Introduction
The history of price comparison sites in the United Kingdom and other countries in the world such as the United States of America can be traced back to the late 1990s. It came with the internet boom during this period in these countries. The emergence of the internet and the wide spread use of the same made operation of price comparison sites a profitable venture for investors (Tanweer 2009).
Tanweer (2009) is of the view that a price comparison service can also be referred to by many names. These include shopping comparison site and price engine among others.
Whichever name is used to refer to it, the site is used by potential consumers to view a listing of different prices for certain products that the consumer is interested in. all the consumer have to do is type the name of the product that they are looking for, and a list of the stores that sell the product, together with the prices, is listed.
The aim of the consumer when using the search is to look for the cheapest retailer for the item, and this is what the price engine does; listing the best deals available for the consumer.
It is important to note that price comparison sites are not restricted to tangibles such as books or electronics. Even service providers use the sites to list the cost for the services. For example, financial institutions offering services such as mortgages and credit cards also do list their merchandise on these sites.
It is also pertinent to note that most of these price comparison sites are not themselves manufacturers or retailers of the products. All they do, at least majority of them, is to list the prices of items that are sold by other retailers in the market. According to Kelli (2008), these price comparison sites obtain the prices from retailers from whom the consumers can get the goods or services from.
In the United Kingdom, price comparison sites are emerging to be big businesses. In the year 2005, according to Kelli (2008), these businesses in this country made revenues of between 120 million pounds and 140 million pounds. This represented an annual growth rate of between thirty and fifty percent.
As far as evolution is concerned, price comparison sites have come a long way. At the beginning, these sites were provided as client side add-ins to other internet services. For example, they were add-ins to Netscape and Internet explorer browsers (Haag, Cummings, McCubbrey, Pinsonneult and Donovan 2006).
This meant that the consumer who wished to use the services had to download extra software and install it in their system. It is only much later that the services moved to the server, meaning that any person with a browser can access the services (Haag et al 2006).
Today, the internet price comparison service is offered by companies that are specialised and dedicated to the endeavour, and they do this through websites and major portals through which the consumers can access the services.
In the late 1990s, the price comparison websites gained popularity as more people had access to the internet and used it to aid their shopping (Haag et al 2006). It is important to note that price comparison on the internet was not a preserve of those consumers who intended to do online shopping. Rather, any consumer could access the price comparison, and then go to the retail store physically to purchase the item.
Website comparison sites are business ventures, and as such, they are supposed to make business sense by giving returns to the investors. Revenue is accrued from the fixed fees that are paid by the retailers who wish to have their items listed and stores specified on the site. Kelli (2008) is of the view that these sites are more like virtual Yellow Pages for online consumers.
Improvements in technology have seen a change in the business model adopted by these sites. Initially, the comparison companies aggregated data feeds availed or accessed from the retailers (Kelli 2008). With improved technology, the functionality of the sites has changed drastically.
The service providers can now search, access and retrieve data directly from individual retailer sites when they come into agreement with the latter. This development has made the experience of the shoppers more satisfying than before.
A more comprehensive list of retailers for a particular item can now be accessed by the shoppers (Kelli 2008). Additionally, the service providers can update the data on their sites on a real time basis, reflecting the developments on the ground.
Like in any other popular product in the market, generic price comparison sites have started to emerge to have a piece of the economic benefits from the services. For example, some companies have felt that they stand to benefit from an upsurge of online shoppers.
To this end, these companies, majority of them credit card service providers and delivery outfits, have initiated their own price comparison sites that give prominence to their services.
Price Comparison Websites and Social Responsibility
The proliferation of price comparison sites have led to the emergence of social responsibility concerns as far as the conduction of business by these sites is concerned. Social responsibility is the ability of any business firm to make profit while safe guarding the well being of the consumers. In other words, as much as the firms are trying to make profits, they should not do so at the expense of the consumers by exploiting them.
For example, there have been concerns to the effect that the price comparison sites fail to provide the consumer with information regarding what the product or item on their site does or can not do. Information such as the side effects of the products is not provided (Wallop 2009).
Industry experts have raised concerns that price comparison sites are misleading the consumers. This is given the fact that they do give prominence to the products and services of the companies that have paid the commission fees (Wallop 2009).
The sites are silent on those products from companies that are not on their commission roll. This means the consumer have no access to balanced information regarding the best deals on the market.
All of the above concerns are based on social responsibility of business conduction. It should be noted that just like any other business venture out there, the price comparison sites also have to take into consideration social responsibility in their operations. This paper is going to address this issue.
The paper is going to bee divided into three sections. In the first section, the author is going to propose what the strategic social responsibility of price comparison websites are. The author is going to come up with their model of the strategy that they feel should be used by price comparison websites to make sure that they are responsible socially.
