If You Can Beat BeatThat.com’s Prices, They’ll Pay You

8/7/08Follow @wroush

For many online shoppers, no sooner have they hit the “buy” button than they’re struck by angst over whether they missed out on a better deal at another site. But at BeatThat.com, a consumer electronics shopping site that emerged from beta testing yesterday, there’s less reason to worry: the site digs up the Web’s best deals on camcorders, digital cameras, GPS devices, MP3 players, printers, and TVs by paying consumers for the information.

If you find a product advertised at a price that’s lower than the lowest one currently featured at BeatThat, the company will pay you $2.00. That way, “there’s an incentive for the deals to keep coming in until, quite frankly, you just can’t find a better one,” says David Parker, CEO of Cambridge, MA-based Digital Advisors, which created the site. “At that point, we can very confidently say we have the best prices on the Internet.”

Digital Advisors is a five-year-old, privately funded company that already operates a network of shopping websites, focused on high-definition TVs, digital cameras, satellite TV units, laptops, and camcorders. “All of those sites are doing fine. The concept is to help consumers make good choices,” says Parker, who was a co-founder of Bedford, MA-based SoundBite Communications and a business development executive at Viaweb (the maker of Web storefront software founded by Paul Graham, now of Y Combinator fame) and Direct Hit (a search engine acquired in 2002 by Ask Jeeves, now called Ask.com). “But about a year ago we decided that we wanted to try something different. We have a couple of people on our staff who are really good at sniffing out excellent prices, and a light bulb went off when we realized that the best prices we were showing on our sites, which were provided to us by an aggregation service, were never the best prices you could get.”

Parker knew there was a business model in attracting customers looking for price information on specific products, since they’re usually on the cusp of a major purchase, and e-retailers are willing to pay a commission for them—indeed, that’s how Shopzilla, PriceGrabber, and the plethora of other comparison-shopping sites make money. “So we came up with the concept for BeatThat, which would have a fixed inventory of products and would always have the best prices for those products,” he says.

BeatThat Front PageThe difference between BeatThat and the other shopping sites, Parker explains, is that every price shown on BeatThat has been submitted by a “Deal-Finder”—a person who’s an expert at sniffing out bargains. Like amateur commodities dealers, these contributors spend much of their spare time sifting through websites for discounted products that retailers themselves often aren’t highlighting. They also keep track of the confusing world of coupons, manufacturer rebates, and free shipping offers, which tend to change from day to day. To motivate inveterate bargain hunters to contribute their discoveries to BeatThat, the company set up its payment system, which is already netting several of the top Deal-Finders more than $1,000 a month, according to Parker.

“We didn’t want to rely on the merchants to tell us when the price is good,” Parker says. “We wanted to rely on the literal wisdom of the crowd. And if you have a large enough crowd looking for the best deals, you are going to find them.”

Anyone with an account at BeatThat can submit their product discoveries to the site; once the information is verified, Digital Advisor will put up to $2.00 into user’s account. Once a month, the accumulated funds are transferred into users’ Paypal accounts. After submitting three approved deals, a user is invited to become an official Deal-Finder.

But finding the absolute lowest prices on the Web comes with one big hazard: the best prices are often found at the least scrupulous e-retailers. “Like it or not, in consumer electronics there are a number of web stores that are not fully on the up-and-up,” says Parker. Digital Advisor didn’t want to screen these companies out entirely, since they have some of the lowest prices. But it wanted to help consumers make informed decisions about whether to buy from them.

The company’s solution was a simple system of color codes. Every Web merchant featured on BeatThat carries a green, yellow, or red flag. A green flag mean there have been no reports of problems with purchases from that retailer. A yellow flag means that a few people have reported problems, but that most customers have had a satisfactory experience. A red flag is just what it sounds like—a sign that a company either has a record of problems such as bait-and-switch offers or poor customer service, or that it has no record at all, meaning it’s so new that it could be a fly-by-night operation.

“If you see that on our site, it means we’re encouraging consumers to think twice before they take advantage of that deal,” says Parker. “They can research the merchant on our own site, where we have collected reviews from around the Web, so they know what kinds of tactics that merchant employs and they can go in with their eyes wide open.”

Yesterday’s public opening of BeatThat.com came after several months of private beta testing. For now, the site covers only 500 products, mostly the latest releases from big-name manufacturers such as Canon, Samsung, Garmin, Olympus, Panasonic, TomTom, and Toshiba. The prices listed for these items are, in fact, very low: the Canon Powershot S5 IS camera that I recently bought at Amazon for $314.30, for example, was listed yesterday at BeatThat.com for $219. (However, the merchant offering that price, shopdigitaldirect.com, bears a red flag as an “unknown merchant,” meaning BeatThat hasn’t found any reviews pertaining to the company.)

Five hundred products is a small fraction of the total number of new gadgets released by consumer electronics makers every year. But Parker says that Digital Advisor learned through experience that it’s not worthwhile to maintain a larger database. “We tried to set up a digital camera site with every SKU [stock keeping unit] ever released, and it was incredibly hard to maintain, and it turned out that very few people went outside the top 200 products,” he says. “In general, there are only about 100 products within each category that people are really looking for—the ones with the latest doo-dads.”

Digital Advisor chose the initial six product categories for BeatThat because they were familiar with them from working on the company’s other websites, Parker says. Over time, the company may add new categories, and it may go deeper into each category. “But we feel confident that even though we’ve only got 130 printers, you will be able to find a very good printer,” he says. And a very cheap one—guaranteed.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://danweinreb.org/blog Daniel Weinreb

    We hear a lot these days about how the web has changed consumer shopping: because it’s so easy now for people to compare prices, traditional retail tricks such as “special sales price, 30% off!” are much less effective now. By increasing the free flow of information, the web effectively makes a much more efficient market for consumer goods, in the same sense in which stock exchanges create an efficient and transparent market for securities. Now both sides have accurate information about prices. (See Robert Reich’s excellent book “Supercapitalism”. http://danweinreb.org/blog/25)

    But this takes it to a new level. Now, we are actually being paid money to make the market even more efficient, and expert bargain-hunters, by sharing their information, make the price even more efficient, at least for those with a BeatThat account.

    From our point of view in our role as customers, it’s great. The downside is that it squeezes the sellers even harder, driving their margins way down, and giving them even more incentive to cut their own costs, which is not always so great for the employees of the retailer, as Reich points out. BeatThat isn’t to blame, of course; this is a macro-trend in modern life. BeatThat is just one more element of the arms war between the retailers and the customers.

    It’s also a cool idea and I wish them the best of success.

  • http://ycombinator.com Paul Graham

    A Y Combinator funded startup called Bountii (http://bountii.com) has been doing the same thing for a year. I’m surprised David doesn’t remember them, because he heard them present this idea at last year’s Demo Day, at almost exactly the same time that mysterious “light bulb” went off.

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  • ronald angora

    I was told about this site by my friend,s son.I am currently living on a dissability check every month,which is next to impossible.I would like to learn more about this to see if this might be a good way for me to suppliment my income.I have very little computer experiece,but am a fast learner.please e-mail me and let me know how I can learn moer about your bussiness.thank you