As .com disappointment looms over Britain, our US correspondent, Lisa Sandberg, uncovers yet another online shopping idea that saves customers real money It's thanks in part to Captain James T Kirk that 750,000 Americans have joined Priceline's WebHouse Club since it opened for business last November, purchasing 30m grocery items so far. "Name your own price for groceries," says priceline.com, an invitation reaffirmed by William Shatner in the company's TV ads, reminding audiences that they can save up to 50% on food from their favourite stores. Already established as an online source for airline tickets, hotels and car rentals before entering the food arena, priceline.com is one of the most recognised e-commerce brands in the US, according to Opinion Research Corp. This month, Priceline launches a "name your own price for gasoline" service whereby customers can "lock in" lower prices -- 10 to 20 cents off per gallon -- for up to 50 gallons at a time. The company is also entering the Australian and New Zealand markets through a new firm called myprice. Two websites ­ myprice.com.au and myprice.co.nz (both powered by priceline.com) ­ will be launched later this year, initially selling only airline tickets. A priceline.com membership card can be obtained at any of the 4,325 participating grocers or requested through the website. Members log on to the site, pick groceries from a list of 220 food categories and 1,000 national brands and say how much they want to pay for each item. "It's not considered bidding," says WebHouse spokesperson Sara Littlefield. "If your price isn't accepted, you must wait 24 hours before trying again." This means you are not competing with other consumers. The real bidding goes on behind the scenes between manufacturers, who compete for business by lowering their prices. My several forays on to priceline.com consistently saved me between 30% and 50% on my grocery bills. Repeat customers like me account for 85% of WebHouse Club sales, says the company. Feeling lucky the first time out, I chose absurdly low prices. For example, the choice of four prices for a pasta sauce that cost $2.79 a jar at the supermarket were $1.77 (85% chance I'd get it), $1.65 (a 66% chance), $1.55 (a 50% chance) and $1.45 (a 33% chance). I picked $1.55, chose my favourite brands -- you must select at least two to allow manufacturers to do battle ­ and continued to shop. At check out, an estimated total is calculated and, 60 seconds later, you find out which manufacturers accepted which prices. On my first order, only one of the 20 prices I named was denied. The entire process can take a while (40 minutes to register and shop), but priceline.com is not competing for customer convenience. The business model is based on the notion that most people will inconvenience themselves for the sake of big savings. Once the items are paid for, the shopper must leave cyberspace and physically go to a participating store, walk the aisles, find the items, check out and bag it all as usual. If an item is unavailable, you have 90 days to find it at a participating supermarket. If the item isn't purchased in that time, a credit card refund occurs automatically. Following Priceline's directions, I separated my web groceries from the rest and paid for them using my Priceline card. Although the register amount was almost double my online total, the grocer would receive the total amount from Priceline. So who pays the difference? According to the company, manufacturers subsidise the service in order to win over new customers. The rest comes from a $3 monthly membership fee and from sponsors, who offer half-price tokens to get people to try their products. According to Littlefield, the company will also generate revenue through website advertisements in the future. "Retailers love WebHouse Club because it drives traffic to their stores," Littlefield says. "They want to come on board and pass the value to their customers." Although food industry organisations and supermarkets still haven't measured Priceline's effect on sales, they are positive about the service. "We saw an opportunity to add value to a customer's shopping experience," says Karen Meletta, spokesperson for Wakefern Food, the largest supermarket co-operative and wholesaler in the US. "Like any new programme, there is a training and education phase as our staff get up to speed, but now [Priceline] is running very smoothly." Some, however, think that priceline.com may end up hurting retailers; Ryan Mathews, a food consultant at Connecticut-based FirstMatter, is one. "Supermarkets may end up giving away a very critical thing ­ their position as the customer's best friend," he told the Washington Post recently. "Priceline will be considered the discounter and retailers will be painted as the bad guys." {{MANAGEMENT FEATURE }}

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