DealTimecom, Internet Value Hunter, Looks to Tap Share Market

From Bloomberg.com

April 5, 2000
Netanya, Israel -- The first time Daniel Ciporin saw the "tiny grotto" of an Israeli headquarters at DealTime.com Ltd., an Internet shopping service he'd decided to head, he almost quit his new job. Fifteen months after joining, he's glad he stayed. The company has moved to new offices, its workforce has leaped to 180 from eight, and 3.1 million people visited its Web sites in February. Now it's preparing to sell shares worth as much as $50 million on the Nasdaq Exchange.

DealTime is one of several companies that run Web sites known as shopping robots, which let shoppers compare prices for anything from computers to tea bags, as its software scans thousands of sites. Once they've chosen the best offer, shoppers go to the retailer's Web site to make their purchases. "We're an information exchange company," Ciporin said. It's the "sweet spot" of electronic commerce, avoiding the costs of retailers and exploiting the vast database the Web offers, he said.

Revenue comes from advertising and the sale of information on consumer spending patterns to companies seeking to hone their marketing. It's a business model that couldn't exist without the Internet, rather than a traditional business molded onto e- commerce, Ciporin said.

That hasn't stopped DealTime, with offices in Netanya, Israel, and New York City, from posting the losses common to Internet companies. Founded in 1997, DealTime lost $19.1 million on sales of $525,000 in 1999, after losing $596,000 a year earlier. Most of the losses resulted from a $12.3 million advertising campaign.

The Need for Publicity
Advertising will be crucial if DealTime is to wean customers from well-known Internet retailers such as Amazon.com Inc. It also faces competition from rival shopping robots, known as shopping bots, including Mysimon.com, StreetPrices.com, Compareitall.com and Ecompare.com.

"The question is whether consumers will be brand-loyal" to retailers like Amazon.com, "or whether people will go to shop- bots," said Dan Harverd, a technology analyst at ING Barings in Tel Aviv.

A Web site, www.botspot, counted 71 shopping robots. In a revue of the industry, it named StreetPrices.com as the best, though it said DealTime.com was "noteworthy."

The competition doesn't damp the optimism of the 42-year-old Ciporin, who left a lucrative position at MasterCard International to join the Israeli company in January 1999.

The company's Web sites in the U.S. and the U.K. are only eight months old, yet they attracted 3.1 million visitors in February. That ranks them among the top 25 shopping sites, along with more well-known sites such as Amazon.com., he said.

Breadth
The reason for DealTime's popularity lies in the breadth of retailers, auction sites and classified ads it searches to find the best offer. An Agfa Snapscan Touch flatbed scanner on sale for 119 pounds near Bloomberg's offices in London, could be found for 97 pounds before delivery costs through the DealTime Web site.

"The service is very convenient," said Modesto Green, a 32- year-old New York City resident who wrote to DealTime after the site helped him save $50 on a printer. "Every time I'm thinking about buying something, I check with them."

The number of online shoppers is expected to soar to 183 million in 2003 from 48 million in 1999, according to International Data Corp. Moreover, the latest mobile phone technology will also allow customers to look for the price of goods while touring stores.

DealTime isn't just popular among shoppers. The company also sells real-time information about consumption patterns to companies. When demand rises, for example, companies can track it and lift prices.

Drilling Down
"We can drill down to any specificity, like the demand curve for TVs; for 26-inch TVs; or for 26-inch Hitachi TVs," Ciporin said. "That's very valuable to merchants." He declined to disclose how the company charges merchants for the information, or what percentage of total sales these charges represent.

"Shoppers get the best deal and merchants get information that's valuable to them," said Michael Eisenberg, a partner at Israel Seed, a Jerusalem venture capital firm that holds about 10 percent of the company. DealTime will soon open sites in Germany and Japan and is eyeing other countries, including Brazil.

Growth will be financed by this year's IPO. Ciporin declined to give more details as the company is in the so-called quiet period before an IPO when it can't talk about future growth plans. Underwriters for its IPO include Robertson Stephens; Bear, Stearns & Co. Inc.; Warburg Dillon Read LLC; and Nomura International.

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