How, he wondered, could one get the best prices at one click. While others indulge these romantic ideas and get nowhere with them, Abbott teamed up with Krishna Mutukuri, a friend at the University where the two Indian Institute of Technology alumni had earned their Master's degrees in 1997.
Fortuitously, Mutukuri had begun working with Amazon.com, which also worked in an e-commerce environment.
The two 30-year-olds co-founded what they described was the next generation online shopping engine focussing on true price discovery and unparalleled consumer benefits.
The idea, despite the presence of so many online shopping engines, cut ice with investors. Earlier this month their company, ugenie.com, raised $5 million investment in its first venture capital funding round from BlueRun Ventures and Sierra Ventures. Promod Haque, who was named the number one venture capitalist in 2004 by Forbes magazine, is a partner in the firm.
Harish Abbott spoke to Suman Guha Mozumder about the need to launch the engine and the benefits it offered consumers.
Why do we need yet another shopping engine?
There are two main things. First and foremost, the need for true price discovery. When you go to many shopping engines the price that you see is not the price that you pay ultimately because of taxes and shipping costs are not accurate. More importantly, they never include any form that consumers can use to get a lower price.
So there was a need for a completely fair, honest and true price discovery engine. If you look at some of the bigger sites in this realm then the top five or six links are for paid advertised listings, not the lowest price listings.
These paid advertisement listings are mingled with comparative shopping listing. So, the first five or six listings do not reflect the lowest price. The consumers, therefore, do not get what they are promised. Secondly, nobody really includes coupons and discounts.
Can you illustrate this point?
For instance, Amazon may be having a discount of say $10 if you buy $40 worth of stuff. The only way for users to take advantage of this is to go to a site and try and find a coupon and see if the coupon can be used to buy what they want.
What we have done is completely take out this guesswork. We identify all the possible coupons that can be attached to this item in real time, attach the most attractive coupons and give you the lowest price. Our price is what we call credit card damage.
We call it that because what you will see is what you get charged to your credit card. This includes shipping, taxes and all possible coupons that you can possibly take advantage of. That was one of the biggest needs missing in the marketplace. More interestingly, we have solved the problem of multi-item shopping.
What is multi-item shopping?
Take a book where you have two items and two merchants. Item one, let us call Tipping Point; and item two, let us call Joy of Cooking. Let us name merchant A, Amazon, and let's call merchant B, Buy.com. Say, Tipping Point was $25 in Amazon and Joy of Cooking was $20 and the total was $45.
Tipping Point at Buy.com was $20 and the other book was $18, the total being $38. Now, on the face of this $45 and $38, most consumers would opt for Buy.com.
However, you have to consider all combinations, including shipping, taxes and coupons. When you do that the final answer may be very different. For instance, in this case, Amazon may be offering me a $10 discount coupon if you buy more than $40 worth of goods at a time.
So when we apply that coupon the consumer will know that the best place to buy from is Amazon because you pay only $35 instead of the $38 Buy.com offers. This is just about two items, involving two merchants.
Imagine when you have five items and 50 merchants. The total number of combinations would in the hundreds of millions. If you really have to find the best way to buy five items you have to run through a 100 million computations, adding all those numbers, applying shipping costs, applying discount coupons to figure out the lowest cost.
This helps because the way multiple items are priced consumers may not prefer to buy them all from one merchant.
What Ugenie does is run through hundreds of millions of such numbers in less than a second or two. We go and get the prices real time from the Web, get all the details about shipping, taxes and coupons and crunch all these numbers in less than a second or two. So, when you wish to buy five items in one click you will know the best way to buy it.
How effective will it be when you buy just one item?
Even if you do that, our list is exhaustive. We have 35 merchants (at present) and in that we have 100,000 plus sellers. We have shipping, taxes and coupons really figured out and one can compare exactly what one would pay across the web. You are never going to pay more than what you would want to. So, in one click it takes the guesswork out. Whatever you see is what you pay -- that is the bottom line price.
You came out with this idea although both of you worked with Amazon, with Motukuri even co-founding Amazon India. How did it come about? Did a shopping experience go bad?
As consumers we have not been happy with the experiences in the comparison-shopping realm online because the data was not clean and the results were advertisement-driven. What we saw was almost never what we paid. So there was this huge gap.
We thought there was a huge need for comparison-shopping for single items. As with multiple items, when I was in school in Stanford, I had to buy four books and I wanted to save money on that.
I tried some research - I went to local bookstores and I went online. I found three or four bookstores and discovered that different books were more expensive in different stores. In some cases, all the books were cheap but the shipping and taxes costs were high. Some had decent prices and coupons, but, again, the taxes were high. I asked myself how I could find all these bookstores online in one click and find the best price.
What kind of impact do you think it would have on consumers?
We are not advertisement-driven. Customers pay what they see. We are honest. So they will save money on single items as well.
Second, and most importantly, for multiple items, in one click we are helping customers discover the best price and the right way to buy it. Not only do you save a lot of money, but you also save time. You do not have to go to multiple stores trying to find the best price. Once you decide to buy multiple items you want to try get into many price breaks across many merchants.
Once you start to combine items and bundle items, you find there are a lot of price breaks in the online shopping space that people are not using. What we are saying that if you bundle with us - and mind you, we are not forcing you to do so - you take advantage of all the price breaks. We help you find those hidden savings.
In terms of technology, how different it is from the ones being others use?
Obviously, our technology is superior, but I cannot fully disclose it.
But from the layman's perspective how does the technology differ from what other shopping engines use?
For a layman, we are putting the burden on ourselves to crunch through all the numbers. We are giving a simple solution with just one click.
What did you learn at Amazon that stood you in good stead in this venture?
It is all about what consumers want and doing your best to deliver what your consumers want. The ability to understand the needs of them through their action on the Website is critical because unlike in enterprise software nobody tells you what they need. The only way to find requirements is to intently listen to what the customers are saying - and they do not say it out loud; they just browse and then leave. The ability to understand and have intense focus is important for delivery.
Online shopping in the US is said to be worth over $200 billion. How much of it do you hope to grab in the next year or so?
It is hard to tell. We know that this is going to take time because it is a new concept for the customers to understand. But we are hopeful.
If goods worth $100 million are sold over the Internet, how much will consumers save if they use your comparison-shopping site?
I think it is a broad question. What we have found is that we can save upwards of 20 percent. It is based on samples of orders that we ran though our site.
Is it going to be based in North American alone or will you expand it to India as well?
For now it is North America. But we do have plans to expand in other countries. I do not want to comment on which ones as yet.
