eBay has made a mint using the time-honored auction format that forces prices up, and OutletZoo.com hopes another gimmick, scheduled price drops for consumers, will also make it an e-commerce darling.
As part of its Automatic Price Drop System, OutletZoo.com posts a limited number of excess or closeout products offered at marked-down prices that are reduced by a set percentage on a given date each week. This allows consumers to wait for their target price for computers in the site’s PCZoo or software in the SoftwareZoo.
The site went live in July generating 550 unique visitors daily in its first two weeks. By the time of its official launch last week, it drew 4,000 visitors a day without the aid of any promotion or advertising.
Although there are other outlet-type providers on the Web, the price-drop gimmick may serve as a significant draw for the large online bargain hunting community.
“The majority of consumers that Jupiter surveyed said price is a primary factor for increasing shopping activity [on the Web],” said Michael May, digital commerce analyst at Jupiter Communications, New York. “Any value-based pricing model that can cut through the clutter and demonstrate a real savings is an attractive one for customers.”
OutletZoo.com said it was averaging $22,000 a day in gross merchandise sales at press time, cashing in at roughly $550 per average order.
To draw new buyers and keep the old ones coming back, the crux of the company’s marketing plan is its inhouse e-mail club, which currently has 27,000 members. Members can opt to receive special listings or to be notified when their desired merchandise product falls to their target price.
Despite the site’s success using e-mail, CEO Ed Samp said he is more comfortable with traditional direct mail campaigns “I’m skeptical about e-mail marketing,” said Samp. “We want to make a splash in the e-commerce market, but we don’t want to spam.”
Samp has signed on with Edith Roman Associates and Postmasterdirect.com to test opt-in lists of up to 20,000 addresses online, while also testing direct marketing lists of up to 15,000 names offline.
To further enhance the product’s reach, there will be print ads and a sweepstakes offering a trip for four to the San Diego or Washington, D.C. National Zoo that will run until Oct. 21.
OutletZoo.com, Cambridge, MA, generates its revenue using a model similar to eBay, earning $1 per line item and 3 percent commission per item sold. The company says it’s well on its way to its projected goal of $7 million in gross sales for its first year. New zoos will generally open monthly, including the ToyZoo, ElectronicsZoo and OfficeZoo. “We’re targeting sellers that have excess inventory and want to sell through a separate marketplace,” said Samp. “Maybe they have a site and don’t want to cannibalize sales of newer items or maybe they just want more eyeballs on their older products.”
Many suppliers, of late, have been looking to the Internet for such a service, said May. “Increasingly merchants turn to the Web to unload off-price merchandise,” he said.
However, despite its efforts, OutletZoo.com, isn’t likely cut into the eBay cash cow, according to May. “I don’t see them appealing to eBay’s target market. eBay sells unique merchandise; the outlet sites sell end-of-the-season, closeout products. I don’t see them poaching any of their market share.”