From October 2007

By M.V. Greene

Roger McClannen wanted a unique address for his “deal-of-the-day” website, and he came up with Froomb.com. The URL – an acronym for “Fluid Running Out Of My Brakes” – is as off-beat as the growing legion of retailers – and customers – that have jumped on the deal-of-the-day bandwagon.

Woot.com most often gets credit for leading the charge on deal-of-the-day, whereby marketers and merchandisers lure customers and move product through daily discounted specials on a limited number of items. Woot is still going strong, and Froomb and other sites – PacificGeek.com, DailySwag.com and Cozy.com – also are becoming must stops for cost-conscious consumers.

McClannen, who lives in Lafayette, Ind., worked for pharmaceutical giant Eli Lilly and Co. for 29 years before getting downsized. He “got addicted” to Woot and tapped his “attractive severance package” to launch Froomb in September 2006.

Unlike the majority of deal-of-the-day sites, Froomb doesn’t actually sell anything: Rather, it serves as a clearinghouse, listing, free of charge, the websites of retailers that offer daily or weekly deals.

“I take no orders, and I ship nothing,” McClannen says. “I just route people to deals.”

McClannen’s business model is based principally on a combination of affiliate commissions, pay-per-click arrangements with search engines and some advertiser ads, and he says that he generates “decent income” via the various revenue streams.

Froomb is a one-man band, and McClannen admits to be being unfamiliar with some of the standard technologies used to power e-commerce sites. It launched with a listing of 30 deal-of-the-day sites; that number has since grown to more than 100. “Probably about 80 percent of the deal-of-the-day sites I run don’t pay me anything,” he says. “A few of them have links back to my site and that generates traffic,” but McClannen is considering pursuing licensing agreements with the sites.

Deal-of-the-day is a concept finding increasing acceptance among pure-play e-commerce and traditional store-based retailers.

“You’re just trying to pique the customer’s interest,” says Michael Klingerman, a buyer for Famous Smoke Shop, a cigar, humidors and accessories catalog house in Easton, Pa., that offers a daily deal under the banner of “Cigar Monster.”

Light-hearted sell
“Mostly it is about just catching the customer’s eye with a good deal that is hard to pass up and he’ll go ahead and add to his collection of cigars,” he says.

Famous Smoke Shop leverages the levity that has come to be part of the deal-of-the-day formula to promote CigarMonster.com. “If King Kong and Godzilla smoked cigars, they’d be shocked by the fantastic buys you’ll find here each and every day. Start devouring some of the biggest and best cigar deals that ever walked the earth, or any other planet,” the site jests.

The dive into deal-of-the-day was “based purely on trying to keep the mix fresh,” Klingerman says. “In essence, we’re trying to take a little of our customers’ request and consumer demand and balance the excess inventory that we have and the pricing that we can move things at.”

Famous Smoke Shop has done daily deals for less than a year, but Klingerman likes what he sees so far. The shop has moved “some good quantities” of product – at times more than 1,000 units in a day. The fact that customers have to log into the site to find the deal is positive, Klingerman says.

“We’re still trying to track some patterns and history here or there,” he says. “The biggest thing I am looking for is traffic more than anything right now, and trying to see if people are consistently logging in to check out the site even if they don’t buy at this time.”

Ron Hassey offers daily deals from the website of his lone store, Cove Cutlery in Charlestown, R.I. He doesn’t view deal-of-the-day as a profit-and-loss center, but “as my marketing” to drive prospective customers to his website without having to pay for search engine placement.

Cove Cutlery typically moves fewer than 100 items via daily deals, but “I look at it as overhead,” Hassey says. “Rather than using click-throughs with Yahoo! or Google, if I end up with a negative – a non-profit – then it’s really an advertising expense as far as I am concerned [and] I’ve got a customer who has experienced my website now.

“I see it more as a replacement for very expensive advertising,” he says.

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