oBaz has been running in beta for a while, but today it officially unveils its services to the larger world. Founder Brian Ficho spoke to Fast Company to highlight exactly how back-to-front oBaz is compared to some of its peers, which are motivated by marketing and advertising–essentially selling loss-leading deals in the hope of earning instant income from lower margins than may typically have been won, and hoping for ongoing business. That’s not for oBaz, which is “100% buyer-driven,” says Ficho.
At the end of the process, oBaz’s users get a sweet deal, the “business will get a customer, and we don’t charge the business anything,” Ficho notes. “We just say ‘here’s this group of like-minded people who all want to buy a product that you have, and while you do sales all the time here’s a chance to reach them at a point where they’re ready to buy’.” Ficho summarized it by saying while other deals sites capture marketing, oBaz “captures intent” in the same way Google does–when it garners data on what people are looking for.
The business model is centered on a social grouping idea: On the site you join or form a group asking for a particular item, and other interested parties join up, too–the group expires after seven days so the deals have a definite timeline. When it gets to a useful size, oBaz’s team kicks into action: “We haggle and we call a bunch of different merchants to ensure we have the best possible offer” and when they reach a deal they think is as good as they can get, they secure a unique money-off code from the firm. The deal is then shared with the group, and members of the group who think it’s a fair deal that meets their needs hand over a fee to oBaz to buy the code–which is where oBaz’s revenues come from. There’s no obligation to buy at this last stage, although there’s some incentive because the coupon expires within 24 hours.
The hard part of all this from oBaz’s point of view is to achieve the deals. Early efforts during the beta phase saw dozens of calls over several days to a hot-label shoe firm’s marketing department in an attempt to organize a deal, only to fall flat–the deal, for 120 people, was finally achieved by sealing a 20% off deal with an online shoe store that was willing to discount the shoes because it was a private sale. Another deal involved $300 off a $900 Nikon camera kit, but Ficho found that doing a deal on a Nikon camera alone was hard, because the stores make slim margins and were reluctant to discount. Instead they found a retailer with a kit containing a camera, lenses, and other equipment that normally retailed for $900, and having persuaded the retailer to sell the kit at a $300 discount, “we then sold that promo code to the group for $20.”
It’s all about tenaciousness. “We track down people on LinkedIn, we do whatever it takes. This is stuff most people don’t have the time for, and it’s too hard to do as an individual, so we leverage the group to get a good deal,” says Ficho. It’s all about the power of the network–“the bigger a community is, the bigger the benefit”–crowdsourcing for deals, with negotiators at the core who’s expertise is only going to get better. And according to oBaz’s press release the groups have, in beta, been getting creative about expanding their numbers in order to secure a better deal–they’ve been inviting other members via Facebook, Twitter, and email.
The company just secured seed funding from Lightbank, and calls itself the “first web-based community to use crowdsourcing and game mechanics to build group buying power.” Will it work, and rival the popularity of sites like Groupon and LivingSocial? There’s certainly a spark of intrigue here: One of the downsides of Groupon is that though it’s a little addictive, you simply have to wait to see what offers pop up (in my case, local deals tend to be centered on skin care and beauty products, and there’s only so many manicures a person can get). This is not a problem for oBaz, and it’s got the same excitement factor, and probably the same addictiveness, because you can sign up in as many groups as you want, with no pressure to actually buy. From the vendor’s perspective there’s also much less exposure to risk: Since the deal size is defined during the haggling process a business can decide exaclty how much cash it wants to put on the table–unlike Groupon’s deals which have, in the past, run away and caused problems.
[Image: Flickr user dynamosquito]