Jerry Kaplan, 45, was something of a high-tech legend long before he started Onsale Inc., the electronic auction service. In the early 1990s, as cofounder and chairman of GO Corporation, an innovator in pen-based computing, Kaplan presided over an entrepreneurial flameout that cost investors $75 million — a story told masterfully in his book, “Startup: A Silicon Valley Adventure” (Houghton Mifflin, 1995).
Kaplan’s new venture, http://www.onsale.com , may be the subject of another book — with a happier ending. More than a million Internet users have visited the site, which held its first auction just two years ago. It’s now selling products at a rate of $1 million per week. It’s also generating profits, a claim few Web companies can make.
Most important, Net pundits say, Onsale’s auctions point to a new model of retailing. Kaplan spoke with Fast Company about the future of buying and selling.
Electronic retailing is in its infancy. Who’s lining up to shop at virtual stores like Onsale?
Our customers are primarily men interested in computers and electronics. That’s a big change from traditional shoppers. Something like 85% of all retail goods are sold to women. In fact, half of all products purchased for men are bought by women.
We’ve developed a form of retailing that appeals to the male psyche. There’s a big gender difference in shopping styles: women are gatherers, men are hunters. Women are comfortable browsing, buying things they happen to run across at the mall. Men see shopping as a surgical attack — hit the mall, buy what you need, leave.
Do the demographics of who’s buying on the Net shape how you sell?
The Onsale experience, like all good retailing, is an emotional experience. Our customers love the thrill of the chase. When someone wins an auction, you can almost hear them — “Yes, I got it!” You don’t usually get an emotional charge when you buy a computer. Our auctions become a form of entertainment.
Will Web services like Onsale change how people shop?
The question behind your question is: What’s it going to be like to buy something 25 years from now? The answer is: very different from what it’s like today. We’re just a first step.
Retailing operates on a myth — that there’s an infinite supply of any product at a fixed price. You walk into a store, see a price for something, and think you can buy as much of it as you want at that price. If the store runs out, you just assume someone screwed up.
That’s not how efficient markets work. It’s certainly not how the New York Stock Exchange works. Increasingly, retail markets are going to resemble the stock market. You won’t ask, “What’s the price?” You’ll ask, “What’s the price now? What’s the price going to be two minutes from now? How much quantity will be available at this price? Is anyone willing to pay slightly more than I am?”
But who has time for those negotiations?
I think we’ll see the formation of electronic purchasing advocates. You register with your advocate — “This is how much I want to spend” — and the advocate negotiates on your behalf. There’s just this constant stock-marketlike process taking place. In that sense you begin to look at buying goods the same way you look at investing in mutual funds. You’ll have an adviser who knows your priorities, your risk profile, and who works on your behalf.