Randy Watts likes to design webpages, but he doesn’t like to pay unnecessarily high prices for new development tools. Like a growing number of small businesses and consumers, Watts has started relying on shopbot technology to help him find killer deals on a wide array of products. But while current ’bots can offer a great service to small-volume buyers and individuals, similar tools for larger companies are just starting to appear. And if you’re an online merchant, the very thought of such margin-slimming shopping assistants may cause you to groan.

Shopbots are intelligent software agents that scour the Web to find the lowest price on a particular product. They can also help shoppers avoid drowning in choices. "I don’t have a lot of time to spare, so I really don’t want to run from merchant to merchant in order to find the best deal," says Watts, owner of G&R Designs in Redondo Beach, Calif. "Shopbot technology helps me acquire the newest and most powerful software quickly and cheaply."

Shopbots have come a long way in a remarkably short period of time, says Edmund Ha, an e-commerce analyst at Giga Information Group, a technology research company in Cambridge, Mass. "They place shoppers in the driver’s seat by allowing them to easily decide which merchant offers the best deal," says Ha.

Yet, despite their immense potential, shopbots remain far from being a problem-free technology. Critics complain that because of various technical and business-imposed limitations, shopbots can mislead consumers into thinking they’ve uncovered a rock-bottom price when, in fact, much better deals exist. For merchants, shopbots mean added expenses as well as a heightened level of price competition that can lead to razor-thin margins. "The technology can make it especially difficult for smaller merchants to survive," says Malcolm Maclachlan, an e-commerce analyst with market researcher IDC (sister company of CIO’s publisher, CXO Media).

Shopbots Grow Up

During the past couple of years, the shopbot market has evolved to the point where three specific types of intelligent agents—price-, feature- and merchant-comparison engines—have become available to consumers. "Shopbots have come a long way from the days when they could only rank products by prices," says Ha.

Price-comparison shopbots—the oldest shopbot technology—continue to be popular. MySimon.com, DealTime and BottomDollar are among the many shopping services that provide users with suggestions about where to find the best price on a particular product. Product-comparison shopbots, such as the type developed by eWonders.com, aim to help shoppers who are concerned with product features as well as pricing. Merchant-comparison shopbots, offered by BizRate, Dash and Frictionless Commerce, are designed to showcase retailers that are best able to meet a shopper’s specific needs in terms of products, prices, support and related areas.