E-tailer allows consumers to choose margins

Online reseller, Digital Zoo, is trialing a new business model offering consumers the chance to choose their own mark-up on computing and home entertainment goods.

The Sydney-based e-tailer, which sells a range of IT and home entertainment products (including televisions, MP3 players, media centre PCs, DVD players, speakers and digital cameras) launched the new business model after being inspired by Melbourne restaurant, Lentil as Anything.

Lentil as Anything offers customers the chance to pay what they feel a meal was worth, rather than what's listed in a set-price menu.

"We are appealing to the consumer's conscience," Digital Zoo managing director, George Lotis, said. "It gives them the opportunity to pay what they can afford or what they feel is fair and equitable."

Products on the e-tailer's site are listed at what it claims is a default margin of 7 per cent. Consumers, however, have the option of registering with the e-tailer and choosing their own margin - from as little as 1 per cent above cost.

Lotis is confident consumers will pay more than 1 per cent mark-up in the spirit of being "reasonable and fair", but he is adamant the business will stay afloat regardless of what consumers choose to pay.

"Assuming the worst case scenario - that goes against what we believe Australians are all about - customers pay only a 1 per cent mark-up," he said. "We still stay open."

Lotis said the business survives through low overheads. As an e-tailer, Digital Zoo holds no stock - it processes orders to be drop-shipped largely by its distribution partners.

The company also offers finance for purchases using third-party provider, Flexirent.

Freight prices are not included in the listed or margin-adjusted price (the e-tailer offers three-day courier services to Sydney, Melbourne and Brisbane, 10 days to the rest of the country). It should also be noted that choosing your own margin is not automatically offered as an option during the registration process. Customers are instead asked to email the e-tailer to suggest a margin for their account.

The online reseller also covers itself for any changes in price in its terms and conditions - stating that it "reserves the right to change the minimum and/or default mark-up and/or to change the pricing model at any time without notice".

With margins listed at the claimed default of 7 per cent, Digital Zoo's prices are currently roughly comparable, if not higher, than several competing e-tailers - but still cheaper than large retail chains.

For an Asus Media Centre PC (Asteio D22) for example, online prices range from around $1680-$2630. On Digital Zoo, the default 7 per cent margin price is $2224.53. Similarly, a Sony Cybershot digital camera (DSCH2) ranges from $525-$717 on the Web. It is listed on Digital Zoo at $619.14 (with 7 per cent mark-up).