Zap: Consumer's Friend or Foe?

Price comparison site Zap claims to 'empower customers,' but as with all business transactions it's 'Buyer beware'.

Amitai Ziv
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Amitai Ziv

"To be a leading, significant and innovative factor in the area of consumerism player and empower Israeli consumers to make the best decisions and implement them without lacking knowledge or expertise."

The quotation is from the vision statement of the Zap Group. It operates Israel's largest price comparison website, which plays a factor in nearly all consumer decision made in the country. When it comes to price comparisons, Zap is pretty much a monopoly.

Users can search for a product by category, manufacturer or model, pull up a list of retailers that includes prices and the sellers' ratings on the site and then click through to the retailer's website to make the purchase.

But Zap isn't perfect. Complaints about nonexistent bargains and negative seller reviews are among the obstacles to reaching its goal of consumer empowerment. The following piece is based on several interviews with retailers, all of whom asked to remain anonymous.

"We bought a three-door refrigerator, but the central control unit needed to be replaced every year," says Eli. "We wanted to warn other customers so we wrote a review on Zap, but it never appeared online," he claims.

Customers can post reviews, whether positive or negative, of products and sellers, but apparently they are filtered and some of the bad ones never appear.

We decided to give it a try ourselves. On November 13 we posted a negative review of the Samsung Galaxy S2 smartphone, writing that it "suffers from the problems plaguing all Samsung phones: short battery life, problematic user interface and a bad camera," and advising consumers to buy the HTC instead. While the review appears on our Zap user account it is not visible publicly. Its publication status - pending, approved, declined - simply says "other."

Zap called the accusation "surprising" and "baseless," adding that there are 150,000 reviews on the site, some of them negative. When buyers post negative reviews of stores, it asks them to present receipts as proof of purchase and also gives the retailers a chance to respond, it says.

The name game

We decided to look for a Sony Xperia Sola cellphone on Zap. The first store on the list of sellers was PcPocket, which offered it for NIS 1,261. The second store was eshops, with a list price of NIS 1,265. Third was a store called Hyper, at NIS 1,269. Yet a quick check of the companies' websites and the companies registrar indicated that these are actually all the same retailer, Ronlight.

This practice, of one retailer pretending to be several competing stores, is apparently a common one on Zap. It increases the retailer's exposure, even though Zap's usage policy bans this practice.

Zap stated that a given company owner can list no more than two stores on its site, but that sometimes a company has multiple owners.

'Not in stock'

A much more common complaint is about a trick some retailers use in order to appear at the top of a Zap search result that starts with the lowest price for the item. The seller indeed offers the lowest price but somehow the specific product is not in stock - ever. When the bargain-sniffing buyer goes to the bricks-and-mortar store he is faced with a classic bait-and-switch, a pitch to buy a similar but more expensive item instead.

"We looked for a Magimix 4200," says a man named David. "We saw stores offering it for NIS 500 below the standard price, but when you call them, they never have it."

TheMarker searched for an oven and a smartphone, and also found that particularly cheap listings were never in stock.

A big player in Israel's retail market confirmed: "We also call [in response to cheap Zap listings], pretending to be a customer, and the answer is always that it's not in stock."

The problem is so widespread that Zap recently reminded its cellphone retailers in writing that offering a product for a low price but then refusing to sell it violates consumer protection laws and Zap's own terms of use.

Zap said it makes sure that retailers meet their commitments to potential customers and called on customers to demand that stores sell them products listed on the site for the listed prices, as required by law. Zap takes action against stores that violate this, it added.

The power of the click

Zap was founded in 2000 by young entrepreneurs from Kibbutz Ramat Hakovesh. In 2005, Golden Pages bought 70% of the company at a market cap of NIS 14 million, and two years later it bought the remaining 30% at twice the valuation. The site is now ranked eighth in terms of total web traffic in Israel.

It is also Golden Pages' most significant holding, apparently: The group renamed itself Zap Group last December.

Retailers pay Zap handsomely for every customer who comes to their site through Zap, giving the company anywhere from 60 agorot to more than NIS 1 for each click on their store. Retailers pay regardless of whether the customer goes on to make a purchase.

The site lists 1,300 stores and charges them for a total of five million clicks a month.

The site's strongest category is cellphones. One seller estimated that high-ranking stores pay Zap NIS 15,000 to NIS 20,000 a month for the clicks they record.

"That's a lot of money but it's the stores' only advertising expense, it's much cheaper than a newspaper ad," said the source.

But many sellers are bitter.

"They're one of the country's most powerful retail monopolies," said one. "If you don't show up in their listing, people start calling to ask if you've gone bankrupt. No competing price comparison site has managed to get off the ground."

Others allege that the site has made price king, at the expense of factors such as quality, reliability and service. Major electronics and computer retailers such as Bug, Office Depot and Shekem Electric don't appear there for a reason.

A senior executive at one of the big chain said, "There are all sorts of bluffs there in all kinds of categories: people offering products they don't have, selling products that don't have Hebrew, we've even found fakes. We contacted Zap, but they didn't really address it. Until the site's clean, we don't really have a reason to go there. When a customer comes in and says 'I found it on Zap for such-and-such a price,' we immediately call the store [where he found it] and show the customer that the store doesn't actually have the product."

In addition, there is an inherent conflict of interest in Zap's business model. It ostensibly wants to give consumers complete information and the best prices, but its income comes from the retailers. More retailers and more user traffic means more money for Zap.

Zap stated in response: "Zap's price comparison site is the only website in the country that takes upon itself tasks that ultimately belong to consumer regulation authorities, including looking into criticism of stores, running undercover checks by reviewers posing as customers, maintaining close partnerships with the Industry and Trade Ministry and Emun Hatzibur [Public Trust, a nongovernmental consumer rights organization], having an active legal department and of course offering transparent price comparisons and ratings," it said.

Zap is the most comprehensive retail rating website in the country, even if there is always room for improvement, the company said.

In addition, it continued, Zap does not profit when a consumer chooses one store over another - it profits when a customer chooses any store at all, it added. It also does not profit when a given store rises or falls in the rankings, it said.

Zap Group CEO Nir Lempert, left, and Zap CEO Eitan Singer.Credit: Dror Katz