Dylan Schlosberg might be only 26 years old, but he has plans to revolutionise online shopping. He wants to make the consumer king.
Convenience is supposed to be one of the great attractions of net shopping. You can buy when you want, at a good price, with the minimum of hassle, or so we are told. In practice, you often waste time struggling with slow net connections and badly designed sites. Consumers have yet to be freed from high prices and tedious procedures.
Schlosberg thinks his site, Ybag, might change all that. Launched only last week, it aims to let you sit back while retailers come to you. Finally, he claims, the customer is king: power has finally shifted from sellers to buyers.
Inspiration for the site came last summer, when Schlosberg found himself perplexed by the frustrating nature of much net shopping.
His concept is simple. Users register and describe a particular item they want - like a TV, a computer or even a car. The requests are passed on to suppliers, and they send details of the deal they can offer to the user, who can check in at their leisure to see what has turned up. If something appeals, they get in touch with the seller. They don't need to buy via the net.
Schlosberg expects many of the sales Ybag enables to take place on the telephone. "The idea is to offer a quicker, more user friendly, more personal shopping experience on the net," he says. "It's very much what's happening in America at the moment." Indeed, shortly after Schlosberg came up with the idea, several similar sites launched in the US the best-known being Respond.com and Buyers Edge.
In fact, sites like Ybag and Respond.com are just one example of the new kinds of retail ideas being tried online. So far net shopping has focused mainly on giving users access to databases of products, all at fixed prices. At its most basic, it is catalogue shopping with a few multimedia knobs on. Though it can be very convenient, online the consumer still does a lot of the work, such as searching databases and keying in payment information, previously done by the seller.
But these new net retailers plan to take advantage of the net's great strength: its ability to allow users to swap information. The retailers hope not simply to shift product but to shift power as well: to build new kinds of relationships between buyers and sellers, relationships in which the buyer sets the pace and could even affect prices in real time.
New sites have sprung up, like Priceline - where buyers name the price they want to pay for travel tickets, hotel rooms, cars and even groceries and sellers then compete to pick up the proposed deal. There is also the aggregate buying site Let's Buy It, where buyers can link up to force down prices.
According to co-founder John Palmer, the net has the ability to put the consumer in the driver's seat. "We are consumer-to-business as distinct to business-to-consumer. That means that the consumer tries to direct proceedings. That's not going to happen in the real world of bricks and mortar - there you are told what products you can have and how much it's going to cost."
The pitch of Let's Buy It is very seductive: buyers can either join in with ongoing sales of products, or suggest a thing they want to buy; the site will then try to source something suitable. The more people who sign up to a particular sale, the more the price goes down, so there is an incentive for buyers to tell friends about the site and so build its traffic.
"Compare it to an auction site where the price is always being bid up and there's only one winner," says Palmer. "At our site, the more people come together, the more the price goes down and everyone's a winner. If you like the idea you want to tell everybody about it because it's going to help you achieve a better price."
Then again, do you want all your friends to have the same TV set as you? Palmer says this doesn't seem to be an issue at all. He also rejects the idea that the site is a fad. People enjoy the buying process, he says. They like coming back to see if the price has gone down.
But some of the sites that promise consumer empowerment do involve an element of risk. Though the US site Priceline.com does let consumers name their price, well over 80% of the deals are never done because the company cannot find a willing supplier.
If a supplier comes up with a deal at the right price, the consumer has to take it. But the deal may not be quite what the customer wanted - Priceline may have to make a couple of changes on route. So Priceline customers get power but they have to be flexible.
That said, when it moves into a product sector, Priceline often subsidises deals, so that customers do get what they want and have a good experience. It's good for building traffic, but it's one reason why the site has yet to make a profit. It seems likely that Priceline will move here shortly, perhaps in conjunction with Lastminute.com (the Lastminute network has registered the priceline.co.uk name).
Now that it has floated, Lastminute.com will at least have the deep pockets needed to get this kind of reverse auction model off the ground. In the meantime, Ybag's Schlosberg suggests that his site is one of the UK's first reverse auction sites, though he doesn't want to trumpet the fact too loudly, for fear of confusing consumers.
