Today Aroxo launches its ambitious play, aiming to create a brand new space in between online retailing and the auction model – specifically targeting eBay. This is, put simply, the thousands of years old process of buyers and sellers haggling over price put into an online model. But there is more to it that that, since it also brings pre-qualified leads to sellers who want to offload inventory quickly. So how does it work in practice?
Every day people are walking into a store with an Amazon page printout asking the store to negotiate the price down. Aroxo takes this idea online.
Say you want to buy an iPod (the site is launching mainly with electronics to start with). As a buyer, you type in what you’re prepared to pay, creating a “Want-it” note. To guide people away from putting some crazy low crazy in, buyers get told an average price for how much something is going for retail. A thermometer tells you how close you are to the price the seller is looking for and you can specify a time limit, say a week, for the seller to respond.
All those iPod buyers then go into the system and the sellers, watching on the other end, see the offers coming in and can bid to offer the iPod at a price which makes sense for them and which might entice the buyer, all in real time. All the tools to handle payment, settlement, feedback are built into the platform.
The two parties then either strike a deal, or continue negotiating until one side caves in and a transaction goes through. There’s no commitment for all this, it’s completely free and no-one gets the buyer’s email address or contact details. However, although there is no commitment to buy when starting the negotiation, if the buyer chooses to send a negotiation and the seller then accepts their offer, then they are committed to the purchase. It’s sort of haggling for the 21st century.
The site is as easy to use as a normal retail site. Since the site is based on pre-qualified buyers, you don’t have to have to wait for other buyers to join you, unlike the old, failed group-buying model of sites like LetsBuyIt.com. The advantages are that buyers can potentially bag a bargain, and don’t need to use search engines as much. For sellers they get to sell off excess inventory without needing to reveal themselves, if they so choose.
How does Aroxo make money? It’s the connector for the transaction and takes a very small fee from the seller to contact the buyer. This prevents spammy offers and keeps the system clean. Here are their prices.
This is in effect a kind of “buyer driven” commerce that is not really being done right now since Amazon is retail, eBay is pure auctions. Aroxo is therefore very recession-oriented. In theory the site could actually be used for other things than white goods, like negotiation over airline tickets or car leasing. Of course, that puts it into competition with Priceline. But the differences are this: Aroxo offers the buyer a choice between sellers, rather than just one provider. Buyers can negotiate the price, unlike on Priceline. And the buyer isn’t initially committed to a purchase.
There are some big advantages for sellers. They can get rid of stock quicker than by normal means by targeting, say 1,000, buyers really fast, and knowing they can deliver the goods. It can be an anonymous disposal system for the supplier, or they can brand the hell out of it with their logo, the works.
Aroxo.com will launch in the US later this year, but for now diverts to the Aroxo.co.uk UK site. This can be used for visitors outside the UK to buy and sell on under British consumer law and the site’s T&Cs.
Although the site only launches to the public today, Aroxo has in fact been in development for over 2 years, bootstrapped by founders Matt Rogers and Andrew Culpan (@aroxo on Twitter). They lead a team of 10 spread across Croatia and India. The site contains 250,000 lines of code, according to its founders, which in startup terms is a lot. Culpan was the Vice President of Strategy at MTV UK & Ireland and before that a Strategist at Orange. Rogers has previously worked with T-Mobile and Orange and is a former management consultant.
The one thing I don’t like about Aroxo right now is its interface. It’s way too light green. But at least that’s fixable. With the ability to negotiate on price and offering a crop of pre-qualified buyers, it’s hard to see how it can fail in these recessionary times. Of course eBay is going to be a prime target for Aroxo. So how serious are they about taking on the auction giant? Well they’ve signed a “multi-year deal” deal with Iomart to host the Aroxo backbone, so that at least indicates that they must be reasonably serious.
first post!
And your lame. Congrats.
His lame what?
Reading through the description made my head spin. It seems really all too complicated.
