Conventional wisdom suggests that online price comparison services are good for consumers but harmful for retailers. The services allow consumers to easily compare the price of a specific product across multiple retailers, which in turn incentivize retailers to engage in a zero-sum game of price competition. For this reason, it is no surprise that some online retailers consider price comparison services an unwelcome development in the world of online retailing.

WinBuyer, a Tel Aviv-headquartered e-commerce technology solutions provider, is on a mission to change the way online retailers think about price comparisons. The company presents online retailers with an unusual proposition: implement their Onsite Comparative Pricing (OCP) application and visitors to your site will be able to see what other retailers (i.e. your competitors) are charging for identical products.

Basic intuition dictates that it is unwise to show consumers where they can find products elsewhere for different (sometimes lower) prices. But WinBuyer’s customers have discovered that by being transparent and providing consumers with access to comparative pricing information, online retailers can increase sales conversion, average order size and site-stickiness. It is counter-intuitive, but providing consumers with easy access to other retailers offering the same product at a lower price turns out to be good for business.

A recent study undertaken by WinBuyer in conjunction with the e-tailing group, a Chicago-based consultancy, provides in-depth research into the buying behavior of consumers with a particular focus on price comparison. The study finds that the majority of consumers invest a significant amount of time searching for the lowest price when purchasing a commodity product: 94% engage in some form of comparison shopping for the best price, 36% spend more than 0.5 hours doing so, and 51% visit more than 4 shopping sites before making a purchase.

WinBuyer encourages online retailers to accept that price comparison shopping tools are fundamental to the online shopping experience, and that the best strategy for dealing with this phenomenon is to embrace it. Presenting consumers with comparative pricing saves them time and effort; consumers acknowledge this favor and consequently develop increased confidence when dealing with a particular retailer. Even if consumers leave a retailer’s site in pursuit of a more attractive deal, 78% would return to the retailer when shopping for items in future.

The OCP application, which launched in the United States in September 2008, has already been adopted by Overstock.com and more than 200 other merchants. The company sources its product listings through partnership agreements with Shopping.com and Shopzilla, and just last month secured a partnership with PriceGrabber.com – as a result, the company now has partnerships with all of the leading direct-to-consumer comparison shopping engines. The application is made available for free to retailers but adopts a revenue share business model where affiliate referral fees are distributed between WinBuyer and the retailer.

WinBuyer helps online retailers face-up to the challenge of diminished pricing power by addressing comparative pricing as an opportunity rather than a threat. The OCP application is a welcome development for the online retailing market, and one that will encourage retailers to focus on distinguishing themselves through competitive differentiators other than price. For consumers, online retailers and WinBuyer itself, it is difficult not to see this as an all-win situation. The company has 34 employees based between Tel Aviv, London and Scottsdale, Arizona, and recently secured a $6.9 million venture investment led by Pitango Venture Capital with participation from Giza Venture Capital and other private investors.

Example implementation of WinBuyer’s OCP application on GameQuestDirect.com

Aragon Networks, an early-stage Israeli startup based in the HaSharon area, is on a mission to ensure that the web user experience is as fast as possible. I recently caught up with Yaniv Shemesh, Founder & CEO, to discuss his startup, which is still largely operating under the radar. Shemesh’s vision is simple yet ambitious: develop software that enables the web browsing experience to match the comfort and speed of reading a magazine.

The software, which is currently in limited alpha release, works as follows. A customer installs the software on its web farm, the HTTP for the site is optimized, and the content is then delivered to end users at a significantly faster speed than would otherwise be achieved. The end result is faster loading web sites – alpha trials have allowed pilot customers to run their sites at between 2 and 5 times the normal speed.

There is an established body of research from the likes of Google and Yahoo! outlining the importance of speed in making, or breaking, the end user experience. Time is money for these companies as, for every additional second that a consumer is required to wait for a page to load, the quality of the user experience is significantly diminished.

While the largest internet companies are already allocating significant resources towards optimizing the speed of their sites, Shemesh sees opportunity in making optimization technology available to other sites. Ecommerce is one example of a vertical that could benefit by reducing the time of page loads for potential shoppers, especially if page load times are demonstrated to have a negative correlation with conversion rates. While larger sites will likely be Aragon Networks’ principal focus at the beginning, the software also has potential to be rolled out on smaller sites as it is essentially a plug-and-play solution.

There is a considerable amount of activity in this space. FasterWeb, another Israeli startup, is also working on a solution for making websites load faster, though it intends to target its solution at ISPs. And just last week, Google announced that it is developing an application layer protocol, called SPDY (“speedy”), as part of its ongoing effort to make the web faster. While the level of activity suggests that this will become a competitive market as we move forward, it also serves as a form of market validation – there is a real problem to be solved here.

Aragon Networks was established earlier this year and development efforts to date have principally been undertaken by Shemesh, with the additional assistance of contractors. Shemesh has an extensive background in spearheading large scale web-based information systems – prior to founding Aragon Networks in February, he led the development efforts for Keshet’s portal, mako.co.il, and he has worked with web-based information systems since 1996.