"They're only just getting to grips with online auctions. But the basic idea is that rather than having one item and a number of buyers, you have one buyer and a number of sellers."
But US e-commerce pundit and author Evan T Schwartz says Ybag "sounds more like a lead-generation service," referring to services which drum up interest in products before tipping off vendors.
"Autobytel pioneered this tactic in the US for car buying," he says. "This approach has caught on so much that the market is now moving into more sophisticated online car buying choices. One example is Carsdirect.com, which promises to let you build the car and name your own price. The big car makers all have projects underway to do something similar."
Ybag plans to make most of its money from the suppliers - it claims to have signed up around 900 so far. After an initial free trial, they will pay to sign up to the service, and each time a consumer gets in touch following one of their emails they will pay a referral fee.
The attraction for buyers is obvious. They don't have to put much effort in and they are not tied to picking up the offers that are sent to them. And, though Ybag does not sell itself on price, Schlosberg says that the site does turn up some surprisingly good deals. It's certainly less trouble to use than many of the existing shopping bots (see panel), which still promise more than they actually deliver. But clearly, if Ybag and the other consumer empowerment sites are to succeed, they need to build relationships and add real value to them. They also need to sign up a significant number of suppliers.
US pundits, who have lived for a couple of years with sites that claim to empower the consumer, advise UK buyers to be wary, as the US sites have disappointed, failing to sell even for sensible offers.
But the arrival of sites like Ybag and Let's Buy It is a clear sign that online retail is maturing in the UK. As simple retail sectors get crowded, smarter companies are now focusing on relationship building, on the exchange of information as well as money. This can obviously benefit the consumer.
But, as Schwartz suggests, sellers wouldn't get involved if they weren't getting something out of it too. "The notion that all the power is shifting to consumer is way overblown," he says. "The last I heard, Priceline was rejecting seven out of eight bids for airline tickets. So you can name all the prices that you want, but chances are you're not going to get it. Priceline also funnels all the demand data to the airlines, so they get a better sense of the so-called 'demand curves' on every major route in the world. So what we have here is not really a power shift but rather a balance of power, in which consumers and businesses are trying to use information to win a small pricing edge."
Buyer-driven net retail sites
Aggregate buying sites
Bulk-buying on the net. Buyers club together to get a better deal. The more people who sign up to a sale, the lower the price goes. Let's buyit is trying the idea out here. Advantages: It's fun, you can get your friends involved and you usually end up with something you want.
Disadvantages: All your friends have the same stuff as you, the price may not go as low as you hope, the novelty may wear off.
The reverse auction
In theory, sellers compete for your business, instead of buyers competing for something offered by a seller. In practice, the idea is elastic and confusing. It is most associated with the US site Priceline where you can name your price for flights, rooms, cars and even groceries and then the site tries to find a seller who can meet your price.
Advantages: Great deals, if you know what a good price is in the first place.
Disadvantages: You usually get nothing,with most prices not picked up by sellers, even if they are sensible. You need to be flexible if you're buying travel tickets. And do you really want to haggle for packets of crisps?
Lead generation services
Here, you tell a site what you're after, the data is passed on to sellers who then get in touch, quoting a price. Pioneered by sites like Autobytel,which in theory help buyers get better prices out of car dealers. It's now been extended to apply across a range of product categories by sites like Ybag and Respond.comin the United States.
Advantages: Not much effort and you don't have to say exactly what you want.
Disadvantages: If the site in the middle doesn't do a good job, your mailbox will fill up with junk mail.
The shopping bot
A dedicated search engine you can use to find the best price on a product. Over here the best known include Shopsmart www.shopsmart.com and Valuemad.
Advantages: You can find some great deals.
Disadvantages: Shopping bots don't search all the sites on the web, so you don't know if you're getting the best price, and they usually only search for specific items - you can't look for "a printer with a scanner".
Where to shop
Ybag
www.ybag.com
Respond.com
www.respond.com
Let's Buy It
www.letsbuyit.com
Buyers Edge
www.buyersedge.com
Priceline
www.priceline.com