Why not just buy the ipod on amazon.co.uk and you know that you get a pretty good price, great delivery and an awesome aftersales service? There is a reason why people in the 21st century shop at John Lewis and Sainsbury’s instead of in a souk or a bazaar.
Hey @frictionless – Aroxo is really quick and easy. Just find what you want and say what you’ll pay. Job done in seconds.
As sellers come to you, there’s no time wasted looking at loads of other websites.
Too complicated! Matt I think you killed the idea.
Hi Matt,
I’d be happy to give it a try, and you guys have obviously put a lot of work (and it seems your own money as well, which is really cool) into this, so I genuinely hope it becomes successful.
However, I just don’t see it taking off as a standalone entity. It’s a bit like social networks, or search engines. I am sure there are some new and interesting social networks being created each day, but it is really hard to change human behaviour and have them learn a completely new way of doing something.
That said, part of succeeding in startups is ignoring all the naysayers … I am sure people were skeptical about ebay too when Pierre launched it. So don’t let any of my comments discourage you. It is always easy to critique other people’s work. Building something is not.
Thanks @frictionless
The impression I’m getting is that the concept is good, we need to crisp up how we communicate it.
hate to tell you…
this has been tried before, by other VC funded operations in the late 90s… but good luck to you.
peace
Love it ! What an awesome idea .. everyone loves a bargain .. here you can set your own price..
Loadsa luck to the guys .. this is an innovation and one to watch
This idea sounds an awful lot like a reverse auction, which certainly is not new and not nearly as easy to understand as standard eBay auctions.
This concept requires having critical mass to successful. Very few sites actually get consistent participation from buyers and sellers on the level this site would have to have.
I’m with the others. Too complicated.
You couldn’t have picked a worse time.
Listen to eBay’s earnings call. Their auction business is contracting because consumers do NOT want the hassle of bidding on an item. Remember, bidding on an item is a well-rehearsed practice. This concept is convoluted and requires more energy and thought than bidding does.
I might also point out that eBay introduced “make an offer” or something along those lines a year or two ago. Sellers could allow a buyer to submit an offer below the asking price. The eBay tool allowed for automated biz rules to accept or counter the offer.
My estimate on usage? Super low — maybe 1-2% of all eBay sales?
This seems to be an idea that sounds interesting but falls flat on the merits.
Sellers aren’t going to have the flexibility to manage inventory on this site and on other sites.
Lots of holes in this one.
But good luck to you — hope you prove me wrong and are WILDLY successful!
Definitely there will be people who will use this service. But one thing that probably always go beyond logic/model is – human factor.
Segway, inspite of being a state of the art machine failed. I am not rich but I don’t care if I am saving $3 on iPod buying online if I can go to a store … see the product, feel it and make my purchase.
Rahul,
Let me know how you feel about Live Video sells where Buyer and Seller interact Live, sellers creating their own Shopping Channel and buyers get to ask Live questions with answers on the spot via Live Video of the seller, i think this would give any consumer the closest they can get to the product as possible without actually touching it, let me know your thoughts.
As a professional e-tailer, I think it’s important to talk about the bottom line.
How much of a pain is this site for sellers? How much time does it take?
Bottom line: If the marketplace takes a lot of seller resources, prices are higher. You can’t bargain your way out of that. Does that mean this is a bad idea? By no means. But it is an important thing to consider, as you focus primarily on the buyer-side.
Wasnt this the Priceline.com model (Name your price) and it failed when they tried it outside the travel niche??
I love the naysayers. I have a small portfolio of online businesses at this point and hear this kind of baloney all the time.
Anything comparing this to eBay forgets that eBay has an absolutely insane amount of overhead at this point. Couple that with some major backlashes from their audience and competing services are bound to steal market share bit by bit.
Startups have the advantage of being nimble and being able to make decisions on a dime based off of analytics and thousands of businesses that were similar but failed or underperformed. Having people that gambled, lost, and left evidence behind explicitly detailing the causes of their failure enable guys like this to avoid mentioned pitfalls.