This extensive experience was likely instrumental in helping him recently secure seed financing from Genesis Partners. (Precise details were not provided but the amount is understood to be under USD1 million.) The proceeds of the seed round will be used to build out a more complete engineering team. Shemesh indicated that he is relying mostly on referrals from contacts and headhunters to attract the right caliber of people. However, high-performing developers with a relevant background should contact Shemesh if they are interested in finding out more. As it is so early on in the company’s life there is still scope to be well-rewarded in terms of an equity stake.

As described by on Zlango’s EMEA Sales Director (on his LinkedIn profile):

Zlango is a Rich-Media messaging service over SMS infrastructure that is combining the good of the two worlds;
The ubiquitous SMS on one axis, and the rich-media on the other axis.

In its basic, Zlango offers an application that enables users to exchange rich-media messages (Mobile 2 Mobile) over the existing SMS infrastructure (Alongside additional WEB services).

In a comment to Globes, CEO Roni Haim said that Zlango intends to use the proceeds to expand its marketing efforts and global precense as well as continue to develop Zlango’s device compatibility. He also added that the company would hold more financing rounds in the future.

Zlango is available on 20 languages and is compatible with 500 mobile models. The product enables users to type a textual message which is then automatically translated to an icon. To date, more than 3 billion icons have been shared. Zlango generates revenue by charging mobile operators on the basis of active users of the service, as well as use of its proprietary infrastructure and 24 hour support. Current customers include: Telecom Italia, Portugal’s TMN SA, and India’s Aircel.

Zlango automatically translates text to icons

Zlango has a head count of 33 and is headquartered in Tel Aviv. Most of the company’s employees are in R&D.

VC Cafe’s take:
Zlango has demonstrated it can deliver on the technology side. With serious funding, the company’s challenge will be to deilver both revenue and user growth by generating additional telco deals. I would caveat Mike Eisenberg’s statement: “The company is on the verge of an extraordinary breakthrough.” and say that the company “could be” on the verge.

1)     Geography – increasing deal flow in China, India and Israel;

2)     Sector – extending focus into healthcare information and medical systems; and

3)     Stage – increasing focus on growth equity (later stage) investments in mature companies.

NVP has two investment professionals based in the firm’s Herzelia office, and in the past the firm has invested in a number of Israeli companies including Double Fusion and Unisfair.

This new fund is interesting due to its size and its focus on later stage investments. Amidst much discussion about how the traditional VC model is broken, it seems as if some funds are scaling up, becoming increasingly reliant on financial innovation to secure attractive returns for their investors within a short timeframe (NVP has invested in a power company in India, for example). In contrast, others are keeping small to focus on investments in early stage startups that do not require a lot of capital (Union Square Partners manages two funds with a total of $281 under management and is focused on investing in early stage, capital-efficient startups).

That said, there are exceptions, like the newly established Andreessen-Horowitz. The firm has $300 million under management which it invests in very early stage Internet companies as well as more mature businesses. The firm was part of the syndicate which purchased Skype from eBay, contributing $50 million to get the deal done.

The Phoenix System is a data lossless system and the self-proclaimed “holy grail of disaster recovery systems”. The company’s Phoenix System™, which is targeted at storage vendors, consists of multiple components: the Black Box, which holds the data at the main site; the Collector, which processes, encrypts and stores the data onto a SSD contained in the Black Box; the Recoverer, which is installed at remote sites and manages the recovery process: and the Management Tool, which helps monitor and manage the whole system.

The core value proposition is that Axxana is that it delivers disaster recovery with no data loss over any distance while delivering costs savings relative to traditional data mirroring systems. The approach is different to traditional synchronous mirroring implementations and has received praise from storage industry analysts. Earlier this year it was identified by Gartner as on of the “Cool Vendors in Storage Technology, 2009”, a list highlingting “interesting, new and innovative vendors, products and services”.

The financing follows on from a $5 million Series A which was led by Gemini Israel Funds in June 2007.

Qlipso (formerly known as  iContaqt) is working on a new tool for real-time sharing of flash-based content (videos, games, slideshows and music)  while simultaneusly interacting with social network contacts through webcams, voice and text chat.

The product is essentially a browser client (available for free download). Users are able to share content with contacts from their social networks (Facebook and Myspace) with the click of a button – contacts do not need to download Qlipso to be able to view the content. The company’s business model is going to be a combination of virtual good sales, premium advertising (exclusive movie trailers, etc) as well as a premium client with additional features.

Qlipso's Homepage: The company is still in stealth

The company is still in stealth, but its website suggests it is preparing to launch soon on TechCrunch. Founded in Dec 2007 by Pnueli Ishay, Qlipso went through several small investment rounds led by JVP. In its previous encarnation as iContaqt, the company developed “a web based 3D social platform that can enable existing web applications to seamlessly integrate in fully immersive virtual experiences, accessible to the mainstream user“. As the company states on its homepage: stay tuned for great products from Qlipso.

NOTE: We originally wrote the post a week ago but held on friendly embargo  in order not to damage Qlipso’s launch. Want to get featured on VC Cafe? Contact us at eze@vccafe.com