The first snow is right around the corner. You’ve already ponied up for your season pass or your mid-winter escape flight to Denver or your chunk of the cabin share you’ll be splitting with eight friends (plus the twitchy guy from ad sales). You desperately need a new snowboard, but your budget is static, so you’ll have to scan for a flash sale or discount code or go virtual dumpster diving through your email inbox cluttered with offers.
But what if you could name a reasonable price--say, 20% less than retail--and buy the snowboard of your dreams now from a willing retailer who’d just as soon sell it off at the beginning of the season as at the end? That’s the premise behind Buystand, an online marketplace for outdoor, fitness, and active apparel and gear that allows shoppers to set their preferred price and retailers to match it.
With its newly launched beta site, the Durham-based company aims to prove that a name-your-price platform can work.
“It helps people get the products that they want today instead of having to wait for them to go on some flash deal site,” says Buystand CEO Joe Davy, who founded big data analytics provider EvoApp.
Paying an agreeable price now instead of waiting for sales and deals to come along makes obvious sense for shoppers. But Buystand is banking on its appeal for retailers, as well.
“You sell more sooner, you make more money, it’s better for your bottom line and it clears your inventory faster,” Davy says of the ways retailers stand to benefit from making inventory available on his company’s platform.
Here’s how it works: Once on the site built by a team and advisory board that includes principals drawn from the retail, finance, and big data worlds, shoppers search for products from brands such as Burton, Vans, Puma, Merrell, and Salomon, among others. For items they want, shoppers can designate a price they’d be willing to pay. Buystand then trolls its inventory and either matches the shopper with a retailer willing to sell the item at that price or rejects the offer if no match is available. To prevent the inevitable attempts at gaming the system and encourage shoppers to propose realistic prices, Buystand only allows site users to make three offers on any one item within a 48-hour time period and actively monitors offers made for suspicious activity.
On the seller side, while some previous attempts to create name-your-price marketplaces have made participating retailers visible from the get-go and required them to manually monitor, accept, and reject shoppers’ offers, Buystand takes a different approach.
“[Retailers] said if they had to hire someone or take someone off another job to manage the offer flow, it’s a huge no-no…it takes too much time,” explains founder and COO Ted Kraus, a self-described serial entrepreneur who started his first e-commerce company at age 16.
Instead, Buystand automates the offer process with a backend platform that functions much like those used to trade financial products and allows retailers to set customized pricing rules around their merchandise. Just who those retailers are, though, is something only shoppers with successful price matches will discover. Individual products and their retail prices are visible to shoppers as they search and submit what they’d be willing to make offers on, but the actual store from which your new snowboard, tent, or kayak paddle will come are hidden until a match has been made. That’s by design.
“I got an email from one of those daily deal sites today that says 99% off,” Kraus says (the site in question is Clymb). “When a company does this to a brand, it completely destroys the value of the brand.”
Buystand aims to combat this and attract retailers by staying mum until its algorithm determines a match. Buystand then takes a commission on each transaction. While the model has yet to be proven, it’s at least been attractive enough to retailers so far to garner what the company says is $250 million in committed inventory and a selection of over 100,000 products. Acting as a middleman, Buystand holds no inventory of its own.
Instead of concerning itself with actual merchandise, the company is setting its sights on becoming a storehouse for the kind of big data major retailers salivate over. If more and more shoppers reveal the prices they’re willing to pay for products, there’s the potential for brands to be able to use this information to price and sell inventory faster and more efficiently.
“We took knowledge base from the financial markets, and we built a trading platform, a true ECN [Electronic Communication Network] platform, that basically, instead of functioning for securities, is functioning for consumer goods to be traded on.”
Shredders, meet traders.
[Image: Flickr user Jaanus Treilmann]