Gofish.com Inc. will use price as bait to ramp up transaction volume on its neutral exchange targeting the 3,000 buyers and sellers in the estimated $80 billion seafood industry in the United States.
Based on member feedback, Gofish.com, Portland, ME, has jettisoned a flat-fee structure in favor of a three-tiered slab. These changes are meant to induce the estimated 800 users of the site at www.gofish.com to go beyond shopping and actually buy seafood online.
“We've got 25 percent-plus penetration into the potential user universe and we, by no means, have the same share of volume of transactions,” said Scott Allmendinger, chief communications officer at Gofish. “So, the challenge is to penetrate the transaction flow with the same success that we've penetrated the user universe base.”
Allmendinger would not disclose the gap on the transaction side. Nor would he disclose the sales executed via Gofish, which offers daily market news, a logistics network and support for transactions but does not set prices, take possession of product or fix terms of the deal.
Gofish's boldest move so far is to drop the flat 1.7 percent fee it charges for transactions made through its exchange. Instead, it has unbundled prices into three different ranges, with fees rising for varying levels of value-adds.
For the basic product, Gofish will charge 0.75 percent on transactions. Users also get guaranteed payment in case a buyer defaults.
The second tier charges users 1 percent of the transaction volume. It offers the benefits of the basic product, plus complete receivables management for the user.
The most attractive offering is the third tier. Gofish will finance the sellers on its exchange for a transaction fee that ranges from 1 percent to 1.7 percent.
“[In] this scenario, we will actually send to the seller anywhere from 1 percent to 80 percent of the receivable within 48 hours of the transaction being completed, in addition to the collection guarantee and collection services,” Allmendinger said.
It is this financing feature, built into Gofish's plans, that helped Internet holding company CMGI's @Ventures division decide to invest $12 million in the seafood exchange.
This mechanism will get cash in the pockets of sellers a lot sooner than in the past, according to Marc Poirier, general partner at CMGI @Ventures, Andover, MA.
“Through this funding program that Gofish has set up, they can get a larger portion of the selling price to the seller in two days instead of 40 to 45 [days],” said Poirier.
“That fundamentally changes the way the industry has operated in the past,” he said. “It increases the velocity of transactions and with that extra cash flow, that seller can engage in other transactions. That's very different from exchanges out there.”
Buyers on the Gofish exchange typically are procurement specialists for large supermarket chains, restaurant suppliers, importers or seafood processing companies. These companies mostly make high-volume purchases of frozen — not fresh — seafood.
Users of Gofish include Wal-Mart Stores Inc., Fishery Products International, Mid-Pacific Seafood, Shells Seafood Restaurants and a sprinkling of Ecuadorian and Thai companies. This group includes buyers and sellers, and those that do both.
Gofish does not charge buyers a transaction or subscriber fee, though it will scrutinize them for creditworthiness as a preventative measure to avoid price manipulations. Buyers also get a rebate up to 0.3 percent on all paid transactions.
But it will levy fees on sellers or marketers that both buy and sell. The membership fees, different from cuts on transaction, range from $400 to $8,000 a year, depending on the services.
A key task for Gofish is to get as many buyers on the site hooked with vendors they already do business with via telephone or fax. The site currently attracts 2,000 page views per day alone in the exchange section.
Competitors of Gofish include GlobalFoodExchange and WorldCatch, which are both vying for the same market.
Gofish will proceed to the next level once the new pricing structure gets the desired results and brings the transaction volume closer to the 25 percent user penetration, Allmendinger said.
“Then our marketing shift will be, OK, because we've got the share gap closing between transaction volume and user volume, let's go out and get some more users, let's go from 25 percent to 50 percent penetration,” he said. “And then we'll go back and say, 'OK, 50 percent penetration — let's go back and close the gap on the transaction side.' “