InformationWeek: The Business Value of Technology

Scheduled to go live with its business-to-business Web marketplace early next year, Dollardays.com will match buyers and sellers of discounted close-out merchandise that results from manufacturers' production overruns, mislabeled packaging, retail overstock, and many other causes. Last week, the company retained BTEK Software Inc. to upgrade its SQL database and customized shopping cart to handle what it hopes will be major Web traffic.

Dollardays.com has signed up about 200 of the United States' largest regional close-out distributors to supply products. Target buyers are operators of 15 million independent businesses, primarily retailers, and 20 million home-based businesses.

"This is a niche that hasn't yet made it to the Web," says Ron Friedman, president of Dollardays.com. "It's a very fragmented industry that we want to consolidate, to help buyers who are looking for products, and to enable distributors and manufacturers sell into territories they otherwise couldn't."

Registration won't be required on the site, although registered users will receive additional discounts. Consumers are welcome as buyers, but suppliers will rarely sell individual items; the Dollardays.com online catalog will consist of product lots. And it won't be an eBay-type auction or bid, but a straight sales transaction at the discounted list price. Dollardays.com will build its profit margin into the price and won't charge transaction fees to either buyers or sellers.

"There's no need to play games or make a mystery out of it," says Friedman. "We're approaching it just like a brick-and-mortar business, but with a new medium. Our management team comes from the retail and distribution industry, so we know the brick-and-mortar way of doing business." Friedman was a founder of Video Alliance America Inc., a national buying group for independent video retailers. Other Dollardays.com executives have worked at Federated Stores, Crown Book Stores, Value Merchants, and Fleming Cos.

Bringing the close-out industry online "is the kind of thing that the Web is perfect for," says Cathy Hotka, VP of IT for the National Retail Federation, a trade group in Washington. "When retailers and manufacturers find something they no longer need, the Web just offers another pricing and distribution model. Getting rid of 'whatever' is going to be a growth industry, and the Web is a great way to make it happen."