Note: Descriptions are shown in the official language in which they were submitted.
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
CORRELATED INDIVIDUAL UutIT SALES
FRICE REDUCTION BASED ON CUMLrtLATIVE SALES
Field of the Invention
This invention relates to the sale of goods and/or services through an
interactive website on the Internet. -
Background of the Invention
Numerous websites have been established on the Internet for the marketing of
a wide variety of products and services. The Internet provides a medium that
allows
customers, including individual consumers and representatives of small and
large
entities, to shop conveniently from the home or office, without physically
going to
a store location. Consumers can shop at any time of the day, have access to a
wide
variety of products and services, and can purchase items either by browsing or
going
directly to a specific website for a particular item. Consumers purchasing
products
over the Internet are accustomed to providing credit or debit account
information and
secure financial systems have been developed to insure the integrity of these
financial
transactions. The popularity of such on-line shopping is evidenced by the past
growth
and the future estimates of a significantly larger dollar volume of so-called
electronic
commerce.
Internet search engines are available to assist prospective purchasers in
locating websites where specific products, or types of products are being
offered for
1
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
sale. Manufacturers and distributors of various types of products and services
have
provided detailed descriptions and specifications at websites which they
maintain. In
some cases, manufacturers and distributors provide interactive purchase order
display
screens that permit customers to order, confirm the availability of, and pay
for
products via the Internet without any direct contact with the seller's
personnel.
A number of Internet marketers have succeeded by offering purchasers
standard products, such as books, at a discounted price that is far below
discounted
prices offered at traditional book store outlets. Although the Internet
marketer's
lower price is based on an anticpated large volume of sale for a particular
product,
the discounted price is fixed and does not vary with actual volume of sales.
Although there are obvious benefits to sellers and marketers that employ the
Internet, including manufacturers, regional, national or even international
distributors,
as well as local merchants, there is no evidence of a general practice of
passing along
cost-savings to individual Internet purchasers of the products or services. In
fact, it
appears that the general approach to the broad category of mail order
shopping, of
which electronic or e-mail commerce is but a sub-category, has been to offer
goods
at what appear to be premium department store prices and to then further
enhance the
cost of the goods to the purchaser by addition of shipping and handling
charges which
can average 15%-20%, or more, of the purchase price for individual items. In
most
cases, shoppers with access to larger department stores, suburban malls and
manufacturer's outlet or discount shopping centers, home center stores, and
the like
can obtain products of comparable quality at prices less than those paid for
mail
ordered goods. The mail-order catalog fulfillment operation does not incur the
costs
of retail store leasing, fixture purchase and installation charges, sales
personnel, cash
2
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
registers, security, etc. , and can locate its fulfillment/distribution center
in relatively
less costly warehouse space, staffed with less-skilled workers. In addition,
the mail-
order business can secure volume discounts from national shippers, and the
potential
avoidance of state and with the avoidance of local sales tax, the cost of
getting the
goods into the hands of the purchaser should be less than through the normal
retail
channels of trade.
It is also a common practice to provide purchasers with a discount for volume
purchasing. For example, the purchaser of a container with 250 aspirin tablets
pays
but a tiny fraction of the per tablet cost of a package containing 25 aspirin
of the
same brand. Volume discounts are also granted by manufacturers to regional
distributors or to national discount department stores. At present, however,
there is
no means by which a purchaser, whether an individual or a small business, that
is
interested in purchasing one or a few units of a specific item can obtain any
special
treatment or secure a discount from the posted purchase price.
It is therefore a principal object of the invention to provide benefits to
purchasers that exceed those of the traditional marketplace.
It is another object of the invention to provide an interactive Internet
website
operating system that will afford consumers the opprotunity to purchase one of
a
variety of products and/or services at a reduced price, or prices, that is
based on the
number of independent sales transactions for the specific product or service.
Yet another object of the invention is to provide means for managing and
operating an Internet website that will lease advertising space and time,
provide
consumer ordering, billing and acknowledgement services, generate order price
3
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
confirmation information and shipping instructions to thereby provide
marketers with
new opportunities to meet customer needs and generate additional sales.
Summary of the Invention
The above objects and additional advantages will be achieved by the method
and apparatus of the invention for operating a website on the Internet at
which one
or more products and/or services are offered for sale to consumers at an
initial or
base price and at one or more prospective lower prices that are correlated to
or
determined by the total number of sales orders for the specific product or
service that
are received by the seller. The discount, or reduced selling price, can be
based on
each individual unit sold during a given time period, or can be reduced
incrementally
as the number of orders received reach specified numerical levels. In order to
meet
reasonable consumer requirements or expectations for delivery of the product
ordered,
in a preferred embodiment, the information for the product will include at
least one
target date in the future or a time limit by which the final selling price of
the product
will be confirmed to the buyer.
