It would be great if we could predict the future, especially where ecommerce was concerned. If you knew that something you bought would be worth X amount of dollars a year from now, you would be more likely to buy it. You couldn't lose if you were certain to get a set price by reselling the item. But as we all know, there are no guarantees where the marketplace is concerned,...
Or are there?
Bill Hudak, cofounder of the online marketplace Ztail, is out to take the guessing out of buying and reselling. At a time when economic uncertainty has everyone on edge, he knows that having a return on investment that you can depend on can encourage you to purchase. And that, in turn, will stimulate the entire economy.
For certain items (especially electronics, which are frequently upgraded), Ztail now guarantees that, if you make a purchase at either the retail price or a specified sale price, you will make back a fixed amount if you resell in the next year.
For example, as I write this, one of Ztail's featured sellers is offering an 8GB Apple iPod Nano for a retail price of $139.99. This is a pretty good price, but you might be able to save a few bucks if you took the time to shop around. What makes this price really attractive is the guarantee: If a new iPod Nano comes out and you want to sell this one some time within the next year, Ztail will put it up for sale for you on eBay. The company guarantees that you will make at least $72.79 from that sale. If the item sells for more, you get to keep the entire amount. If it sells for less than $72.79, Ztail makes up the difference.
Hudak likens this program to one used in the auto industry in which the U.S. government backs up warranties for vehicles purchased from Chrysler and GM.
"Because of the economy, there is reason for caution," says Hudak, 37, who lives in Palo Alto, California, where Ztail is located. "But our product is a good model, and we are helping people make money in the secondary market. If you are creative about purchasing products using our service, you can own products for considerably less money. So our product is very much in tune with what's happening in this economic environment."
Hudak's reasoning is simple: If you bought the iPod Nano in the previous example for $139.99 and sold it in a year for $72.29; in effect, using it for a year will cost you only $67.70. But not all the items offered by the eBay sellers who also list their products through Ztail have such a guarantee. An item receives the guarantee only after going through the following selection process:
- An eBay seller sends Ztail a data feed of their current eBay product descriptions. (The site processes data feeds daily.) Sellers who want to participate must contact Ztail beforehand.
- Ztail analyzes the data feed to choose the items that it can cover with a guarantee. This decision is based on an analysis of eBay sales prices.
- Ztail displays the items with the guaranteed resale price.
- After they sign up to use Ztail, users click from the Ztail site to the listing. They then make the purchase on eBay as they normally would from the seller.
- The link from Ztail to eBay has the eBay partner network code on it, which is how eBay knows to pay Ztail a referral fee when the user makes the purchase.
- The user comes back to Ztail when they are ready to resell the guaranteed item.
Complete terms and conditions of the Ztail Guarantee program are found on the company's website.
The company is accepting new merchants and is working on a product to integrate on merchant's sites. "The fee structure is essentially the same as their normal affiliate fees, so around 5%. We will work with an existing affiliate program as long as they can provide a data feed, or we will take a datafeed directly."
Key for sellers: if Ztail has to pay out on transactions where the price is not met, Ztail pays the difference, not the merchant. Current Ztail Authorized Partners include 3Balls Golf, Cambridge Soundworks, Comp USA, Giggle, J&R Music World, Mister Watch Online and Tactics.
Hudak doesn't have a background in computers or programming. In fact, he got his B.S. in environmental policy from the University of California at Davis. But he did analytical marketing, product development, and advertising for three Internet startups that eventually went public: women.com, Epinions, and Google. With Dave Keefer and Jordan Kobert, he founded Ztail in 2006.
"I was at a search engine marketing agency startup, and eBay was a client of ours," he explains. "I saw there were opportunities to use eBay as a platform to do some innovative ecommerce. I got the eBay bug and eventually left to work on my ideas full-time."
Since going online, Ztail has grown to tens of thousands of unique visitors each month, generating more than 100,000 page views per month. Hudak's family is growing as well: he and his fiancée Jessica plan to marry in May.
As AuctionBytes reported in a previous article, Hudak was influenced by Daniel Nissanoff's 2006 book FutureShop. He is excited by the chance to fundamentally change the way consumers view ownership and to facilitate a major change in how ecommerce is done. He hopes to expand the guarantee program beyond eBay sellers and build such functionality into the websites of major retailers.
"I would like to see people change the way they buy and own products," Hudak says. "I want them to consider the future value of a product as a criterion for purchasing, just as they do with cars. We are trying to change the way people think about buying."
If you are a merchant interested in participating in the Ztail Guarantee program, you can find additional information on the Ztail website.
