Name That Price on Priceline.com!
As much as I’m a great proponent of the Internet slowly infiltrating itself into our everyday lives, I sometimes need an excuse to try new Internet services. Such was the case with Priceline.com, a Web-based service that lets you name your price on airline tickets, hotel rooms, new cars, mortgages, and more. Priceline.com’s reverse auction approach of matching buyers with set prices with sellers willing to meet those prices has been awarded a much-debated patent. Do note that it appears that Priceline.com is useful only for items in the United States; even international flights must originate in the U.S.
I’ve used and liked Priceline.com’s service for finding cheap airline tickets, but their most recent foray into grocery shopping, another Internet commerce field that interests me, has me wondering what’s in their drinking water.
Fly by Web — A few months ago I had to attend the MacHack conference in June and Macworld Expo in July. I had a frequent flyer ticket to use and I’d come across a discount coupon from Northwest Airlines, so I used the discount coupon to attend MacHack, figuring I would use my frequent flyer miles for the Macworld ticket. However, in the hectic rush around MacHack, I failed to take into account that airlines often restrict the number of frequent flyer seats available on reasonable flights. By the time I got around to making my Macworld reservations, the only option was a multiple-hop red-eye from Seattle to New York City, arriving a few minutes before my presentation at the Macworld Town Meeting.
So, I decided to buy a ticket for a direct flight – it would be a business expense, and flights from Seattle to New York City normally cost about $350. Unfortunately, for reasons I still don’t understand, I couldn’t find a ticket for under $750. I started kicking myself for not acting sooner, reasoning that the problem was that I was booking a flight only 20 days away, rather than the 21 days that are often necessary to find the cheapest fares. Normally that might have been true, but just so I could torture myself appropriately, I looked for the same tickets 22 days out and came up with an only slightly reduced price of $650.
So I was faced with two lousy alternatives: blow a frequent flyer ticket on a poorly timed flight with stops coming and going, or spend more than twice what I thought was reasonable on direct flights at the times I wanted. Rather than settle for the lesser of two weevils (as the running joke goes in Patrick O’Brian’s excellent Aubrey/Maturin novels), I decided instead to try Priceline.com. After all, I had little to lose.
Take a Deep Breath — Priceline.com is scary. You ask them to find flights on an unknown airline, flying between 6 A.M. and 10 P.M., and potentially with a number of stops. Then you decide how much you want to pay for the ticket and give Priceline.com your credit card number. Within an hour after you submit your request, Priceline.com sends you email telling you if a major airline has agreed to sell you a ticket at your price, and informing you of the itinerary details.
I gulped and filled in all the information, then left the Web form open and went upstairs to ask Tonya what she thought a good price would be. First we agreed that $300 was reasonable, but then decided to play it a bit tighter and bid $250. I came back downstairs, submitted my request, and within a few minutes had email from Priceline.com. I opened it with some trepidation, since I couldn’t figure out from their site what happened if they couldn’t meet your price. To my great astonishment, Delta Airlines had agreed to sell me a round trip ticket for $250, and what’s more, the times were totally reasonable and both flights were direct. I was ecstatic, since Priceline.com had just squished both of my previous weevils with a single blow.
The temptation is of course to lowball your bid, but Priceline.com can’t work magic. When I tested Priceline.com to see if I could buy round-trip tickets from Seattle to San Diego for $20, Priceline.com regretfully informed me that no airline was quite that stupid and encouraged me to try a higher bid. I can’t see any reason why you wouldn’t start low and work your way up in an effort to find the lowest possible fare price for a trip.
Not everyone is as happy with Priceline.com as I was. A variety of Web pages detail complaints with Priceline.com’s service, some of which seem justified, while others sound like whining. For instance, Priceline.com is up front about the fact that you won’t collect frequent flyer miles, you can’t change your tickets in any way, and the price doesn’t include taxes. You also cannot determine your specific itinerary, which would bother me in other situations. If you’re uncomfortable with these limitations, you shouldn’t use Priceline.com. But as long as you understand the ground rules, Priceline.com can be a useful tool, especially for last-minute tickets.
But for Food? As much as I was satisfied with Priceline.com’s airline ticket service, the company’s most recent announcement is that they plan to offer the same technique for buying groceries. The program, called WebHouse Club, is due to open 01-Nov-99 in the New York, New Jersey, and Connecticut areas.
Priceline.com describes the service like this. First, you need to get a free WebHouse Club card, which provides you with a unique identification number. Next, using an interface which hasn’t yet been made public, you name your price on grocery items that you want, giving Priceline.com the names of your two favorite brands to choose from for each item. Then enter your credit card number, and Priceline.com tells you whether or not it has found a store willing to meet your prices, supposedly within 60 seconds. Finally, you print out your Private Price List, take it and your WebHouse Club card to any local participating supermarket, and get your groceries. If you have coupons or some sort of frequent shopper card at that supermarket, those discounts will still apply.
This sounds simple on paper, but think about the logistics involved! You have to figure out all the brands for grocery items you buy (which leads me to suspect they won’t let you name your price on produce). Tonya was once coerced into a market research study, during which she was asked what brand of pain killer we used. She didn’t have the foggiest idea what brand we used, or even the type of pain killer, but she did know it was in the round bottle with a blue and red label in the medicine cabinet. The researcher had to keep shushing me, since I knew the answer but didn’t fit their demographic. My point, roundabout as it might be, is that many people haven’t the foggiest idea what brands they buy.
Once you get past the brand problem, you’re faced with the price problem. Quick, how much do you pay for a half-gallon of milk? Although I can generally say whether a given price is reasonable, I couldn’t pull an appropriate discount price out of my hat for most products. With sufficient research, I could figure out prices of items we buy regularly and decide on appropriate bids, but that’s even more work than clipping coupons.
Work is the key item here. Services like HomeGrocer.com save time and effort, and even when we don’t order the $75 worth of groceries to qualify for the free delivery, the $10 delivery charge is worthwhile to us for the time we’ve saved. I have no doubt you’ll be able to save some money through Priceline.com’s grocery shopping service, but it will be expensive in terms of time and energy, and you still have to go a store to get your groceries. The amount I saved with Priceline.com when buying a plane ticket was significant – about $500. For some people – particularly those with specialized purchasing needs or who already direct significant effort toward tracking prices and cutting coupons – Priceline.com’s service might save some money. Otherwise, would you spend an extra hour shopping each week to save $10?
For many people, it simply doesn’t add up. The amounts saved are by definition small (since grocery bills aren’t that large and grocery retailers don’t have huge margins on many products), and the service not only fails to save time, it actually requires more of your time to use it. I’ll be surprised if the checkout process at the participating supermarkets is totally smooth as well: you’ll have to present the cashier with your WebHouse Club card and price list, but what if you buy other items as well? I’m sure that Priceline.com will be making its money in related ways, such as using the demographic information garnered when you sign up for the card. The company already tries to get you to sign up for a credit card or magazine subscription when trying to reserve an airline ticket, with the attraction of automatically adding to your bid, and thus the likelihood you’ll get the tickets you want.
Perhaps I’ll be proven wrong, but I don’t see Priceline.com’s model working for grocery shopping the way it works for big ticket items like airline fares, hotel rooms, and new cars.