These "reverse shopping sites," which debuted this summer, enable cyber shoppers to tell vendors exactly what they want and how much they're willing to pay for it.
Many of these new shopping sites, which are not yet as popular as online auctioneers eBay and Priceline, have been pegged as reverse auctions, Dutch auctions or volume discounters. The new sites are actually none of the above but combine traits of all three.
By now, the reverse auction is familiar to most serious cyber shoppers: Prices go down as the bidding goes forward. The Dutch auction, a variation of the reverse auction, has its roots in the flower markets of Holland. As prices descend, buyers bid on part or all of a lot of multiple items, such as tulips or car radios. The auction continues until all the goods are sold or a previously established minimum price, set by the seller, is reached.
Volume discounting, another way to attract buyers, follows the basic discount model: buy more, pay less. For example, why buy one pair of socks for $5 when you can get three for $10? Two online volume discounters, Mercata and Accompany, use the volume discount principle to offer group buying online.
"Reverse shopping" sites operate on an even simpler shopping model. The least complex, such as Respond.com and Mygeek.com, let customers fill out a form to request a desired product. Customers wait for a specified amount of time for a response by e-mail from prospective sellers. Once the response is received, the buyer chooses which seller to buy from, if at all.
One site, NexTag.com, adds an auction element to the mix to create a more sophisticated shopping model. At NexTag.com, buyers negotiate in "real time," not simply by e-mail. Savvy consumers can also join together and encourage vendors to offer volume discounts.
All of these new "reverse shopping" services are free to buyers, but sellers pay a commission and/or a listing fee. In addition, the consumer controls what information the seller gets and when. The identity of the buyer remains unknown until the buyer initiates the transaction.
Service with a cyber smile
Representatives at both Respond.com and Mygeek.com say the allure of reverse shopping is not necessarily price or inventory but the added "human element" these sites bring to the Web. Unlike most e-commerce sites, consumers at Respond.com interact with live human sellers through e-mail conversations. Respond.com's CEO, Will Clemens, is banking on the notion that at times, online customers, particularly Web newbies, want that "personal touch."
Respond.com, which launched in July, has already enlisted 6,000 sellers and offers goods in 17 categories and thousands of subcategories, everything from rolling suitcases to surfboards to antique maps. Clemens also boasts a success rate of about five responses to each customer request. He hopes his shopping model will eventually outpace the well-known online auction house eBay, which he considers "revolutionary."
Searching for its own revolutionary e-commerce tool, Respond.com last month started a referral program whereby sellers are rewarded for "forwarding leads they can't fill," Clemens said. In the first week, about 50 vendors signed up and will start accumulating points that currently can be redeemed for traveler's checks.
One of Respond.com's competitors, Mygeek.com, is not only an e-mail shopping service site but a cool place to shop," says marketing chief Mario Diaz, formerly a brand manager at Apple for 10 years.
Mygeek chief Chad Little says the inspiration for the company's name stemmed from the stereotypically endearing qualities of geeks. "A geek is someone that you can trust and knows the answers," he says.
Little also believes the "human element" will drive the cyber market. In the world of e-traders and Web surfers, he says, "time is worth more than money." When shopping for a digital camera, for example, Little says he'd rather "pay $20 bucks more and go with someone who offers the best service." His site lists 500 product categories and has 500 "relationships" with merchants (which means fewer than 500 are on board.)
Sellers are smiling
Todd Moutafian, founder of LiveToPlay.com, a sporting goods site, signed up as a seller with Respond.com a few months ago and sees the site as a "reactive vs. proactive" way to reach consumers. Compared with Web window shoppers, "these people are ready to buy, know what they want and just need some help finding it," he says. In two months, he has attracted 400 potential new customers. Reverse shopping sites are often free to sellers for a trial period, but even the low monthly fees that some sites charge - Respond.com charges $4.95 per month, for example - is far less expensive than commercial advertising, Moutafian says.
Chad Manz, a senior account executive at Insight Direct USA, a reseller of computer products based in Tempe, Ariz., first used Respond.com as a buyer and then quickly became a seller. Finding a front bumper for his truck, microbrews from Wisconsin and an out-of-production Lego set convinced him to sign up.
Of course, reverse shopping sites just can't deliver on every product. I went to Respond.com and Mygeek.com and asked for two products - a 1950s Kodak Instamatic movie projector for 8 mm and Super 8 mm film and Power Gel, a styling gel that I dab on my hair before corporate interviews and television appearances. Respond.com tracked down the manufacturer of the gel, which I contacted by e-mail, and who steered me to one store in Manhattan that sells it. Mygeek.com had no response to the gel request.
Neither site led me to the Kodak projector, but three merchants at Respond.com had some information about the product.
To increase a customer's odds of landing desired goods, Mygeek.com just unveiled what Chad Little calls its "secret sauce" - plans to have a group of shopping experts available online who know the dirt on a category of goods, just like Avon or Tupperware salespeople, he says.
The founders of NexTag.com are not concerned with the "human element" of reverse shopping but with what they consider the most efficient business model: applying stock market principles to online buying. The company's founders have strong business backgrounds, including such credentials as Stanford MBAs and Wall Street experience, says Rafeal Ortiz, vice president of marketing.
At NexTag.com, information drives real-time buying, Ortiz says. Each product for sale includes a sales and price history section that resembles the stats used for tracking stocks. Consumers can judge for themselves whether the "product holds its value," Ortiz says, and then negotiate with multiple sellers.
Currently the site has a dozen vendors - including Egghead and PC Mall - offering more than 100,000 computer hardware and software products. Launched in August, the company plans to expand from tech-only products before the end of the year but will not yet disclose its new product categories.
As a buyer, I had a mixed results at NexTag.com. Even with my clunky 56k modem, NexTag was fast but it couldn't deliver all the goods. I could not find a Konica point-and-shoot camera or the 1950s Kodak movie projector I was searching for. Another search for an Apple iMac resulted in about 100 hits, but only five pointed to the computer itself. Most led to accessories. And the five were really only one company offering the iMac in its five snappy flavors - lime, blueberry, grape, tangerine and strawberry. The unit was selling at a price significantly higher than that offered at my local computer store and currently was not in stock.
So far, these reverse shopping Web sites have not risen to the level of cocktail-party conversation but are known in the e-tailing circuit. How fast consumers take to reverse shopping should become relatively clear quite soon with the holiday season only a few months away.