Is the Price Right? Ask Jay Walker (page 2 of 2)

During the first 13 weeks of the program's launch in New Jersey, 200,000 people enrolled, spending about a half-hour online bidding for their selections. The average household income of participants is $73,000 per year, Walker says.

When purchasing grocery items, buyers must select from two or more acceptable brands, not knowing which one they will get until they check via e-mail. Then they must go to the store, pick the items off the shelves and separate those items paid for with Priceline.com from their other merchandise. A software feature lets online users watch a wheel resembling a slot machine to inform them whether their bids are accepted or not, giving the impression that they are "winning" their groceries. But for Walker and Priceline.com, maintaining the anonymity of sellers is crucial to the bidding process.

Delta Air Lines can't publish its fare on a particular flight for retail sales and privately offer a "What am I bid?" price elsewhere. It can do that, however, if the buyer is not sure whether he will get a ticket from Delta or a competing carrier, Walker contends. Similarly, the shopper still goes to a nearby participating grocer, but may not know which company in the supply chain has cut its profit margins to make the sale.

"Manufacturers want to sell at lower prices but cannot do so without destroying their rate card," Walker points out. By shielding sellers from buyers and creating a new consumer network, costs will come down, he claims, and the reliance on name-brand goods may decline.


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