A veteran of the online auction industry is looking to harness the power of the crowd in his latest venture.
Gene Fusz is the Founder of Biffle, a new platform combining aspects of a buying club with reverse auctions to provide consumers with the lowest prices on popular products.
It starts with empowering the consumer with the information they need to make informed buying decisions, Mr. Fusz said.
Mr. Fusz grew up in a family that owned many car dealerships in the St. Louis area. He ran his own dealership for a decade before he began to look for a new challenge. This coincided with the beginning of the internet boom.
It was also when Mr. Fusz came across Microcosm, a book by George Gilder which charts his predictions for how technology will alter society and business.
That led Mr. Fusz to study auctions and game theory for dozens of hours each week to learn how he could leverage the new medium to create unique consumer purchasing experiences.
That eventually led him to create the auction process used by eBay.
“eBay was the first platform to use the vendor in a unique way,” Mr. Fusz said. “They figured out how to help sellers generate the maximum selling price.”
No small feat considering AOL and Yahoo were among the competitors who spent over $100 million each trying to replicate the feat but failing in the process, he added.
Now Mr. Fusz is on the other end of the transaction as he tries to help the buyer get the best possible deal.
“The eBay model works great for unique products where there is limited supply,” Mr. Fusz said.
Mr. Fusz combined his study of game theory and auctions, which he was convinced is the most powerful pricing mechanism.
“There was only one option that was the most appropriate and that is when I had my big ‘Aha!’ moment,” he recalled. “The best way for consumers to get the best possible price is to combine the power of a reverse auction with a buyer’s agency.”
That is the basic concept behind Biffle. Biffle leverages the power of the crowd and combines it with search engine technology to search the internet for the best possible price on televisions, sporting goods and other popular consumer products. Once identified, Biffle contacts that vendor to try and negotiate a better price on the consumer’s behalf.
There are many benefits to his method, Mr. Fusz said, and to illustrate he returns to his roots selling cars.
“The car business is filled with intrigue from the consumer perspective,” Mr. Fusz explained. “It is an asymmetrical market because sellers have more information than the buyers do.”
Symmetrical markets are the only way for buyers to get true price transparency, he added.
“When buying consumer products, people do not care what vendor they buy from,” Mr. Fusz said. “They are completely agnostic.”
The only caveat to that is when buying online, some consumers will spend more at a recognizable retailer such as Amazon or Walmart and forgo Chuck’s T.V. Emporium in Grand Forks because they cannot see Chuck, so they do not trust Chuck.
That is where Biffle comes in. Their users tell them they want a certain big screen T.V. then it is up to Biffle to negotiate the price and delivery terms. They do not know if the TV is from Walmart or Chuck’s until they open the box.
“You don’t know who the seller is on the NYSE either,” Mr. Fusz said. “And it works fine.”
But if the consumer opens the box and the product is broken or otherwise not as advertised, it is Biffle’s problem to solve not theirs. That eliminates the fear of buying from unknown entities while increasing Biffle’s vendor pool.
Mr. Fusz envisions Biffle becoming like NASDAQ or the NYSE where the acquisition process is open. People know they are getting the best price they can.
This has been his goal since early in the process, how to create a stock exchange atmosphere for consumer goods.
At the beginning of the decade he set to work preparing his paperwork for the SEC when he got a call from his lawyer telling him about the coming JOBS Act.
“You know what this means,” the lawyer said.
Mr. Fusz hopes to leverage the publicity afforded an early adopter to take advantage of Regulation A+ and generate some early momentum for Biffle. The company is conducting a Regulation A+ offering.
Biffle plays perfectly as a Regulation A+ company, as its success will depend on the size of its affinity group. After getting a great buy for dirt cheap, they will become the best advocates for the company. A textbook situation for a Regulation A+ company.
“I’d rather have 1,000 invest $1,000 each than one person invest $1 million,” Mr. Fusz said. “Because 1,000 evangelists are better than one.”
Those 1,000 people benefit from the crowd’s collective purchasing power to receive better prices than they could ever negotiate on their own, he added.
Will Biffle be getting most of their deals from the Amazons, Alibaba’s and Walmarts of the world? Is Chuck in Grand Forks frozen out?
Definitely not, Mr. Fusz said.
“We’ll buy from Amazon if it is the lowest price, but remember they are not just focused on providing the lowest price for consumers. They also want to maximize gross margins for their stockholders.”
The Walmarts and Amazons leverage the value of their brand name to adjust product prices as high as possible to generate maximum profit, Mr. Fusz explained. Our friend Chuck and his ilk use low prices to gain a foothold.
No matter where the TV comes from, the consumer benefits in the end, Mr. Fusz said.
“Consumers have never been shown how much power they have through crowdsourced buying power. This will do it.”