Further, referring to anything that has failed in the late 90s is a rather retarded line of logic. Mentioning the first wave of dot com failures and comparing it to a 2009 startup is evidence you got your rear handed to you and you never got over getting your Aeron chair taken from underneath your undeserving ass.
If people can transact easily it will become profitable. Maybe not obscenely profitable, but enough to enable further development and enable the sweat equity guys to get a return on their efforts.
It’s a simple survival game. Spend your money in the right places, don’t run your funds out too quickly, and give yourself enough time to catch on and there’s nothing stopping them from having a pretty good run.
Any model which eases/simplifies the basic seller/buyer transaction will be accepted. The idea is extremely interesting. I would suggest that you change the tags … “Highly likely” triggers a thought that the price is close to ‘list’. “No chance” indicates that no bargaining is taking place.
Use a street model – perhaps that of a night market – buying is an adventure – haggling is the entertainment.
Good luck- it works.
Mercata failed, Accompany failed, as well as numerous others, burning through several hundred million dollars of investor money. This is not a new idea. It’s been tried and failed repeatedly; it works only within Asian communities where it’s called Tuangou, and for a niche market of auto parts which has substantial market imperfections.
“Group buying” without a commitment won’t work; there is no credibility to offers that are not binding.
Timing is also an issue; if people are willing to wait and put up with auctions they do. But normally they want it now and buy it now.
Given the slim margins offered by Costco (markup is 12% over cost), Wal*Mart and others, there is not much wiggle room inbetween the etailers and the auction sites to effect substantial savings.
Critical mass will be a problem as well.
I give this a 2% chance of success.
old concept might be failed by some reason.if we may take that in another one way to success. because ‘N’ number solutions are available to one problem if we tried. ok.. so we never told this is good or bad. only think this is good for people or not.
I like the basic concept of this site, but of all the things to start with consumer electronics must be the worst.
It appears it is buyer driven, so people are going to be wanting the latest and greatest and it is unlikely sellers have “excess stock” or the margins to beat sites like Amazon for current electronic items. Possibly for older items, maybe TV models that are two years old it could work, but then you don’t have a buyer saying “I want a 2007 Panasonic XXXXX”, and without critical mass the chances of a match would be minimal even if they did.
Maybe if it was more general? I want a name brand 10 megapixel digital camera for under £100.
Also I just tried it with a random item, and offering 10 quid more than the average online price (as shown by the item) I got “Could be lucky” so that isn’t exactly providing much in savings.
“eBay is pure auctions”
This statement is incorrect. Ebay is no longer an auction only site. It’s turning into more of a retail site with the stores and the buy-it-nows and the big powersellers with their cheap china junk.
Good luck to Matt with Aroxo, wholeheartedly.
I don’t know whether it’ll succeed or not but I see it powerful for a very specific niche of the market which can be described as “things I don’t absolutely need to buy now but I’d like to have at a bargain price”. Now, whether this niche is big enough to create success or not I don’t know. Personally I had an idea in the same space but I never started it because I wasn’t convinced about the size of the market. I might have been right or wrong, who knows… maybe Matt and the Aroxo guys will prove that there’s a big enough market indeed! Good luck chaps.
this is a perfectly good idea. I wish many a times when a book is not available on amazon that i can leave a price that i am willing to buy it at with the hope that someone will write to me and say here it is I will sell it to you. I do appreciate the comment that people don’t have time haggle over these things, but maybe these are the guys who value convenience more and are prepared to pay for it.
I think a better marketing strategy will help Araxo to face big companies like eBay!
This seems an innovative evolution of the co-buying strategy implemented a decade ago by sites like letsbuyit, mercata and mobshop, without the group but with the same buyer and seller motivations.
You’re a dumb cunt
and you’re a mad cunt
seems like a very interesting idea, however i dont think it will take off unless lots of money is put behind it to promote it in the b2c sector.
However on the b2b front this would work wonders…best of luck though!