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Drop 'Til You Shop Reinvents the Clearance Rack

December 9, 2013Written by Tom Ryan

Likened to the last 30 seconds of an eBay bidding war, a new website, Drop 'Til You Shop, launched last week, bringing gamification to bargain shopping.

Through a patent-pending pricing algorithm, shoppers compete against each other for limited-time offered products in a "rapid-fire" barnyard auction scenario.

The site features three deals going on at a time. Each item is initially assigned a suggested retail price, but the price quickly heads down, cent by cent, until a bidder "freezes" the item. The shopper is then transferred to a checkout page where they have three minutes to pay. Failing that, the item gets re-released back on the website.

The bidding process generally lasts less than 60 seconds, but ends any time a bidder claims the item. Determined by user activity, the price-drop descent also runs faster as more shoppers participate. Feeding the frenzy, the site will say "almost gone" and then "gone" once a deal is claimed. Once "gone," a new deal pops up.

The website initially plans to hold two daily, three-hour shopping events (9:00 a.m. to 12:00 p.m. in the morning and 9:00 p.m. to 12:00 a.m. at night).

"Really the most exciting part of eBay is the last 30 seconds of bidding," Nick Rosenthal, CEO of Drop 'Til You Shop, told Yahoo Finance. "We're really allowing users to have that experience all the time." The site recently saw a $300 iPad Mini go for $170.

For participating retailers, the gaming aspect promises to bring in much higher margins than traditional clearance efforts. The algorithm takes into account the total average margin targeted by the retail partner against user behavior.

"Drop 'til you Shop bridges the gap between first discount and final clearance for retailers," said Mike Theilmann, current investor and former group EVP of J. C. Penney, in a statement. "What used to take three-six months with stair-step discounting can now happen in just one week."

According to TechCrunch, retailers will soon be able to embed Drop 'Til You Shop on their own sites. The startup takes between 8 and 10 percent of each sale on a retailer's site and an 18 to 20 percent cut if the sale is completed on its own website.

In beta, user sessions were lasting up to 35 minutes, which Mr. Theilmann described as "simply unheard of in the online world."

Apparently, the activity overwhelmed DTYS's team as the website crashed last week upon launch. The website page now indicates that products and services are being updated to enable more live events. "Secret Sales" invites are being offered to those providing an e-mail address.

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