The Internet-based auctioneer Priceline.com inaugurated its grocery-shopping service in the New York City region last week, amidst much fanfare and an aggressive advertising campaign supported by $70 million, to be spent in upcoming months. Part of those riches were plowed into an attractive offer of $10 off shoppers' initial grocery order, a device intended to foster trial of the service.
There's no doubt that such a level of advertising spending will create a lot of noise, and further broadcast the voice and image of William Shatner, Priceline.com's spokesactor. But there's one problem: The firm's name-your-own-price offer seems to be leagues from what supermarket shoppers really want or will use, beyond cashing in on the $10-off offer. (See Page 20 for examples of some of Priceline.com's new print advertising.)
Here's why Priceline.com's grocery auction won't be around for too long. The shopping service is a technological marvel, but in actual use stands the logic of an on-line service on its head. It increases the amount of time and bother that attaches to supermarket shopping -- there is no home-delivery component -- and does little to convince a prudent shopper that it even represents a price break. Further, shoppers lose control of what brand of product they purchase.
Priceline.com works like this: Internet shoppers select from a broad category list what specific product they wish to purchase. Let's say ground coffee. Upon selecting coffee, the shopper is asked to choose from a list of three brands. More than one must be specified. Then, the shopper is informed that the typical price range of coffee is $2.79 to $3.09. Then, a bid sheet rolls up. Shoppers can bid $2.48 for the coffee, said to be 85% of the usual price, and score a "great chance" of having the bid accepted. Other bids are $2.32, 66%, for a "good chance"; $2.18, 50%, for a "fair chance"; or $2.04, 33%, for a "low chance." Shoppers then proceed on to compile a list of products. Shoppers are informed in about a minute's time what portion of their bid list, and which brands, is accepted. Payment for items on the accepted shopping list is made on-line. Then, shoppers take a printout of the purchase list to a participating supermarket, of which there are about 650 in the metro area, and pick their own order. As the on-line order is picked, it must be kept separate from any other goods selected for purchase, since the other goods must be paid for separately.
Does any of this strike to the convenience that is the promise of on-line shopping? No. It fails on almost every count. The offer frontloads what could prove to be quite a bit of extra time into a trip to the supermarket. Worse yet, the service holds no promise that the bid price will prove to be lower than the shelf price shoppers discover upon going to the supermarket. Indeed, one newspaper report on the service published last week found instances of just that situation. Finally, it requires shoppers to go through two transactions at the front end if they wish to purchase non-Priceline.com goods.
Maybe other Priceline.com auction services, such as those for big-ticket travel purchases, will prove to be successful as time goes on. This offer, centered as it is on a tiny-ticket, high-count grocery service, stands little chance.