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.