In the second section of the paper, the author is going to compare the performance of three price comparison websites with their model. The aim of this section is to reveal to what extent the selected price comparison sites are adhering to the social responsibility strategy proposed by the author.
In the third and final section of the paper, the researcher is going to provide a case study of a price comparison website. The site that will be selected is Moneyminder. The author will critically analyse the approach adopted by Moneyminder website. Moneyminder have already published the approach they adopt as far as social responsibility is concerned.
The aim of this section of the paper is to critically analyse whether Moneyminder are adhering to their published strategy, and the extent to which their operations are socially responsible. Is Moneyminder conducting business in an ethical manner? This will be the question that the author will try to answer in this section.
Strategic Social Responsibility for Price Comparison Websites: A Proposal
There are different views regarding the kind of social responsibility strategy that should be adopted by an organisation when conducting their businesses. Some of the views focus on the agency itself, opining that the agency and the business it is conducting should be given a priority.
Others are of the view that the stakeholders in the business, which includes the clients and the workers, should be given a priority in any social responsibility strategy for a business. The author will look into these schools of thought in detail before embarking on their strategic model.
Friedman (1970) holds an agency perspective as far as social responsibility in business is concerned. This scholar is of the view that businesses have only one social responsibility. This is to use the resources at their disposal in carrying out economic and other form of activities that are aimed at increasing the firmās profit margin (Friedman 1970).
The resources that Friedman is talking about here include the human resource, capital and such other. Friedman is of the view that it is alright for the business to increase the profits provided that it ensures to conduct business within an environment of open and free competition. According to Friedman, an open and free competition takes place when the firm is not engaged in any fraud or deception (Friedman 1970).
On the extreme side of the continuum, Freeman (1984) gives their perspective about social responsibilities for business operations. Unlike Friedman who focuses on the agency, Freeman puts the focus on the stakeholders.
This scholar is of the view that the main task of the business manager as far as social responsibility is concerned is to safeguard and promote the rights and well being of the various business stake holders on board (Freeman 1984).
This includes the rights of the share holders and generally those people who are necessary for the existence and operation of the business. This is for example the members of staff, the business partners such as the suppliers and the community within which the business is operating (Amaeshi, Osuji and Nnodim 2008).
Apart from this Friedman Freeman dichotomy, there are other views that lie somewhere in-between the continuum. For example, Bowie (1982) gives a neo classical view, where they opine that the role of the business is to make profits while at the same time avoiding harming the stakeholders.
Amaeshi et al (2008) are of the view that for the organisation to realise social responsibility, it must make efforts to conduct business within a sustainable environment, while taking into consideration the well being of the stake holders.
The business has to bee conducted within an environment that is economically and environmentally sustainable, and the managers should ensure that they strike a balance between making profits and safe guarding thee rights of the stake holders.
McWilliams and Siegel (2001) are of the view that social responsibility for the business is extra legal in nature. By this, the scholars recognise the interplay between business operation and legal provisions. The managers must act within the legal provisions.
It is the opinion of this author that price comparison websites should follow a strategic social responsibility model tailored along the suggestions made by Freeman (1984). In other words, the websites should take a stake holder perspective when formulating strategic social responsibility models. The major aim of the price comparison web sites should be the protection and promotion of the rights of the various stake holders.
There are many stake holders in the business of price comparison web sites. These include the clients, who are the retailers interested in displaying the prices of their merchandise on the site. These are for example the banks, the insurance brokers, book retailers among other consumer products retailers.
The other group of the stake holders include the employees. This includes those employed to mine price data from the various retailers among others.
But perhaps the major stake holders on whose rights the strategic social responsibility model should protect are the consumers who access the site looking for the best deals in the market.
The managers should make sure that these consumers are not exploited, and they are given accurate information regarding the products that they are intending to buy. The accuracy of the information should include the lowest prices, the availability of the product, the negative or side effects of the item among others.
Strategic Social Responsibilities for Price Comparison Sites
The following are some of the suggested strategic social responsibilities for the price comparison sites:
Privacy of Information Provided by the Consumer
Maria (2008) of BBC Money Programme, in an online article criticising price comparison websites for financial services, quotes Lord Lipsey bemoaning the unscrupulous dealings of financial services price comparison sites. Lord Lipsey is the immediate former chair of one of the financial dealings regulatory bodies in the United Kingdom. This is the Financial Services Advisory Panel, which he led for a significant period of time.
Lipsey is concerned that price comparison sites are used as āsparksā for sales by insurance brokers who contract them (Maria 2008). Some of these sites ask the consumer to provide personal information regarding their contacts, their age and such others. This is done in the pretext that the information will be used to help the site provided the client with the best deals.
