| BUSINESSWEEK ONLINE : DECEMBER 13, 1999 ISSUE | ||||||||
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| BUSINESS WEEK E.BIZ -- CLICKS & MISSES
Online Shopping: Bargaining Power New services claim to do more than regular ''bots.'' How good are they? If you're like me, you're going to do a lot of shopping in the next few weeks, and if your job is a busy, nailed-to-the-desk experience like mine you'll do it online. Since online retailing began, the quest has been on to help shoppers find the best prices. First, there were shopping ''bots,'' Web sites whose software would search a bunch of other sites and tell you what each charged for the same book, CD, or whatever. Now two of the hottest startups in the country are e-commerce companies that claim to do more than the bots to boost consumers' bargaining power. But do they? One contestant is NexTag.com Inc., and the other is Mercata Inc., the new venture of Microsoft Corp. co-founder Paul G. Allen. For comparison purposes, I also looked at mySimon.com, a standard bot that has prices from almost 2,000 stores in 14 categories. NexTag takes the bots' game further: After the site searches other sites' prices, it lets you try to negotiate with different sellers. After everyone bids, you say what you're willing to pay and see if anyone budges. The answer comes from a large number of e-merchants instantly (how many depends on what you're buying). If you want, you can haggle some more. Mercata's plan is bolder still: The company thinks consumers can rule if they negotiate in groups. Mercata customers say what they'll pay for that camcorder or DVD player, then Mercata uses the group's bargaining power--based on volume--to get the product cheaply. If your bid is higher than the group rate, you pay what everyone else does. If you bid too low, you don't get the item. The shopping aids, however, turn in a mixed performance. Often, but not always, mySimon will find lower prices than a consumer with a working knowledge of Web stores. At this point, Mercata is the Brooklyn Dodgers of Web shopping--wait till next year, and it'll be a real contender. NexTag is shopping's Mike Tyson: Don't believe the hype. Right now, for most shoppers, the best advice is to do as Simon says. These conclusions emerge from my own partly real, partly hypothetical shopping expedition, designed to give the services a workout. For my wife, a leather jacket and one of those combo fax/copier/printer/scanner machines for a home office. For my parents, lawn furniture and a grill for their new deck. Because it's a big comparison-shopping item, a new DVD player. For an old boss, a No. 8 New York Knicks jersey: Latrell Sprewell's number, just to say ''I love you.'' And for an editor who once called to cancel a job interview on a day when, uh, we didn't have an appointment, a Palm IIIx. None of these sites lets me find all the items at good prices. MySimon came closest, because it had quotes for almost everything. Mercata and NexTag serve too few categories to be a one-stop shop. Shopping at Mercata meant no CDs, no jacket or jersey, no lawn furniture or office machine, and a paltry selection of grills. All of these sites are useful but none is perfect. The best price I found on the office machine came from Staples.com, which I visited myself. Mercata is by far the most exciting concept in Web shopping since priceline.com popularized its ''name your own price'' idea. Mercata's group ''PowerBuys'' are supposed to deliver low prices through the power of consumer unity. But it typically takes a few days to a week for Mercata to gather a big enough group to buy at a discount. If the item you want isn't part of a current PowerBuy, you can buy it off the rack. However, off-the-rack prices at Mercata for the items on my list were pretty easy to beat. Mercata is like a colt, still stumbling around the paddock clumsily even though you can see it's going to run like crazy someday. It needs a bigger audience to drive prices lower--a group buy for a few dozen people is one thing, but group buys for tens of thousands will be genuinely interesting. So its delivery on price is uneven. The DVD player, which lists for $450, was selling for $314 at Mercata when I checked. After the PowerBuy ended, Mercata had it for $399. Nice, but mySimon and NexTag both found it for $298. I found the Palm for $250 at Mercata during a PowerBuy, $299 through mySimon, and $253 at NexTag. Mercata also tells you too little about products to let you make expensive buys comfortably. But at mySimon, I could pick through product reviews from the review site Productopia. As it happened, the particular DVD player was a Productopia editor's pick. Both mySimon and Mercata also gave me a basic guide to DVD features. Mercata's product guides are O.K., but mySimon's are better. The big disappointment was NexTag. It came hyped as a real innovation: Pit stores against each other and watch them bid down as they learn what you're willing to pay. But it doesn't seem to work: In my test, only stores with plainly-too-high prices bother to negotiate. NexTag can deliver lots of stores' prices for a Palm or a DVD player. But just as you can see all the stores' prices, so can they. So here's what happens: You get a list of Palm prices ranging from $253 all the way up to $310. I then bid $225, looking to unleash some competitive forces. A store that had bid $306 came down to $281, but the two or three stores with the lowest prices stood pat. They wouldn't even meet me at $245. Who would make them? The bottom line: I was going to pay $253 with or without negotiation. NexTag wants to be a bot-killer, but for now it looks like just another bot. MySimon works, in part, because it doesn't raise expectations quite so high. It's an information service, and a good one. A bot needs to have access to the prices from a lot of stores in a lot of categories, and mySimon does. Even the most determined mall avoider probably won't do every smidgen of holiday shopping through a single site, but this is a good, versatile resource. The lesson in all this: Stay tuned. These services are only the beginning of a complicated shift in purchasing power. And if it works, all shoppers win. By TIMOTHY J. MULLANEY, timothy_mullaney@businessweek.com _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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