Let's go 'Dutch': Auction site seeks lowest bidders
A 22-year-old entrepreneur aims to sell high-end items at the lowest possible price.
Is this the foolishness of youth or the next big thing on the Web?
Elliot Moskow hopes you'll think it's the latter. His Pricefalls.com enters its second year, hoping to grab bargain hunters with the site's "Dutch auction" style. Modeled after old-fashioned tulip auctions in Holland, retail goods basically go to the lowest bidder.
"The Dutch auction allows for a fair auction process where you don't get into a bidding war with people," Moskow, Pricefalls' CEO, told WalletPop this week. "You don't get into those fights where you pay more than you're willing to pay."
Here's how it works: Stores aligned with the site put their products on the block at a relatively high cost, with a predetermined and undisclosed basement bid they'll accept. Consumers, for whom the site is free, bid downward for the items.
If the price for an item tumbles to the designated amount entered by a user, that user gets the item. The site works best for more expensive goods, Moskow said, because there's more room for the prices to plummet. One patron recently grabbed a $3,600 Baume & Mercier watch for $1,000. Pricefalls makes about $5 for every $160 in purchases, Moskow said.
He said his reverse model also offers the personal touch: Instead of hiding in cyberspace, he said, both the company and merchants are accessible by phone. All goods up for sale originate from businesses. There are no private-party exchanges, although the companies can sell factory-reburbished electronics, restored jewelry and other items.
Pricefalls.com launched last year while Moskow was attending Bates College in Lewiston, Maine. He said he got frustrated using the Internet to buy goods low and sell them high, as economics majors are taught to do. But when he stumbled upon the Dutch concept, he changed direction. Now a senior about to graduate this spring, he has set up shop in Las Vegas with five in-house employees.
He won't discuss the financial particulars, but said the site had thousands of registrants. He recently redesigned it, introducing a new directory of Pricefalls stores, a clearer explanation of the Dutch descending concept, and an overhauled home page.
Moskow praised a certain auction giant's online success, but said his upstart startup has the goods to attract its own sizeable base. "It takes a more one-on-one approach than eBay," he said. "It must be unique to compete with them."