But this is not the case in most instances. The personal information is immediately passed on to third parties who use to pitch for sales. The consumer starts to be nagged by persistence insurance telesales agents who are bent on recovering the commissions given to the comparison sites (Private Health 2010). This means that there is no privacy as far as the personal information of the client is concerned.
Social responsibility demands that the personal information provided by the customer be safeguarded. Under no circumstances should it be disclosed to third parties without the direct consent of the client.
If it is really necessary for the price comparison sites to disclose this information to third parties, Freemanās stake holdersā perspective on social responsibility demands that consent should be sought from them. The site should inform the customer that they have the option of accepting to have their information disclosed to third parties or not. Their privacy should be respected at all times.
When the third parties to whom the personal information have been disclosed to calls the customer, social responsibility demands that they identify themselves and inform their potential customer that they are not agents or representatives of the price comparison sites.
There have been concerns that customers are misinformed and they think that they are talking with representatives from the price comparison sites (Maria 2008).
Accuracy of Information Provided
Tanweer (2009) is of the view that some price comparison sites provide inaccurate information regarding the availability of the items on their site. For example, the site may claim that a certain product is available at a given price in a particular store. However, when the customer visits the store, they find that the item is out of stock, or the prices have changed and the price comparison sites failed to inform them of the same.
Freemanās stake holdersā perspective demands that the consumerās right to information be respected. Hidden costs and charges should be made available to the customer. These include shipping charges, if any, and such other charges. In the case of drugs and other high risk consumer items, the side effects should be listed.
Kelli (2008) is concerned that many price comparison sites aim at pleasing the retailers who pay for their services at the expense of the consumer. The sites shy away from disclosing negative effects of items for fear of inviting the wrath of the commission paying retailers.
Majority of the sites avoid this dilemma by eliminating any information, negative or positive, regarding the item been sold by the retailers. But this should not be the case, as the consumer has the right to make informed decisions when purchasing the item (Lindsey 2008).
A case in point is when purchasing an insurance premium. The best deal which is usually the cheapest may be that cheap because it has been stripped of some covers (Wallop 2009). The consumer is not informed of this, and they only realise it much later when they go to claim their premiums. A social responsible price comparison site should provide the consumer with the information regarding this stripping of covers (Malinowski 2007).
Listing of the Best Deals Available
The idea behind a consumerās visit to a price comparison site is to get the best deals available in the market. When they get to the site, all they have to do is to key in the details of the product that they are looking for. After this, the website lists all of the available deals on the market, starting with those that are cheap (Tanweer 2009).
However, as earlier indicated, this may not be the case. The consumer may not be able to get the best deals as they have envisaged. This is because the items listed on the website are those from those retailers that are willing to pay the commissions demanded by the site operators.
The end users of these sites may miss out on the best deals and fail to save money because the best deals may be from those retailers that are not listed for they do not pay commissions (Atkinson 2006).
A socially responsible price comparison site should list even those deals that are from retailers who are not paying commissions. To create an incentive for the retailers to pay for the service, the website should inform the consumer they are not affiliated to the retailer.
Instead of omitting the provider from the list, the website should ensure that there is no direct link from their site to that of the non-paying retailer. The consumer will make their own arrangements to access the item if they are really interested in it.
Alternatively, the websites should inform the consumer that the returns on the first search page do not include the deals from non paying retailers. They should avail the list of the non paying providers to the consumers on request. As earlier indicated, the price comparison site may opt to fail to provide link to the retailerās website (Messerli 2009).
The Performance of Selected Price Comparison Sites: Comparison with the Proposed Strategic Social Responsibilities Model
The researcher selected three price comparison sites. These were PriceGrabber.com, StreetPrices.com and Pronto.com. There were no specific criteria that were followed when selecting the websites. The author selected them randomly. The following findings were made when comparison was made with the proposed strategic social responsibilities model:
PriceGrabber.com
The researcher rated this as one of the best price comparison sites available. The prices that were listed were among the best deals available for all the searches that were made. It gives the customer some of the cheapest options that are available.
Privacy of the Customerās Information
Just like majority of other sites available to the consumer, personal information is sought by PriceGrabber.com. The site asks for details regarding email address, phone number and such others.
However, it is important to note that the provision of this information by the consumer is optional. This means that the consumer does not have to give their details to access services on the site. But the website fails to tell the client whether the information will be disclosed to third parties or not. As such, the consumer provides personal information but the privacy of the same is not assured.
Accuracy of Information Provided
This site fared fairly well when it came to accuracy of information. The stores from where the consumer can access the items were listed, and the author confirmed the availability of some of the items on the lists. The price was also as listed on the website.
