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Reverse auction site launches – NBR leaps in

UPDATE: My reverse auction on new site Pricemaker closed at 5pm, finishing its day-long run.

I got two bids for my business on the item I want to buy – a Bosch dishwasher, chosen on the basis that it featured on the websites of both of Pricemaker's only two retail partners at this point: Magnus Benrow and 100%.

The whiteware model I was after* turned out to be no longer available.

One retailer offered a stainless steel step-up model for $1597, including free delivery.

The other quoted $1580, including free delivery.

(Both retailers are anonymous. If I choose an offer by the 10am tomorrow deadline, we then exchange contact details.)

They were both good prices, but not killer. Looking around (as I definitely have to do after only two quotes), Harvey Norman has the same model for $1659 with a $60 delivery charge – though I dare say they would talk turkey if presented with the offers above.

So: I got a glimpse of Pricemaker's potential to save time, and money. 

But also of its limitations until more retail chains come onboard ... and I'm wondering if some will be that motivated to support a service that will naturally drive down prices.

Maybe they all will, once some kind of critical mass of sellers joins up.

* Sorry retailers, the auction was for journalistic purposes only and I'll be choosing neither of you.

ckeall@nbr.co.nz


There's been a lot of action in e-tail lately.

The likes of Wheedle, Geta and listselltrade are going for a full frontal assault on Trade Me.

And last week, we saw a fresh twist: a Kiwi-authored Facebook app called Buddy Bid that lets you target auction to your social media followers.

Now there's another crowd with a new(ish) angle.

Pricemaker is offering reserse auctions.

You list the item you want to buy, then retailers compete to offer you the lowest price.

It's a neat idea.

At the moment, Pricemaker suffers from the fact it has only two retailers signed up: Magnus Benrow and 100% Electrical.

So the discerning buyer is still going to have to work the phones and websites, or trudge around town to see how prices from Harvey Norman, Bond&Bond, JB Hi-Fi and so forth compare. 

Still, you've got to start somewhere.

Pricemaker is run by Erin Walshe, who seems like a smart guy (he's held senior FX trading roles at ANZ and Westpac). 

So hopefully he's going to get a bunch more retailers on board to make this a useful service. A third large retailer is in the wings, but unconfirmed, NBR ONLINE is told.

In the meantime, I've listed an auction, for a dishwasher, so I'll let you know how that goes (it's scheduled to end at 5pm today; I have to make a choice by 10am tomorrow.)

There are options to request details on delivery and finance pricing. Mr Walshe says that's the sort of info that will be included in a "sweetner" box when each retailer submits its bid.

It wasn't as easy as you might think to set up a bidding war between Magnus and 100%, as they have some brands in common but not many models.

Walshe told NBR retailers can offer a quote for any product, so if they don't have your desired product in stock they might offer a price on a comparable model. 

Anyhow, check back later today or tomorrow to see how it went.

On Pricemaker, you can only see your own auctions, or what the bidding is, which is a pity. It would be good to see which areas are competitive, even if auctions are only displayed as anonymous (I'm auction No 45, so there's obviously been a smattering of first-day interest).

Retailers can see what each other are bidding for your business. The idea is it'll incentivise tem to get into a price war.

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Comments and questions
12

Love it! Good luck to them, hope it is wildly successful.

Price wars are not what we want at all. The idea behind the retailer being able to offer a "sweetener" is to take the focus off price. The lowest price may, in fact, not be the best deal.

I believe that Yahoo! has a site that offers people the chance to look at comparative prices of retailers offering similar products....

Get the banks on board so they can compete for my mortgage

www.fundit.co.nz is exactly this - works well.

Just goto Yellow Shed. It's always the cheapest. I stopped going elsewhere for price comparisons as it wasn't worthwhile.

The concept has been going for about 15 years in the business-to-business world, which is where we operate a reverse auction site. For example, we auctioned over £150m of goods and services in October alone, so it clearly makes a lot of sense for businesses to invest a bit of time to participate in these auctions.

The challenge in consumer-to-business reverse auction sites like this is that there is little motivation for businesses to invest in bidding. It drives their cost of sales up whilst reducing their margins. For the $300 or whatever profit they acheive on a washing machine, will they really be incentivised to recruit staff to bid on such websites, or would they rather recruit staff to aim for mass-market?

After a while, what we see is not an open auction but a defined market with just one price being submitted. Look what happened to eBay, starting off as an auction platform whereas today the majority of business is transacted as "buy-it-now" online marketplaces. I would expect the same here. Therefore in essence this is just a protracted way of creating another Amazon, and do we really need another?

Sounds like it'll be great once it reaches a critical mass otherwise i'll be sticking to pricespy.co.nz for quality price comparisons on thousands of products.

I've used Pricespy a few times for commodity tech items.

With a reverse auction site like Pricemaker, however, there's the potential of different retailers trying to undercut each other as they day-long bidding continues.

And in whiteware etc there's usually some scope for discounting, plus sweeteners like free delivery, free install etc

LOL funny I came up with this very idea for a website many years ago, just never followed through with it.

Basically its a closed envelope tender process.

Major problem is after you get the deal \ offer you can take that to another retailer and they may undercut it again.

It only really works if all retailers are onboard.

Also limited in terms of some categories like Computer \ PC related items where you have 2 or 3 retailers that are always the cheapest and best service (QMB, PBtech and Ascent for instance).

A big factor may be how many time-wasters the retailers have to deal with (people who don't actually buy anything and were never really intending to). Obviously this is a factor in real-world shops with people just browsing with little intent. However, the internet has taken idle activities to a whole new level because the effort required is so much lower. If the conversion to real sales is low compared to effort the retailers could jump ship pretty soon.

I just want to ask if there are some system to buy.