Rapid-fire developments in technology mean revolutionary changes for consumers on the shopping front. Mobile-phone banking and Internet-based services such as motor-insurance purchases are already available, but convenient access to services is not the only benefit of the technological age. Consumers are actually saving money thanks to international competition on the Internet and new definitions of the shopping experience.
One of the most successful companies in the e-commerce game is relative newcomer, USbased priceline.com whose slogan "where you name the price you want to pay and save" says it all.
Priceline has pioneered an unique new type of e-commerce known as "demand-collection system" that allows customers to use the Internet to save money on a wide range of products and services while enabling sellers to generate incremental revenue.
Using a simple consumer proposition - "name your price" - priceline collects consumer demand for a particular product or service at a price set by the customer and communicates that demand directly to participating sellers or to their private databases. In other words, it's an auction. Sellers and buyers are matched up to exchange items at agreed prices.
Consumers agree to hold their offers open for a specified period of time to enable priceline.com to fulfil their offers from inventory provided by participating sellers. Once fulfilled, offers generally cannot be cancelled. By requiring consumers to be flexible with respect to brands, sellers and/or product features, priceline enables sellers to generate incremental revenue without disrupting their existing distribution channels or retail price structures.
The New York metropolitan is one of the toughest and most demanding consumer markets in the world yet. Priceline.com expects to sell 25 million items this year on the Internet in the New York metro area. Over the holiday season, members of priceline's grocery purchase area, the WebHouse Club, bought two million grocery items, more than any other online category.
Founder of the WebHouse Club, Mr Jay Walker believes "the immediate success of priceline for groceries demonstrates that people are looking to the Internet as a way to save money on a variety of goods and services".
Members name their price for more than 175 product categories representing in excess of 700 national brand choices and then get those groceries at their favourite local supermarkets. WebHouse Club members save on average $12.75 (€12.62) on a basket totalling $32 says the company.
Perhaps surprisingly, purchase over the Internet using this service does not mean goods are delivered. A recent independent survey showed that 85 per cent of WebHouse Club members would rather get their groceries at a saving at their favourite supermarket than spend full price and pay to have the groceries delivered. Even if not charged for deliveries 68 per cent of members said they prefer to shop at the supermarket if they could save $10 as opposed to having their groceries delivered for free.
The WebHouse Club is an example of the so-called "Clicks-and-mortar" business model. This is where the speed of the Internet is used in combination with the advantages of traditional retailers, namely local stores and merchandise that is immediately available. The WebHouse partners with established local grocery stores and offers consumers a new bargain: save money while shopping at their favourite local grocery store.
Financial services are one of the fastest growing areas on the Internet as consumers begin to feel the benefits of online shopping. Priceline.com also offers airline tickets, hotel rooms, new cars and trucks, home financing and groceries.
On the other side of the US, California-based Webvan has taken a different approach to retailing on the Net. Webvan is a full-service online grocer and drugstore that provides free delivery within a customer-specified 30-minute period. Prices on average are 5 per cent lower than in local grocery stores and delivery is free for orders of $50 or more. Webvan couriers are not allowed to accept any tips. The company is starting from the West Coast and working its way throughout the US. No doubt supermarket chains operating in the Republic will watch these retail grocery shopping experiments with great interest.
