Priceline to launch online 'yard sales'

Priceline.com Inc. has a new scheme for getting rid of old things gathering dust in the attic: an online "yard sale.
Written by Nick Wingfield, Contributor on

Priceline.com Inc. has a new scheme for getting rid of old things gathering dust in the attic: an online "yard sale."

The company is preparing to launch a new Web site dubbed Perfect YardSale. The site will have the same basic mission of the giant Internet auctions run by eBay Inc., Amazon.com Inc. and Yahoo! Inc. -- namely, hooking up buyers and sellers of goods. It will have a heavy emphasis on "quality second-hand goods" like old video-game cartridges, exercise bicycles and television sets.

But Priceline, based in Stamford, Conn., says there will be key differences between Perfect YardSale and auctions. The new site will let a user make an offer beneath the seller's asking price for an item, a system that's similar to the haggling that goes on at garage and yard sales. Priceline (Nasdaq: PCLN) argues its method will lead to better bargains for buyers than at auctions where a minimum price is set.

Jay Walker, the vice chairman and founder of Priceline, also said he expects Perfect YardSale to attract a different type of merchant -- the individual seller seeking to get rid of unwanted possessions on the cheap.

In contrast, he argues, much of the trade on Internet auction sites is conducted by dealers selling the hottest new toys, antiques and other collectibles. "If you have a VCR, you're willing to sell it for whatever," Walker says.

A more personal touch
Here's how the system will work: A buyer hunting for a camcorder, for example, will select the features he wants on Perfect YardSale, the price he's willing to pay and how long he wants the site to search for a seller that meets his demands. The buyer then will be required to submit a credit-card number to demonstrate that his bid is serious.

Once Perfect YardSale finds a willing seller, the two parties will arrange to meet in person so the buyer can inspect the merchandise. If the buyer is satisfied with the condition of the item, he'll give the seller a secret pass-code. The seller can then enter the pass-code into the Perfect YardSale site to receive payment for the item directly from Priceline.

Perfect YardSale will be limited to local metropolitan areas so buyers and sellers can swap goods in person, eliminating the expense of shipping. The company says it expects to begin testing the site in a city in the Southeast in January, with plans to expand it to other cities later in the year.

Luring new customers
Priceline will try to lure bargain hunters online with perks not found at normal yard sales or most auctions. The company won't charge buyers' credit cards until seven days after their purchase, giving them a week to return an item if they're not satisfied. After that, Perfect YardSale users will have a 30-day warranty period, during which they can receive a refund on defective merchandise. Analysts briefed on the Priceline service said such consumer protections will be crucial if the site is to catch on with users, but they predict the site will face stiff competition from the existing Internet auction houses.

Priceline plans to make money on the service by charging sellers a fee of around $1 to list an item on Perfect YardSale. Sellers will also pay a $3 to $5 fee for every item they successfully sell on the site, while buyers will pay about $1 for every item they purchase. Priceline is forming Perfect YardSale as a separate company that is expected to bring in additional outside investors. The company took a similar approach to launching WebHouse Club, a name-your-price grocery shopping service.

It will be tough, however, for Priceline to attract enough buyers and sellers to Perfect YardSale to make it a viable marketplace. To jump-start the service, Priceline is negotiating with a major rock star to hold a concert to which Perfect YardSale buyers and sellers will receive free tickets, according to people familiar with the matter.

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