Tuesday, May 28, 2013
Helping Consumers Name Their Own Price For Products, With Greentoe
Story by Benjamin F. Kuo
In real life, you can just about bargain a price for anything you want to buy--a car, a house, even that new stereo from your local electronics store. But, online, that's not the case. To bring that ability to name your own price on products, Los Angeles-based Greentoe (www.greentoe.com) recently launched, allowing consumers to name their own price to retailers of everything from electronics to baby products. We caught up with CEO and Co-founder Joe Marrapodi to hear more.
What is Greentoe?
Joe Marrapodi: GreenToe is a name your own price marketplace for products. It's very similar to the Priceline.com model, where you name your price for a flight or hotel. However, rather than travel services, it's for products. Our current categories are electronics, photo equipment, cameras, lenses, appliances, music equipment, and baby products.
The way it works, is you go to our site, find the product through either search, a dropdown menu, or filters, and you can find the products you want. You put your price into our gauge, which has the colors red, yellow, and green to help guide consumers in making the most appropriate offers. Those are based on the numbers we have from retailers. Those retailers give us information about what kind of offers they would or wouldn't accept. That gauge helps make sure the offers that consumers place are realistic, for example, not offering $200 for a $2000 Canon camera. Once you put your offer in, you enter your credit card, and you commit to the sale. If we match your offer, a retailer then ships them the product.
How does the matching process work?
Joe Marrapodi: All of that process is automated. Your offer goes into our system, and our retailers have visibility on that offer. There are various ways that they can work with us--they can automate accepting any offers for a product that metes a certain price, or some retailers will manually check those offers. Once that offer is accepted, that make the sale, and the retailer handles the transaction just as if it happened on their own website. We take a commission on the sale, and everybody is happy. The customer gets a great price, and the retailer gets both a new customer and a new sale.
Retailers are already doing this all day long in their stores. You can walk into any audio/video store, including Best Buy or Home Depot, and negotiate with the sales or customer service representative. This has been happening in stores and around the world for thousands of years. My dream is, why not online? That's why we wanted to make a service which enables consumers to name their own price.
What's the story behind the company?
Joe Marrapodi: I have been in the Internet business for sixteen years. I started by career at Yahoo, and also worked at Intermix. I owned and ran my own search marketing company, and started and ran a digital consulting company. I've actually been tinkering with the name your own price idea for a long time. Way back in early 2000, I invested in Priceline, because I always liked that model and have been a fan of it. I had been talking to a friend, Todd Zander, about this for some time, and he happened to have another friend, Andrew Kurland, who was already tinkering around with a similar idea, creating an RFP process for ad agencies. Todd introduced me to Andrew, and Andrew is now our CTO. He's the tech wizard behind this, and managed the databases and infrastructure and all the different types of tools we use to manage our consumer and product data. We basically came up with the model of having the consumer having to commit to the sale, which allowed us to scale this. We figured out that if it's just having a consumer interested, there's too much back and forth between the retailer and the consumer. Instead, you have to use that old priceline model, and commit to the sale with your credit card. Andrew and I raised $150,000 from friends and family, and we got the business built, and got the retailers on board, and had a great holiday season. Back in early January and February, we began to work on additional features on the site, and also started talking to investors. We were introduced to Parker Thompson at 500Startups, and after a bunch of phone calls, he invested in the company. We're now raising more money, and think we'll be able to fast track through a Series A.
My vision for the company, is I believe that shopping is going to change, and consumers are going to have more buying power because they can name the price they want to pay. We're now in five categories, and we're looking into computers and video games next. But, I see a future for us in many verticals, so that essentially, someday you can buy anything you want with the same, name-your-own price concept.
What is it about your service that retailers like?
Joe Marrapodi: Our service only works with authorized retailers, the medium and larger sized businesses. We don't work with that one person who happens to have access to cameras or inventory. You have to be an authorized and vetted dealer, which we vet through the actual manufacturer. That's a big part of the business. There are lots of shady characters online selling things they shouldn't be. The different, from our standpoint, is that we are only dealing with authorized retailers. For dealers, there's no risk to them. It's all commission based. Retailers only pay us if the sale happens. Plus, they also get to acquire a new customer. We share all of the customer information with the retailer, and they handle the shipping and communications with the customer, updating them when products are shipped, and so on. So there are two value propositions for the retailer. For a retailer, we're both increasing their sales and helping them acquire new customers. It's almost a lead generation process. They might even decide to break even on a sale, just to acquire that new customer. The other thing is, it's a much faster process, unlike a site like eBay. Aside from Buy It Now on eBay, the eBay bidding model takes time. You have all the bidding, going back and forth, and competition which drives the price up. With us, you just name the price you want to pay, and we do the work for you by approaching our network of retailers.
What's the biggest challenge for you?
Joe Marrapodi: Awareness, and getting consumers to sign up for the site and buy products, and getting the word out. When we have a consumer sign up for the site, there's a very high conversion rate. However, we have a brand new concept, and are leading the way, which means that we have to educate the consumer about how and what's happening. People have short attention spans, and so you have to be able to relate to a consumer exactly and explain what you're doing in a very short time, in order to grab their attention.
One last question, kind of off the wall -- we noticed one of your big categories is baby products. Where did that come from?
Joe Marrapodi: I looked at all the products and demographics of people who buy those products, and saw that we needed to round off our target demographic with female-based products. The reason for that is in that moms talk more about their experiences than any other demographic, and they're always sharing ideas and products. We felt that we needed to take advantage of the super strong word of mouth that goes with the mom community. That's a perfect fit for baby products.