Money
Getting the best deal
Choose and compare
Jonathan Margolis looks into the recent proliferation of price comparison websites, and measures up their pros and cons
Do price comparison websites really help find the best buys?
Without a doubt. You can save money on almost anything you buy by using sites such as www.kelkoo.co.uk, www.shopping.com and www.pricerunner.co.uk.
Research shows that by choosing the right vendor you can save as much as 40%. One survey out of many done before last Christmas found that by shopping around online, you could buy a Samsung TV that was £700 in high street stores for £539, the Disney Princess, Cinderella story book for £20 against the £30 high street price and football computer game FIFA 08 for £27 on one website, a £10 saving on the standard retailers' price and on other internet sources.
When you think that the massive data-handling power and speed of computers and the internet combined can also be brought to bear on such areas as the sale of insurance and financial services and mortgages, it’s no wonder that a poll of 2,010 adults conducted by YouGov found that 45% had used a comparison site.
A survey by Saga last year of 16,000 people aged over 50, found that 69% have used an “online aggregator” to research car insurance and 44% have gone on to buy according to such sites’ recommendations. According to the market research group Consumer Intelligence, 96% of users of such sites say they would use a comparison site again.
So, these comparison sites are in the philanthropy business, are they?
Price comparison sites, or “price engines”, are a business like any other and a lucrative one, too.
They make a commission from sales they generate. There are issues that consumers need to be aware of. For example, some sites work out the best deals by sifting through details supplied by companies that pay a fee to be listed – typically 50 or so vendors in each product category.
Other sites trawl the internet day and night, going into retailers’ websites for latest prices.
It’s an immensely complex software operation and, not surprisingly, the system gets things wrong. The independent research organisation Resolution Foundation found up to 30% of prices on some sites were wrong.
It’s all a bit of a jungle, then?
Perhaps, but far less so than a normal high street or shopping centre. The beauty of the internet is that it covers more ground in a second or two than someone on foot or on a phone could do in weeks.
Furthermore, you can spend as long as you like researching a purchase before you commit, without salespeople breathing down your neck. Nonetheless, watchdogs like the Financial Services Authority are concerned that some comparison sites are less than wholly transparent.
In January, the FSA said it would investigate concerns that some are misleading consumers into buying unsuitable insurance products and it also fears that, as the British Insurance Brokers’ Association (BIBA) has pointed out, sites make assumptions about users that can lead to inappropriate quotes. BIBA also says 84% of users find comparison sites confusing.
While the possibility of a code of conduct is being discussed, the best thing for consumers to do is to treat them with moderate caution and treble-check (by looking on other sites) that the deal you are attracted by is as good as it seems. Look out, for example, for sites that push a particular deal, in the guise of a “Special” or “Editor’s Choice”. Is this impartial advice?
Are sites doing anything to address such concerns?
Yes. At least one, www.twenga.co.uk, aims to eliminate confusion. Twenga claims to be truly impartial, listing results on the basis of relevance only rather than commercial relationships with vendors.
In the insurance field, Saga last year launched its own comparison site, www.ConfidentCover.com, initially for motor cover, but with plans to move into breakdown cover and home insurance.
ConfidentCover gathers in competing quotes from 15 major insurers (Saga’s included), but rather than present them solely according to price, also compares more than 30 policy features side-by-side.
One of the FSA’s concerns is that comparison sites in the insurance field gloss over important features such as whether or not a courtesy car will be given to policyholders after a theft or write-off or while their car is being repaired.
What other types of comparison sites are there?
The proliferation of utility companies and the baffling variety of deals they offer has led to sites that try to sort out the best available deal.
The best-known of these is www.uswitch.co.uk. A variety of sites compare phone, mobile and broadband tariffs, which are also notoriously fickle. Both types of site have been criticised for encouraging us to switch about more than we need to, which feathers the websites’ nest.
Train and air tickets are another area where the power of the internet has been unleashed to the benefit of consumers.
So is there a site that compares comparison sites?
Almost. There's a new site, www.electricpig.tv, which compares reviews of electronic products. In travel, www.kayak.co.uk compares the selections of flights offered by the likes of www.expedia.co.uk and www.ebookers.com.
It’s remarkable how these sites, hunting for best fares, get different results. Another address, http://paler.com/price_comparison, doesn’t quite compare sites, but keeps an up-to-date list of them.
Run by a Romanian who works for Google in Ireland, Paler is a mess, but useful nonetheless.
* Jonathan Margolis writes the One Foot In The Future technology column every month in Saga Magazine
