Internet will lead to global pricing shifts
June 4, 1999
by Joseph E. Maglitta
(IDG) -- "Name your price."
What buyer wouldn't love to hear a seller make that offer? If Jay S. Walker is right, more and more Web shoppers will soon see that dream come true.
"People like anything that saves them time and money," said Walker, vice chairman and founder of Priceline.com. The 14-month-old online shopping service lets buyers decide how much they want to pay for items like airline tickets, hotel rooms, mortgages and home equity loans. "Online self-pricing does both," he said.
Stamford, Conn.-based Priceline.com has the numbers to back it up, he said during a recent interview with Computerworld.
The site attracted a million visitors in its first week of operation last April. It currently sells more than 7,000 airline tickets and 1,000 hotel rooms per day, according to company figures. Some 50,000 transactions per month are sellers -- not buyers -- bidding against each other to offer the lowest prices, Walker noted.
Investors seem sold, too. Company stock (Nasdaq:PCLN), which opened at an offering price of $16 per share in April, closed Friday at $112 per share. A recent survey showed Priceline.com had the fifth-highest name recognition on the Internet, close behind Amazon.com. Last week, a leading association honored Walker as "Direct Marketer of the Year." Walker also made Time Digital's "CyberElite Top 50."
Now that online buyers have tasted flexible pricing, Walker predicts both consumer and business sales will progress quickly beyond competitive pricing to widespread "demand pricing" -- a fancy way of saying: "Offer what you think is fair, and see who bites." Proponents say the buyers get good prices, while sellers can unload inventory that would otherwise go unsold.
"The shift to flexible pricing is happening automatically," Walker said. "The Net allows for the facilitation of all kinds of information. Pricing is just another kind of information."
Longer term, Walker said he envisions buyers ordering online and picking up at a local store. Mobile devices will make shopping mobile and ubiquitous, he told direct marketers at a conference in New York last week. "The customer will be able to shop wherever they happen to be -- in the bathroom or the bedroom. They will be online all the time," he said.
Advanced agents and other software that mediates between buyers and sellers will be needed for such visions to be realized, he added.
But there's no question, Walker said, that "the Internet is going to find every seller at every price."
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