Effects of daily and “woot‐off” strategies on e‐commerce

The purpose of this paper is to analyze the prices and consumer behavior at Woot.com, a deep discount online retailer, and compare two selling mechanisms it uses – the regular “one deal a day” and the “woot‐off” mechanisms. The paper also compares the “one deal a day” business model with the mainstream multi‐product retail business model.

Product, pricing, and sales data for products sold on Woot.com were collected using an automatic online data‐collection agent. The data set of 572 products includes 270 products sold using the regular “one deal a day” format and 302 products sold on ten woot‐off days.

Two periods of the day were identified when most orders were placed. It is found that Woot.com's prices were usually lower than the lowest found elsewhere online, and the price differences were even greater during woot‐offs. The analysis reveals that the price elasticity at Woot.com is lower than those at internet retailers such as Amazon.com or BarnesandNobile.com. In addition, factors such as having the lowest online price, a large customer base, and selling during a “woot‐off” and on weekdays all help increase sale outcomes. The comparison of the “one deal a day” and the multi‐product retail business model suggests that the former focuses on niche markets and primarily sells closeout and refurbished products to online bargain hungers.

The current study contributes to both research and practice toward understanding prices and consumer behavior at “one deal a day” web sites. Future research can examine other aspects, such as the order arrival on these sites.