EGGS competitor ONSL receives comments from Keith Benjamin at Robertson Stephens ...
ONSALE LAUNCHES VACATION SERVICE:ÿ ONSALE has been quietly building
its community of cost-conscious shoppers. We estimate that ONSALE has over
670,000 registered bidders.ÿ We have been challenged to gauge the size and
growth pace of ONSALE's market opportunity. We have not been fully appreciative
of ONSALE's leadership position within its chosen category.ÿ We have been
concerned that competition may be sneaking up, but ONSALE has kept ahead.ÿ
Gross margins have moved around, but volumes have continued to rise.ÿ As the
story evolves, ONSALE appears to have built community of loyal customers
looking for bargains.ÿ Its marketing target has remained primarily business people
with a technology interest.ÿ It has reached these customers more by word-of-mouth
than by aggressive marketing through Web distribution agreements or traditional
media.ÿ It attracts more than 100,000 unique visitors daily and over 2 million monthly.ÿ
Its customers spend an average of $800 per year, which ranks high among e-
tailers.ÿ With a bit more marketing, we expect this target audience could measure 5-
10 million people within a few years.ÿ As indicated by this week's launch of its time-
share auction service, ONSALE continues to expand its offerings from the computer and technology-related merchandise, which represent about 80% of its current sales.ÿ High levels of repeat purchases (i.e. over 75%) point to a defensible business model.ÿ While auctions are fun, the underlying element is to offer goods and services at some discount for a short period of time.ÿ Because of its ability to know what you want based on bids lost, ONSALE plans more direct marketing to its customer base, for example.ÿ We expect more announcements regarding other partners and categories.ÿ Overall, we are encouraged by signs that ONSALE has defined a new real-time retail segment that can prove both defensible, scalable, and profitable.ÿ |
