Shopping.com Files for $75M IPO

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E-commerce search engine Shopping.com filed for an initial public offering that could net the company $75 million. Shopping.com did not report the number of shares it would offer or the price.


The Brisbane, CA, company revealed this week in its filing with the Securities and Exchange Commission that it turned its first profit last year, making $6.9 million on $67.2 million in sales.


Shopping.com is a comparison-shopping search engine. It lets users search for an item, compare prices, read reviews and click to the store's Web site to make a purchase. Shopping.com's 6,000 merchants pay from 5 cents to 30 cents each time a user clicks on one of their listings.


Though the lion's share of revenue came from cost-per-click fees paid by its merchants, Shopping.com took in $25.5 million thanks to paid listings by Google that appear on the bottom of Shopping.com search results. The company and Google struck a distribution deal for the listings in August 2002. The agreement expires in April 2006, according to the filing.


Shopping.com generated 219 million leads in 2003, up from 77 million the previous year, according to the filing. The company attributed much of the increase to its Google agreement. Price per lead, however, fell to 28 cents from 34 cents. That drop was attributed to Shopping.com branching into new categories, like home and gardening, beyond traditional comparison-shopping areas such as computers.


The IPO would add to the company's $25.7 million in cash as it tries to fend off increased competition from search giants like Yahoo and Google. Yahoo recast Yahoo Shopping as a comparison-shopping search engine in September, taking aim at sites like Shopping.com, BizRate and PriceGrabber. Google also has a shopping search engine, Froogle, which is in test mode.


According to Nielsen//NetRatings, Shopping.com is the No. 2 most-visited comparison-shopping site. It attracted 14.3 million visitors in February to Yahoo Shopping's 18.5 million. BizRate ranked No. 3 with 8.7 million.


Founded in 1997 in Israel as DealTime, the company rose and fell with the dot-com bubble. It withdrew a $50 million IPO in October 2001 and racked up $72.9 million in losses that year, according to its filing. In 2002, it cut its losses to $5.1 million by more than doubling its revenue and reducing operating expenses.


In April 2003, DealTime acquired Epinions, a shopping service centered on consumer reviews. In September, the company changed its name to attract a broader audience than niche comparison sites like PriceGrabber, which focuses on computers and electronics. Shopping.com bolstered its marketing two months later with a $3.8 million TV advertising campaign in three cities. It reported that 76 million shoppers visited the site over the holiday season, generating $237 million in sales for Shopping.com merchants.


Goldman Sachs, Credit Suisse First Boston, Deutsche Bank and Piper Jaffray are the IPO's underwriters. Shares would trade on the Nasdaq exchange under the proposed ticker "SHOP."


Brian Morrissey covers search marketing for DM News.com. To keep up with the latest search marketing news subscribe to our free e-mail weekly newsletter Search Engine Marketing by visiting http://www.dmnews.com/cgi-bin/newslettersub.cgi .


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