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Teaming up online to buy in bulk

Andrea Gardner Nov 23, 2007

Teaming up online to buy in bulk

Andrea Gardner Nov 23, 2007


SCOTT JAGOW: We all know the appeal of stores like Costco. Cereal boxes the size of small buildings. Gigantic crates of toilet paper. Buying in bulk. But what if buying in bulk meant you teamed up with other shoppers to get things at a discount? There are some Internet start-ups trying to get that idea off the ground. From our Entrepreneurship desk, Andrea Gardner reports.

ANDREA GARDNER: I need some shampoo. My favorite brand is Bliss. It’s not sold in the drugstores, and I’m looking for a deal.

I could browse any website that sells products at a discount. But I just heard about one called eSwarm. It lets me post a message online, where I describe the product I want and name my price — which is less than retail. A week later, six people have joined me. eSwarm finds us a seller, takes a small commission, and a few weeks later, I get my Bliss.

Now, this might seem like a complicated way to shop. But for a whole new generation of consumers, the Internet is second nature and online shopping is easy and entertaining. Through team-buying sites like this, consumers can bargain companies down instead of just accepting prices that are offered.

Team buying isn’t widespread yet. It relies on the power of numbers, but most people have yet to discover it. And while it can be fun to swarm and haggle, it takes time for a supplier to bite. Sometimes, they never do. Forrester Research analyst Sucharita Mulpuru says that’s because consumers can browse for products on many other sites.

SUCHARITA mulpuru: The Web already provides a pretty easy way for you to find the best price and the best item that you are looking for. And that’s the challenge. You just can’t go and do any old product.

Sites tried to promote the team-buying approach in the 90s but they folded quickly. Mulpuru says back then consumers were wary about buying online and personal e-mails were pretty much the only way to spread the word. Not anymore.

MULPURU: With tools like Myspace, Facebook, where you can literally have, you know, thousands of people in your network, you just have much greater reach within people who have similar tastes, who are often of similar demographics, and maybe very likely to buy the same things that you’re interested in buying.

And that’s why a new crop of young entrepreneurs is giving it a second go. Investors are pumping millions of dollars into these companies. Since eSwarm’s launch in July, consumers have swarmed for everything from ski tickets to golf balls to ammunition, says company co-founder John Temte.

JOHN TEMTE: There have been some very random things that have gone through successfully on our website. And we kinda look at each other and we’re like, “We never thought we would be in the business of conducting a transaction like that.” But, if people want it, we’ll do it.

Most swarmers are college students, he says. Some of them have told eSwarm that they want to bargain for more than just consumer products. They want to band together to challenge banks and credit-card companies to offer them lower interest rates and debt refinancing packages. eSwarm says that plan is just around the corner.

In Los Angeles, I’m Andrea Gardner for Marketplace.

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