AOL to Enter Fixed-Price Liquidation Market

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NEW YORK -- America Online Inc. in early spring will launch AOL Marketplace as an online liquidation channel for marketers and retailers looking to offload inventory.


The service will replace a pilot program called Deal of the Day that AOL has run for the past year. It is not to be confused for an auction service, a senior AOL executive said yesterday at the National Retail Federation's 92nd Annual Convention & Expo in New York.


"We don't want to compete with eBay -- they're a great partner," said Kelly Kemmerer, executive director of home and house shopping at AOL. "EBay is synonymous with auctions."


The initiative seeks support from companies already using Deal of the Day to offload excess inventory. AOL is talking to users Dell Computer Corp., QVC, SmartBargains.com, ShopNBC and Continental Airlines. AOL currently has relationships with 250 retailers for its shopping channel.


For the marketplace offering, AOL is looking at all types of models within fixed-price. This includes listings and actually buying merchandise in certain cases and then selling directly.


As expected, AOL will use its media power to push sales to promote the service.


"AOL's big into click-through rates and conversion rates," Kemmerer said, adding that the Internet service provider's 50 million page views daily are a major advantage.


She sees the greatest opportunity for manufacturers, integrated retailers and mass merchants to place inventory on AOL Marketplace.


Marketers and retailers planning to sell on AOL Marketplace should be aware of certain costs associated with disposing inventory via traditional bidding auctions and the fixed-price variant. Mainly, manufacturers should be able to fulfill products on a one-off basis.


Based on its experience with Deal of the Day, AOL is certain it will fill a need with the new fixed-price liquidation outlet.


A comparison of that service with AOL's regular shopping channel dug out interesting facts. Average order size on Deal of the Day was 50 percent higher related to the regular shopping channel. The number of items in shopping cart and total dollar sales also were higher.


"The [customer] acquisition costs tend to be a bit lower," Kemmerer said.


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