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December 01, 2006
DealJaeger Founder Eyes Financing For New Twist On Price Comparison
BusinessWeek published an article last week deliving into how price comparison sites rank results, telling readers to be wary that the sites are not necessarily in the business of providing links to items at the best prices. Articles like that will be making Sven Schmidt, co-founder of DealJaeger GmbH, pretty happy.
He's just started up a new company called DealJaeger GmbH - in English “bargain-hunter” - which runs a German language site meant to enable users to find the best prices for goods based on user recommendations. The buzzword on this is "social shopping", we believe.
The company is a spinoff of ICS Internet Consumer Services GmbH, which Schmidt co-founded along with Daniel Grözinger. The same team also co-founded GetGo.de, an online ticketing company acquired by CTS Eventim in 2002 where they were employed until leaving to start up ICS. We tried to pry the acquisition price out of Schmidt, but he's not saying.
DealJaeger has some of the elements that have made eBay successful as it enables its power users to make money and it moves online something that has mainly been offline and unorganized (eBay moved flea markets online - DealJager put the preisagenturen concept online).
Schmidt confirmed what BW hints at: "comparison shopping sites only list deals from merchants who pay per click", and he added, "--they mainly list big shops. Hence, the user rarely finds the best deals [or prices] there. What is more, you can only compare prices if you know exactly what you want."
He's currently looking to raise a €2M Series A round for DealJaeger. The plan is that after launching in Germany, it will go international. "Our technology and partners like shopping.com allow for that. We are thinking of taking funding for that roll-out," he said.
We asked him if Dealjaeger.de is a clone. His reponse and his answers to a couple of other questions are below the jump.
Is Dealjaeger a clone?
There are other similar social shopping sites but we have four things that combined make it unique.
1. "Steal the Deal". A user posts a great deal, but you know where to get it cheaper? Steal the deal from the user and get all his points
2. "Jaeger des besten Deals". A reverse auction to find the best deal for a given product. Right now we post one deal per day and ask the community to find the best price for the product (winner gets a Dealjaeger.de T-Shirt).
3. "Direct Deal". Plug-ins for the IE and Firefox let users post a deal on Dealjaeger.de with one click
4. "Weltrangliste". Users get points for all activity on Dealjaeger.de. The world ranking is updated every 5 seconds
What is the business model of Dealjaeger.de?
We will monetize the generated click-outs through partnerships with for example shopping.com, direct deals with merchants or affiliate programs. In addition we will monetize the reverse auctions. An example: My mom looks for a washing machine. She has found it herself for €699. But she is not sure whether it´s really the best deal. So she asks the Dealjaeger.de community to find her the best deal. And she promises to pay Dealjaeger.de 30% of the price differentials. We in return will share that 50/50 with the user who finds the best price. If that price is €499, my mom pays Dealjaeger.de €60 ( (699-499) * 0.30 ) and we will pay the winning user €30. And my mom still saves €140 ( 200-60=140).
Why would anyone bother to spend time helping other shoppers find bargains?
We will share the money generated through the click-outs with the community. At start we will probably pay the best ten users per month. That number will increase with time and traffic to 50 or 100. And users will directly get money if they win a reverse auction. While building up traffic, revenue sharing probably won´t be sufficient. Right now we are evaluating if we can pay the top Dealjaegers €400 tax-free per month on a mini-job basis. In Germany, so-called mini-jobs are tax exampt up to €400 for the employee, while the employer has so pay social fees of about €100. We think that would be a pretty good starting point.... Students and people looking for some pocket money, as well as those that live in countries where the cost of living is much lower could see this as an income.
alarm:clock readers that want to try out the beta can register with username "alarm" and password "clock”
Read - For Shopping Sites, Buyer Be Wary (businessweek)
Posted on December 1, 2006 07:58 AM | Posted to Web 2.0 | eCommerce | Permalink
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