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	<title>Comments on: Arbitrage, schmarbitrage</title>
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	<link>http://yardley.ca/2005/03/08/23/</link>
	<description>greg yardley on online product management</description>
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		<title>By: Greg Yardley</title>
		<link>http://yardley.ca/2005/03/08/23/comment-page-1/#comment-21</link>
		<dc:creator>Greg Yardley</dc:creator>
		<pubDate>Tue, 08 Mar 2005 17:35:02 +0000</pubDate>
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		<description>This is probably a failure on my part to be clear.

Comparison shopping sites only get paid when a click-out is made to a merchant.  No click, no pay.  Here&#039;s my thinking - comparison shopping sites buy traffic.  That&#039;s their &#039;inventory&#039;.  They don&#039;t immediately ship it out the door to a merchant - if they did, it&#039;d be arbitrage. Instead, there&#039;s anywhere from ten seconds to a few minutes where the user surfs around the site, processing the information there.  During that time, the traffic is, effectively, &#039;inventory&#039;, and the comparison shopping site&#039;s got to &#039;resell&#039; that inventory in order to get paid - if the browsers don&#039;t leave the comparison shopping site to go to the merchant, no money comes in.  To make the sale, the comparison shopping site must provide enough useful information to the user to make that user click onward to a paying client instead of clicking on the &#039;back&#039; button.  This is by no means guaranteed.  Every comparison shopping site loses traffic they&#039;ve purchased to the back button.  The challenge is to provide a useful enough service to keep your users clicking onward.  Doing this is both difficult and risky.</description>
		<content:encoded><![CDATA[<p>This is probably a failure on my part to be clear.</p>
<p>Comparison shopping sites only get paid when a click-out is made to a merchant.  No click, no pay.  Here&#8217;s my thinking &#8211; comparison shopping sites buy traffic.  That&#8217;s their &#8216;inventory&#8217;.  They don&#8217;t immediately ship it out the door to a merchant &#8211; if they did, it&#8217;d be arbitrage. Instead, there&#8217;s anywhere from ten seconds to a few minutes where the user surfs around the site, processing the information there.  During that time, the traffic is, effectively, &#8216;inventory&#8217;, and the comparison shopping site&#8217;s got to &#8216;resell&#8217; that inventory in order to get paid &#8211; if the browsers don&#8217;t leave the comparison shopping site to go to the merchant, no money comes in.  To make the sale, the comparison shopping site must provide enough useful information to the user to make that user click onward to a paying client instead of clicking on the &#8216;back&#8217; button.  This is by no means guaranteed.  Every comparison shopping site loses traffic they&#8217;ve purchased to the back button.  The challenge is to provide a useful enough service to keep your users clicking onward.  Doing this is both difficult and risky.</p>
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		<title>By: Ross Mayfield</title>
		<link>http://yardley.ca/2005/03/08/23/comment-page-1/#comment-20</link>
		<dc:creator>Ross Mayfield</dc:creator>
		<pubDate>Tue, 08 Mar 2005 16:44:21 +0000</pubDate>
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		<description>I may well be wrong about this, but I don&#039;t think Nextag is holding inventory as you describe.</description>
		<content:encoded><![CDATA[<p>I may well be wrong about this, but I don&#8217;t think Nextag is holding inventory as you describe.</p>
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