October 1999

BY ROBERT VAHID HASHEMIAN

Greetings from Germany! Thanks to the Internet, I'm enjoying an unplanned respite, although I'm still a little dazed from the lightning-speed travel arrangements I made. Until now, I never fully comprehended the power of e-commerce. Now I am a believer. Don't get me wrong. As the Webmaster for TMCnet.com, I live and breathe the Web every day of my life. I've purchased books from Amazon.com and found the experience relatively pleasant. Ditto for trading stocks and options online. But until now, I didn't truly believe in the impact e-commerce has on our lives. I was wrong. With the prevalence and proliferation of e-commerce, new standards of online sales and marketing are being forged every day. Cross-selling, persuasion techniques and customer service take on a whole new shape when applied online. And just when you think you've got it all figured out, along comes a new way to reshape online selling all over again.

My experience buying an airline ticket online has led me to believe I have discovered the clever way online sellers (particularly the ones in the popular bidding business) are maximizing their returns on the items they sell. Here's the story.

By tradition, my wife and kids spend part of the summer season in Germany with my in-laws. Becoming a temporary bachelor has its benefits, but I do miss my family after a while. I had just come off a big Web project and out of the blue, I decided to join my family in Germany. But where would I get a plane ticket with such short notice? Would I be able to get a good deal? I started by calling our company's travel agency. Very nice people, but the best they could do was a $650 ticket from New York's JFK airport to Frankfurt, and I was told that I should feel lucky as space was extremely limited. That was a little pricey for me, so I decided to go online and see what I could find. An hour of searching on travelocity.com, expedia.com and previewtravel.com yielded the same price ranges the travel agent had quoted me over the phone. Disappointed and tired, I was about to throw in the towel and accept defeat, when the voice of William Shatner from a radio commercial I had heard a few weeks back rang in my head (yes, I am a Star Trek fan). He was speaking on behalf of Priceline.com, whose motto is "Name your price and save!" Priceline.com is an e-commerce Web site that allows users to bid for items such as airplane tickets, new cars and home financing. The difference between them and more traditional online bidding companies (such as eBay) is that users do not interact with each other, but instead buy the goods directly from Priceline. Obviously, Priceline sells these products through agreements with airlines, banks and automobile dealers, acting as the middleman. I decided to give Priceline a try. I jumped on their site, easily navigated my way through their pages and made a bid of $300 on the JFK-Frankfurt roundtrip ticket. I was a bit surprised when I was greeted with a form asking for my credit card information. But then it all started to make sense. I was bidding on merchandise, not window shopping. No room for tire-kickers here. I should have done that before I came. I entered my credit card information and the bid was on. I was positive my low bid would not be accepted. An hour later I received this e-mail confirming my suspicion:

"Ticket Request Number 19xxxxxx5.

Dear Priceline Customer:

We're sorry, but we couldn't find a major airline willing to accept your offer of $300 for tickets to Frankfurt. Your credit card has not been charged.

YOU CAN TRY AGAIN - FREE! We value your business and really want to help you get the tickets you need! We've made it easy for you to submit another request for tickets to Frankfurt right now. Many of our customers are successful on their second try, and we've made it fast and easy to try again now. Simply click here to find out how."

The first bid was obviously rejected. But I was highly encouraged to make a second bid. So I did. This time I increased the bid by $100, which brought my offer up to $400, a more reasonable but still cheap rate, if Priceline would accept the bid. An hour later I received this e-mail:

"Ticket Request Number 42xxxxxx9.

Dear VAHID HASHEMIAN,

Congratulations! We have a ticket for you. Your complete flight itinerary is listed below."

So it was done. The ticket was purchased at the exact bidding price plus the additional shipping charges and taxes. I had the ticket on my desk the next morning. The ticket, as I had expected, came with restrictions: non-transferable, non-refundable and non-changeable. There was also no mention of seating, which was to be determined at the airport. Later I learned that airlines reserve their better seats for final settlements and I ended up with a great seat location.

But let's get back to the sales process. Did you catch the marketing technique employed by Priceline? I didn't at first. I was happy to have received the ticket at a good price together with great service. But when I thought about it, here is how it went down:

• I wanted a round-trip airline ticket to Frankfurt.
• Priceline had it available and since time was running out on the flight date, was motivated to sell.
• I made a bid offer.
• Priceline asked for my credit card number to be sure I was making a serious offer. Now I was a motivated buyer to Priceline.
• Priceline rejected my first bid, but encouraged me to make a second bid, almost assuring me of success on a second try.
• I raised the bid offer.
• Priceline sold me the ticket and followed up with timely service.
• I was a happy customer and Priceline got a higher price than my initial offer.

Armed with this knowledge, I feel like I am a more sophisticated e-shopper now. Perhaps the next time I bid on a ticket, I will start lower and raise the bid with smaller increments. I have learned to be a smarter e-shopper and make better use of the online bidding systems.

Such innovative sales techniques, while not impossible outside the e-commerce arena, clearly define the changing face of marketing alongside e-commerce. And we are just at the beginning of this revolution.

What are your e-sales and e-marketing plans to bolster your e-commerce returns? Do you have some of your own usage tips to share? Do you think Priceline would have accepted a $350 bid on those tickets? Let me know.

The author may be contacted at rhashemian@tmcnet.com.