Petco wags its tail over new shopping-engine strategy

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PALM DESERT, CA - As an early adopter of comparison-shopping Web sites, Petco at one time had 18 datafeeds going out to the various engines supplying the pet-supplies retailer with the necessary product information.

This was because at the time there were no third-party firms managing such information, John Lazarchic, Petco vice president of e-commerce, told a room full of eTail attendees this week.

Until this year, building and managing its own system for handling this particular area of its business had become "very cumbersome," Mr. Lazarchic said.

So six months ago the company hired Channel Intelligence, which manages all product data information for Petco and channels it to the various shopping portals in the format they require.

As a result, Petco has seen its conversion rates and sales go up across the board. At NexTag alone, conversion rates have increased 45 percent since August, and sales have increased 37 percent, Mr. Lazarchic said.

This has happened for a number of reasons, he said.

For example, Channel Intelligence is able to optimize Petco's product data through each of the engines in a way that the retailer couldn't do on its own. All comparison sites categorize their data in different ways. By getting Petco's products

in the right place, Channel Intelligence ensures the retailer doesn't miss out on any clicks. It also ensures that Petco isn't getting any inappropriate clicks that it has to pay for.

By using Channel Intelligence, Petco also does a better job of advertising the right products on each shopping site. According to Mr. Lazarchic, there is a small subset of products that drives sales for each comparison site, and the selection is different between sites. One site may be geared toward products for dogs, for instance, and another for cats.

It has also reduced click costs by not sending products that generate low or no sales and instead bidding higher on top-sellers. This strategy changes seasonally, however.

From mid-November to the end of December, Petco put its entire catalog of products back out to the shopping engines. It cost the company in terms of its ROI, but the acquisition rate made it worth it, Mr. Lazarchic said. In January, Petco immediately scaled back its product selection.

Petco will periodically put a product that didn't sell well back on a shopping engine to test it for 14 days.

The biggest win for Petco since making the switch to Channel Intelligence has been in the reduction of resources for managing the data for shopping engines, Mr. Lazarchic said. Also, where it used to take two days to pull accurate reports, it now takes minutes, he said.

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