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HolidayBuyer's Guide
Internet

BuyersZone in market for leads

BuyersZone joins the ranks of Internet middlemen, the latest in a wave of Internet commerce services that attract potential buyers and then deliver them to vendors.

BuyersZone today joined the ranks of Internet middlemen that get paid before anything gets sold.

BuyersZone, an online offshoot of print publisher Beacon Research Group, which focuses on how small and midsized businesses make purchases, is just the latest in a wave of Internet commerce services that attract potential buyers and then deliver them as "hot leads" to vendors in those markets.

What BuyersZone does for small companies buying copiers, 401(k) plans, or health insurance is similar to what Nth Dimension is test-marketing in SharpShopper.com for would-be buyers of consumer electronic products. Inquiry.com pioneered the same concept for corporate buyers of enterprise software.

"Buying isn't just about taking credit card numbers, processing, and fulfilling orders," said Brenda Chin Hsu, vice president of marketing for BuyersZone. "About 30 to 40 hours of research goes into typical office purchase of a phone system, voice mail system, or postage meter--learning the options there are, identifying the right vendors or suppliers."

For products that need to be customized for a specific office, Hsu argues, sales need to happen face to face, not online. But by shortcutting the education process for buyers and sellers, BuyersZone will collect $15 to $50 per hot lead--far below what sellers pay to generate a similar lead through advertising and other means.

Forrester Research, in a June 1996 report, dubbed these new intermediaries "Internet transaction brokers."

"Target a market where there is a lot of interest in selling high-value products and where there are high enough margins to make it worthwhile for companies to pay a toll to get a customer," advised Forrester's Karen Epper. She thinks the corporate market is attractive because it fits both criteria.

For BuyersZone, most of the content comes from the company's bimonthly magazine, weekly business columns, and a book on small-business buying. Its payoff comes when a potential buyer fills out a "CyberReply card" to solicit bids from vendors; then it collects from the various buyers whose information is requested.

The service is free to buyers; vendors pay fees that run from $900 to $20,000 annually. For that fee, they also get a listing in an area called "Vendor Expo" to describe their services or offer commodity items that can be ordered directly.

BuyersZone reflects the basic formula on the "hot leads" category: Provide free, preferably deep content on a complex product to purchase; create a sense of community with areas for users to post and answer questions; let users request more information on a particular product or service; then forward that request--now a lead from an interested prospect--and sell it to a vendor.

BuyersZone also has a specific geographic focus. It's starting in the Boston area and expects to add New York by year's end, then march into six other major metropolitan markets by mid-1998. National chains give it thin coverage in many markets, but sales efforts to line up vendors are now concentrated in Boston.

SharpShopper.com is now testing its consumer electronics service in Seattle and the San Francisco Bay Area, intending to add five other markets by the holiday shopping season. Today, its content consists primarily of detailed data sheets on different products, but it expects to add content from independent consumer electronics publishers.

"We charge by the delivery of impression," said SharpShopper.com founder and CEO Court Lorenzini, describing his basic advertising model. With BuyersZone, retailers don't get the name of a specific prospect but pay for having information about a product in their specific store delivered to a potential buyer.

"We tend to try to deliver customer [impressions] for $25 to $70," Lorenzini said, compared to $1 to $5 per lead in yellow page directories or $70 to $130 for print ads. BuyersZone lets consumers choose features and use them as filters for finding the correct products.

Another player with a similar approach is InsWeb, a consumer-oriented insurance site. InsWeb makes referrals to relevant agents and carriers, but it has integrated insurance applications into its Web sites, so applicants can do all the paperwork online.

Intuit's Quicken Financial Network has a similar approach for insurance now and soon for mortgages. Because both industries are regulated quite closely on a state-by-state basis, payments to Intuit are a combination of brokers' fees, fees for applications, and advertising.

But the general model fits. Overall, these sites are turning their consumer education efforts into a business by delivering potential buyers part way through the sales and education process.