Users profit from finding online deals

Some Web sites offer users a cut of the profit for finding a good deal online.

JP Leider

Craigslist and eBay offer the promise of great deals to those with patience, but, for users on a tight schedule, waiting for a good deal or a last-minute bid may not prove practical.

There are myriad sites that look to simplify the online shopping process for the discerning user, and a new entrant to the scene plans to turn incentive-based shopping on its head.

This week, Modoshi.com will become widely available to the public. Modoshi will attempt to stand out in the already-crowded online shopping scene by offering a novel model to users – anyone who can find deals online and post them to Modoshi will receive a cut of the organization’s commission.

Typically, Modoshi will receive 7 to 8 percent from an affiliate for each sale, and on average, 40 to 50 percent of that commission will go to the user who posted the deal, said the site’s co-founder Vaishali Angal.

In theory, for a $10 sale from an affiliated Web site, the user could make around 40 cents.

“The site itself allows users to participate and contribute by finding online deals and posting the deals, and it’s really geared toward the entire online community,” she said.

Generally, users spend time trying to find the best deal online, buy it and forget about it, Angal said. But Modoshi allows users to continue benefiting from finding a deal.

Currently, users can only profit from deals found through about 150 sites that are affiliated with Modoshi, such as Buy.com and Amazon.com.

In upcoming months, Modoshi will roll out a program to compensate users for finding good deals on non-affiliated sites, Angal said.

Although Modoshi’s model may be relatively novel, the idea of revenue sharing is anything but new.

Google’s pay-per-click advertising is what brought the model into the limelight, according to Alok Gupta, department chairman and Carlson School of Management professor of information and decision sciences.

The amount Modoshi is willing to share likely reflects on the industry-wide move to use the potential of social networking, he said.

“Sharing half is very appealing to people – it has a ring of fairness and fairness is becoming a big thing in (social networking) environments,” he said.

Contingent on Modoshi’s volume, Gupta said, the organization could likely get away with dropping commission payments to users down the road.

“If they are getting very high value, they can drop (it) because they are generating substantial revenues,” he said. “If they don’t and the revenue streams are pretty low, then people would like to have a substantive chunk of whatever sales are made.”

Modoshi’s challenge will be “getting on the radar,” Gupta said.

Similar sites

One of the broadest types of online shopping sites allows users to compare prices from different merchants side by side. The Internet giants like Yahoo and Google offer such services.

Michelle Kane, a public relations manager for the comparison site PriceGrabber.com, said users can save from 25 to 30 percent shopping online compared to in stores.

Sites like PriceGrabber allow users to do research before they look to make actual purchases, either online or offline.

Users can see, in-store, if a product is right for them and check PriceGrabber through their cell phone for the price range, Kane said.

On the surface, FatWallet.com seems like a similar model, but breaks from the pack of comparison shopping sites by offering users varying amounts of cash back should the make purchases through FatWallet’s affiliate sites.

Users can see anywhere from 1 to 30 percent back, depending on the site.

Although companies like eBay and Amazon draw a large and often fiercely devoted fan base, FatWallet benefits from patron loyalty as well, according to Jim McIlroy, FatWallet’s marketing manager.

Online shoppers often benefit most when they have access to forums, like those at FatWallet, McIlroy said.

“They are able to have conversation freely from consumer to consumer, helping each other out,” he said. “That is huge.”