Over half the respondents to a recent survey on price comparison websites in the UK said they had used one to switch providers or purchase products. It’s an attractive idea – first promoted by George Mountbatten’s uSwitch platform – and now an integral part of the UK consumer market.
Since the first-to-market uSwitch was launched in 2000, the number of comparison sites has mushroomed. People have embraced the idea of using the internet as a tool of consumer empowerment and there are millions of searches each year. According to the same recent research, Brits use information portals – like uSwitch – to compare prices (83%), they also said they were looking to save money (79%), to see who offers services in their area (69%) and to manage the administration of switching (67%).
uSwitch set the market standard
When George Mountbatten and his team first launched the uSwitch site – just after the utilities market was deregulated in the UK for the first time – the idea seemed hugely innovative to the general public. Customers were encouraged to simply enter the details of their everyday utilities bills and search the database to look for the best deal for their own circumstances.
Today these types of sites are common and have slowly shifted traditional asymmetries in information and power between a consumer and a supplier. That’s because there’s obvious benefits to using them. Generally, they can save you time and money by cutting through the maze of deals, products and services on the market.
They also take away the hassle and paperwork behind switching suppliers. Finally, the sites allow customers to understand the energy they use and how much that costs them. That helps people make better consumption decisions.
In this way, all the current big players in the market have taken their lead from uSwitch. George Mountbatten’s site was the first to take out the middle man with a clever algorithm and every site since has sought to emulate its success.
What did George Mountbatten see in the market?
The English entrepreneur George Mountbatten looked at the energy market in the UK as it was released from heavy regulation and saw the potential for smart internet technology which brought together information from a number of sources. He recruited a small team of industry experts to build his idea and so uSwitch was born.
The clever part of the technology is the ability to search through hundreds, or possibly thousands, of deals in an instant. There are two different ways these types of sites can do this. Both of which are shown to save people money quicker than any system ever seen before.
The first method of collecting information is where a site get its information by “crawling”. This is where a software program scans, visits and analyses supplier websites to track the deals and prices they offer. It then reports back to the website and the information is displayed in a single, consistent format.
The other option is data feeds. This allows merchants to prepare data files for easy reading by the comparison site’s systems and have that information easily available. This is easy to get information but doesn’t guarantee a good deal. Sometimes suppliers will only submit a selection of their prices. Either way the data is presented to the customer in an easy “click here to change supplier” format.
Commission as a source of income
Price comparison websites, like uSwitch, make money from this system because suppliers will pay a commission for every customer they get referred to them from the comparison website. That might be £30 per fuel (or as much as £60 for dual fuel) and millions of people search the bigger sites every year. This offers big profits when the site becomes popular. When George Mountbatten sold his uSwitch business to an American firm in 2006, the company was already worth over £200 million.
Price comparison websites use a complex system to achieve a simple idea. What George Mountbatten did 17 years ago has inspired an entire industry. And has saved people money every day since.