Tuesday , November 26, 2024

With TigerDirect, Assurz Scores Big And Sets the Stage for Growth

Assurz Inc., which this week signed up its biggest merchant so far for its transaction-guarantee service, expects to have about 10 large merchants and between 20 and 30 smaller ones on its client roster by year's end, according to Steve Hoffman, chief executive of the Redwood City, Calif.-based startup, which is less than a year old. For now, though, Assurz, whose service focuses on online retailers and allows consumers to get full merchandise refunds when dissatisfied with a product in the first 90 days after purchase, is working hard to accommodate its latest client, Miami-based TigerDirect Inc. The nation's 24th-largest e-commerce merchant, according to Internet Retailer magazine, TigerDirect wants to have the service in place in time for holiday sales. “We're rushing around to get such a large and formidable customer up and running” says Hoffman, an entrepreneur who once led the creation of one of the first online transaction-processing systems while at First Data Corp. Before this week, Assurz had signed three online merchants that had been announced, and there are more in the pipeline to back up his year-end projections, Hoffman says. He also has done deals with 13 independent sales organizations to sell Assurz to their e-commerce clients. Now, Hoffman has high hopes for the relationship with TigerDirect and for what it can do for his fledgling company, which is founded on the idea that consumers will spend more willingly with online merchants if their purchases are covered by ironclad money-back guarantees. For one thing, not only does TigerDirect represent Assurz's biggest client, but it also brings the company its first multichannel operation, since Assurz will cover transactions at TigerDirect's physical store and through its catalog, as well. In return for a 3% transaction fee, Assurz offers to refund customers' money and pay return shipping costs in cases where customers are dissatisfied and can't get a refund from the merchant. Assurz takes delivery of the goods and disposes of them in secondary channels to keep merchandise from competing with clients' offerings. Merchants may pay the transaction fee itself on some or all purchases, or let customers pay it at their option, alternatives Assurz calls its “all-in” and “opt-in” models. TigerDirect is following the opt-in model, a course Hoffman says most large merchants, particularly in this category, will probably adopt. “Electronics merchants, where margins tend to be thin, tend to be opt-in,” he says. The advantage of the opt-in approach, though, is it will allow Assurz to begin gathering data on consumer acceptance. Calling it “still early days,” Hoffman says he has no meaningful transaction volumes to report. But, he says, “what everyone wants to know, including Steve Hoffman, is what's the uptake and what are the payouts.” This is hard to measure when all transactions are covered. Once Assurz-guaranteed transactions start rolling out at TigerDirect with consumer opt-in, Hoffman says, those numbers will start becoming clear. The merchant did $819 million in e-commerce volume alone last year, up 26% over 2005, according to Internet Retailer. “Once we have Tiger up, we'll have tons of data,” Hoffman notes. Hoffman also hints his transaction guarantees could prove useful to one or more of the alternative payment programs that have formed over the past few years to challenge bank-issued credit cards for online transactions. Most of these systems have struggled with the challenge of handling so-called broken transactions, or cases where customers express dissatisfaction and want to return products. Hoffman refuses to give any details about his plans in this market, but adds, “Watch that space very closely.” Alternative payment methods, such as PayPal, Bill Me Later, and prepaid cards, will account for 30% of Web-based retail dollar volume in 2012, up from 14% this year, according to a report issued this week by Javelin Strategy & Research, a Pleasanton, Calif.-based research firm. The TigerDirect experience could also help clinch more deals with the smaller merchants Assurz targets. The large merchants Hoffman expects to sign before 2008, he says, will likely fall into the $10 million to $100 million category, while the small ones will range from $1 million down to $100,000 in sales.

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