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Bruce FairKelkoo was offloaded by Yahoo to UK private equity firm Jamplant at the end of last year for a figure reported to be in the region of €100m, a good deal less than the €475m paid for the shopping comparison site in 2004.

I've been talking to Kelkoo's UK MD Bruce Fair about the company's plans now it is under new ownership...

Why did Yahoo decide to sell up?

I can’t go into too much detail on this; it was a strategic decision taken by Yahoo. Kelkoo sits in a tight vertical and doesn’t necessarily sit comfortably with the rest of Yahoo’s content / ad network model.

Why did they buy it in the first place?

I think Yahoo saw the rapid growth of the shopping comparison marketplace – Kelkoo and others were experiencing triple digit growth at the time and wanted a part of that.

Can you tell me about the new owners Jamplant?

It is a private equity company, and saw the value of Kelkoo as a going concern. They see the value of the audience and the shopping comparison marketplace as a business model, and are also aware that the market is continuing to grow.

They are taking a back seat, and have introduced a new CEO, Richard Stables, as well as a new management structure.

What are their plans for Kelkoo?

We have some high costs associated with the separation of the business, in terms of platforms, servers, office moves etc, which requires high investment levels. Altogether, it will take six to nine months to disentangle Kelkoo from Yahoo.

What has the company been doing since being sold by Yahoo?

We have been working on building more relationships with merchants, we added 100 new merchants in March, and have been providing shopping solutions for portals like Tiscali and Virgin Media.

We have had a good 2009 so far, and have grown the business in Europe especially. UK sales are up 9% year on year, while we are doing even better in other markers; up 20% in Spain for instance, and we have been successful in Denmark in Norway, where the shopping comparison market is less saturated than in the UK.

We are looking to do more in relatively new markets like Poland, where there is high levels of growth in online retail, and also Canada, which has very high levels of broadband penetration.

Has the shopping comparison market reached saturation point?

In the UK, it is certainly a full and competitive market, but this not the case so much around Europe, where there is less competition and plenty of room for growth remaining.

It’s important to differentiate in such a competitive market: how does Kelkoo achieve this?

Features like our cashback service, where we offer cashback for shopping with merchant like Boots, Apple and Play.com.  We have a toolbar that customers can download, and this tell them how much cashback they have earned from their purchases, and how much they can spend with a particular retailer. This will give them this information even if they go straight to the merchants’ site, rather than through Kelkoo.

What are you doing with mobile?

We have a mobile site (m.kelkoo.com) which allows customers to access our price comparison service and get prices when they are shopping in the high street, the duty free shop at an airport etc.

Is there a risk that customers will use this information and then shop offline rather than through Kelkoo?

It would be a risk if we weren’t confident that we could save customers money, we offer typical savings of 15%-20% off high street prices, so the mobile site should drive customers online.

The mobile site is a bit outdated; do you have plans for a version more suited to 3G phones?

The next stage is to capture the 3G market, and we are working with handset manufacturers to produce a more up to date version.

How will you monetise mobile shopping comparison?

The current mobile site is not monetised, it merely offers customers the chance to see the prices from our retailers and compare it with what they are seeing online.

In future, with the growth of the 3G market, the mobile site will have a commercial purpose, with more ability to click through to purchase products via mobile phones. This very much depends on UK retailers having mobile friendly sites.

At the moment, only around 9% of our retailers in the UK do, but this will change. When companies like Amazon have already introduced mobile sites, then the rest are certain to follow their lead.

How has the recession affected the business?

We are in a relatively good position, as there is still significant channel shift from offline to online. It’s worth highlighting that, while we have seen some decreases in sales around spontaneous purchases like mobiles and iPods, a lot of the core products that people come to Kelkoo for are essential items.

People still need household appliances, lawnmowers and other essentials and are more likely to look for the best deal in difficult economic times. The fact that we can deliver savings compared to the high street puts Kelkoo in a good position.

Graham Charlton

Published 18 May, 2009 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

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Comments (1)

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JakP

I suggests that typical shopping comparison systems are more then saturated. One should use system which helps to select right goods for customers. I found http://www.peryskop.pl/ - small polish startup, which aggregates reviews and then produces marks and futures based ranks on several products. And in this way it helps customers to make right decisions.

almost 7 years ago

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