Listing of the Best Deals Available
This website raises some concerns when it comes to listing of the best deals available to the consumer on the market. When a search is made, featured retailers and merchants are given prominence. The first results on the search are for these featured retailers.
However, the site covers for this by listing the merchandise of the featured retailers starting with the cheapest. As such, the consumer is able to access the best deals available, albeit from a censored list. The best deals on the site are labelled as āYour Best Priceā, and in fact the labelling is clear and conspicuous, hard to miss.
StreetPrices.com
Privacy of Information
The site does not ask for personal information from the consumer. In cases where such information is sought, the consumer is informed that it is for the site to post them the fall in prices for their preferred items. This provision of personal information is optional.
Accuracy of Information Provided
It is a fact beyond doubt that this site provided some of the best deals which were cheap. But there were some items that were not available on the site. Instead of giving the consumer the exact brand that they wanted, the site provided alternatives when they did not have the item.
This is understandable considering that the site had been focusing mainly on electronic items in the past. It is only recently that they ventured to other items such as apparel, and the hiccups can be attributed to this.
Listing of Best Deals Available
This site provides the consumer with some of the best deals available. After accessing the site, the consumer is able to narrow down their search in terms of price range and such other factors like brand. The site is also interlinked with others where the customer can find the deals they want if they are not available. This is for example eBay and Craigslist.
Pronto.com
Privacy of Information
The site asks for personal information such as email address. This is optional, and it is for those consumers who have no time to shop and would wish to be alerted when their brands go on sale.
Accuracy of Information and Listing of Best Deals
The site lists only those items from featured retailers. The consumer can not access those that are not featured. The information provided is scanty. There is no description of the items on the list, and the consumer can not make informed decisions.
Moneyminder Price Comparison Site: A Critical Analysis
Ray Black, one of the major stake holders in Moneyminder, is on record criticising the operations of other price comparison sites in the industry. He especially criticises those sites that specialise in life insurance cover comparisons (Private Health 2010). He is of the view that these sites provide the personal information provided by the consumer to third parties who pester the consumer for sale.
This is especially so for those sites that compares prices for financial services such as insurance. The personal information is made available to third parties who include insurance agents who pay commission for the same.
Given that the insurance agent is interested in recovering their expenses when commissions are paid to the price comparison sites, they make their best to sell the policy to the consumer. The insurance agent calls up the consumer and tries to pitch for a sale. The information can be disclosed to more than one third parties.
The Moneyminder site provides the consumer with some of the best information on the internet. When compared with other price comparison sites, the services rendered here compete favourably. This is despite the fact that Moneyminder is a relatively new entrant in the industry, in addition to it being one of the smallest operators in terms of size and financial muscle.
Moneyminder has some software that makes the experience of the consumer considerably different from that derived from other sites. For example, the Finance Navigator software is very efficient in tracking the best deals available.
This is software that was specifically developed by Moneyminder to be used by consumers on the site. The consumer uses it to compare the various prices on the market, and it makes the search to be more advanced than that offered by other competitors.
However, there are some issues that put the strategic social responsibility model touted by Moneyminder to question. For example, the site asks the consumers to create an account with them by registering. While this may be optional, it goes against the standards set by Ray in his criticism. The site posses the consumerās personal information.
This is given that to register, the consumer has to provide their personal information. To make matters worse, the site is silent on whether the information will be disclosed to third parties or not.
The site may be committed to safeguarding of the consumerās personal information as Ray Black makes one believe by the criticism he puts forth against other sites. But this should be made obvious to the consumer by assuring them explicitly that their information will not be disclosed to third parties.
The site asks for the information to provide the consumer with a personal financial adviser with the option of the service availed over the phone or on a personal basis. This is an invasion of the consumerās privacy by the site. This is despite the fact that this is optional. This service, when critically appraised by a discerning observer, is no different from the sales agents who pester consumers trying to make a policy sale.
The only difference is that this service is offered by Moneyminder itself and not third parties. But this does not make the invasion of the consumerās privacy any different. In this case, the invasion is more subtle and sophisticated, but invasion nonetheless.
In conclusion, it is important to note that Moneyminder may be making efforts to conduct its business responsibly. However, there are some instances, for example the requirement for personal information from the consumer, which negates this. This means that there is room for improvement as far as strategic social responsibility and Moneyminder is concerned. This is not unique to Moneyminder.
It should be noted that strategic social responsibility is a central part of price comparison websitesā operation, and there is no limit to it. There is no situation where one will find a comparison site that is 100 percent compliant to social responsibility. This is given the vastness of strategic social responsibility as a facet of business operations.
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