How do deal-a-day sites work?

June 11, 2008 1:40 PM

How do deal-a-day sites work? Are they really 'deals', and where do they get all the loot?

Woot.com, Chainlove.com, steepandcheap.com, backcountry.com. How do these sites WORK. I am a programmer, I could script one up in a day, that side is easy. How do they actually get all the crap they sell, and still make a margin on it all? Are the deals really deals? How are they sourcing stuff in quantities enough to even make them available for volume payback on low overhead?

If I wanted to start a deal-a-day site (and I dont), what might my background look like to be most successful? Do I have connections to a large wholesaler through existing business lines, and I offer to buy 5000 of their remaining 2007 stock of closeouts? Do I have a "friend in the business" that sources me say Oakley stuffs?

How would I get a deal to offer a deal?

posted by SirStan to computers & internet (4 comments total)

I believe a lot of what you will find on Woot, specifically, is refurbished. I would imagine that the same goes for similar sites.

As for the second part of your question, as with all business ventures, Connections Are King.
posted by prunes at 1:48 PM on June 11

I worked for a company that tried to off-load some items to woot. We actually contacted them. We had an inventory of some electronics that were not selling and have been sitting around in a warehouse for 18 months. The woot rep (Hi Russ!) gave us a price that was really, really low. We didnt do it, but a lot of businesses do. If you have inventory that isnt moving then woot can get it off your hands. Theyre not really any different than any other refurb or clearance outlet.

How do they actually get all the crap they sell, and still make a margin on it all? Are the deals really deals?

Yes, they are deals. Woot's prices are usually the lowest. They make a healthy margin but the company they are buying them from doesnt. They just take the loss. That's better than paying to have the items destroyed or wasting money keeping them in storage. Its a good way to get rid of 5,000+ items that will never sell.

Do I have a "friend in the business" that sources me say Oakley stuffs?

This is true of all businesses. You hire sales people who can move product, or in this case, source product. You hire people with connections and experience. Start small, etc.
posted by damn dirty ape at 1:49 PM on June 11

Yeah, they are like the "Pic-n-Save" or "99-cents-Only" stores of the internet. They get liquidation items from othter companies or distributors. My favorite is http://www.tanga.com/ since it appeals to a particular niche I'm interested in which happens to be boardgames.
posted by markhu at 2:27 PM on June 11

chainlove.com, steepandcheap.com, and whiskeymilitia.com are all run out of backcountry.com's warehouse. BC is just selling the stuff that they couldn't sell on their main website or even in their outlet sites like backcountryoutlet.com, dogfunk.com, and tramdock.com. They basically have a built in inventory (all at the same warehouse) for setting up a deal-a-day site.

I'm sure that soon enough all retailers will have a deal-of-the-day on their websites. A lot of them already do, but very few of the one's I've seen are even worth checking everyday.

In order to profit from this style of websites, you'd have to sell high volume, since the deal would have to be good enough to keep people checking your site regularly. You'd have to compete on price. How else would you be able to keep people interested enough in your website. And competing on price would mean you need lots of capital to get lots of inventory.
posted by metacort at 10:41 PM on June 11