This post is part 2 of a series about the early days of shopping comparison site PriceGrabber.com. You may want to read part 1 before continuing.
PriceGrabber was created in 1999, at the height of the Internet boom, with only about $1.5 million in seed money. The company was able to raise a sizable amount of capital using the tools it had created for the general Internet marketplace of expert users and enthusiasts. By tracking exceptional deals from merchant crawls performed multiple times a day PriceGrabber was able to turn bubble-worthy goofs of other companies into seed money for a company built with a founder’s vision.
PriceGrabber’s first feature retrieved prices from online retailers such as Buy.com or PC Mall and compared those prices against the prices charged by wholesale distributers Ingram Micro or TechData. Most online retailers simply drop-shipped from a wholesale distribution warehouse using automated fulfillment software. The business environment of the go-go 90s and the level of computing automation created pricing mistakes and mismatches throughout retail systems creating bargains at hundreds, if not thousands of dollars off regular prices.
The Internet Archive happens to have captured PriceGrabber’s homepage the day I made a few thousand dollars in five minutes. A ViewSonic PJL855 LCD projector normally sold for over $3000 but on October 7,1999 Buy.com had five projectors for sale at around $300 a piece: 90% off the normal sale price. A few clicks later and the order passed through Buy.com’s payment system and was passed along to Ingram Micro’s warehouse for fulfillment. A week later a few of the projectors showed up on eBay and sold for a profit of about $2500 each. Not a bad day.
Our favorite discounted item was the Iomega Zip 250 drive introduced in 1999. The $200 Zip 250 was extremely popular and well-stocked by all wholesale distributors. It was not uncommon to discover Zip 250 drives for sale in large quantities for under $50 each and resold for a profit of about $100 each. The team bought Zip drives by the truck netting what must have been six-digit profits.
CompUSA — the same company that had turned away Grabware — had a very liberal return policy even if you did not purchase an item from their stores. We swapped a few Zip drives for computer workstations, commodity server hardware, and office supplies and sold the rest through auction sites.
In the beginning PriceGrabber did not charge merchants for leads as we were still growing our user base. The “best deals” feature of PriceGrabber.com was eventually pulled from the site as these errors and oversights caused too many embarrassing headaches for merchants paying PriceGrabber for thousands of click-throughs a day.
The name PriceGrabber was meant to represent a spider grabbing an item based on price. PriceGrabber’s early days turned well-funded goofs into bootstrapped capital, allowing the founders to retain more control over the business and build for the long-term.