Chairman and Chief Product Officer of Shopzilla on Shopzilla vs Shopping.com (SHOP, SSP)

Farhad Mohit is the Chairman and Chief Product Officer of Shopzilla, a comparison shopping search service that competes with Shopping.com (ticker: SHOP). Here are his thoughts in response to Scripps-Shopzilla deal shows eBay-SHOP deal too cheap? (published yesterday morning on the The Internet Stock Blog) which argued that eBay (ticker: EBAY) may be forced to raise its bid for SHOP:

David,

Just read your piece re: Shopping.com being too cheap, because of our deal.

A few things for you to ponder:

1) Shopzilla has far superior technology - Proprietary Shopping Search Engine which indexes 31 million products and updates that index 6 times a day.  This is versus about 9MM products for Shopping.com and 1 update per day. Larger index, more up-to-date is very good.

2) Our technology translates into a much better ability to, on the one hand answer the tougher queries (i.e. outside of digital cameras) and, on the other, always return the lowest price.  These are two keys to winning consumer loyalty. Our 55K stores listed are more that 5x more than what SHOP has reported.

3) This results in a superior service for consumers and our important numbers prove it. Keep in mind that our revenue projections are larger than shopping's, we expect to be more profitable and our revenues are all in the US right now!

Why is that important? Well, the US is the most competitive market and when you're winning here, it means that consumers are choosing your product when given the choice.  This makes us hopeful about our prospects in other countries. On the 'Net, superior product beats everything... remember that Google was not the first search engine on the block...  just the one with the best tech and largest most up-to-date index.

Therefore, current market share in EU is not as important to us as building the best product to export there when ready.

BTW: We are investing in and have launched 3 sites in the EU too (UK, FR,DE) which should contribute in '06.  We just don't go around beating our chest as much about them...  (eg: http://www.shopzilla.co.uk)

4) Since we have built and rely on superior tech, we use far fewer people / manual operations to structure / organize our information and provide our service.  We are 170 people, SHOP is 300+.

5) UVs [unique visitors per month] really don't matter as we could buy all the UVs we want too, if we work with spyware / pop-up providers like Claria and WhenU. We don't do work with any of these companies.

I mean, you have to ask yourself, either SHOP has a service that does a pretty poor job of converting its UV traffic (i.e. inferior product) relative to us or they are buying inferior traffic that can't be converted, hence pumping useless UVs.

How else can you explain that with 22MM UVs they're planning on generating significantly less revenues than we will be with 14MM UVs?

Farhad Mohit
Shopzilla Chairman and Chief Product Officer