In a preferred embodiment of the invention, the purchaser is provided with at
least one option to extend the period of pendency of the order before shipment
for the
purpose of prospective entry of additional individual purchase orders that
will further
reduce the final purchase price for the product of interest. It will be
understood that
the establishment of a first target date or time for determination of the
total number
of purchase orders and the correlated final sales price will be dependent upon
a
number of factors, including the total number of items that can be supplied
from
inventory or produced by the manufacturer. Alternatively, a first, second and
4
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
additional target dates can be established at the outset so that
predetermined. or
"firm" shipping dates can be elected by the purchaser.
The method of the invention can also be programmed to operate the system
for the purchase of products at a special daily price if a sufficient number
of orders
are received, then the product will be sold at the specified lower price. In
the
practice of the method of this embodiment, the purchase order can be accepted
with
the understanding that it will be canceled if the volume of orders is
insufficient to
trigger the reduced final sales price and that the product will be shipped
without
further confirmation and the buyer billed at the end of the day, or other
announced
sale time.
It will also be understood that experienced manufacturers, distributors and/or
marketers will have the additional advantage of being able to estimate volume
and
date information that will affect reduction or reductions in the price
schedule.
Although the seller may choose to provide this information relating to unit
sales
requirements or volume of sales at the website in connection with the
descriptive
information and sales pricing, the seller may choose not to include this in
the screen
display information. In a preferred embodiment, a graphic display with or
without
textual data is provided with the product description.
The invention comprehends the establishment of an interactive marketing
website on the Internet and the posting to this website of displays of
informational
fields describing at least one, but preferably a plurality of products and/or
services
that are available for sale. In addition to an appropriate pictoral
representation of the
product, written specifications, performance characteristics and the like,
there is also
displayed an initial or current selling r each product or service. Also posted
at the
5
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
website in association with the product identification information is at least
one lower
alternative price and an associated number of prospective sales of the product
that
must be concluded in order for the initial or current price to be reduced of
the next
lower alternative price Thus, a prospective purchaser or browser who visits
the
website is provided with information that establishes a direct correlation
between the
initial or current offering price for the product and the reduction in the
price that will
result from the confirmation of a specified number of prospective sales. The
individual purchaser can therefore obtain the benefit of a specified quantity
discount
so long as the indicated number of purchase orders are confirmed in the
future.
In one preferred embodiment of the invention, a time period is also
established
during which the required number of purchase orders must be confirmed in order
to
secure a specified reduction or a lower price. In another preferred
embodiment,
incremental increases in the number of confirmed purchase order results in
corresponding incremental decreases in the eventual final sales price of the
product
or service.
Since most prospective purchasers will require that the product be delivered
not later than a specific date in the future, the processing of purchase
orders will be
terminated and fixed as of the date specified.
Once the final sales price has been determined, it is entered into a data
processing system and compared to all confirmed purchase orders. Purchase
orders
reflecting a sales price that is greater than the final selling price are
sorted, and a
credit for the price difference is transmitted to the purchaser's debit or
credit account
holder. In a preferred embodiment, a final confirmation of sale is also
transmitted
via e-mail, telephone, or facsimile to the purchaser. The final purchase order
6
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
confirmation list is also transmitted to the fulfillment center, which may be
the
product's manufacturer, a regional or national distributor, wholesaler or
local
merchant.
In the event that the number of confirmed purchase orders is not sufficient to
effect a reduction in the initial offering price, a notice can be transmitted
to the
purchaser with an option to rescind the purchase order, or to maintain the
order for
a further specified period of time. If the purchaser elects to rescind the
order, a
credit notice is transmitted to the purchaser's debit or credit account holder
in the
amount of the purchase price previously billed.
The apparatus and method of the invention further comprehend according a
purchaser of multiple units shipped to the same address a reduction from the
pro rata
shipping charges for a single unit to the same address; and according
discounts to
individuals or entities whose names appear on a "membership" list and/or to
repeat
purchasers, i.e., to those who have completed a prescribed number of previous
purchases in a prescribed period of time.
Brief Description of the Drawings
The invention will be further described with reference to the attached
drawings
in which: Fig. 1 is a flow chart of a presently preferred embodiment of the
method
of the invention; and Figs. 2-5 are schematic illustrations of website screens
depicting
several aspects of the invention.
7
CA 02362467 2001-08-10
w0 00/48104 PCT/US00/03421
DetaiYed Description of the Invention
The description of the preferred embodiments which follow will include
methods illustrated schematically in the flow chart of Fig. 1.
In the practice of the invention, the website operator or product seller will
typically allocate a web page or a portion of a page to a product and will
typically
include a picture of the product and a description which can be in the form of
text,
audio and/or visual display. In the case of a product having a substantial
technical
specification that may be of interest to purchasers, the website can provide a
hyper
link to another website maintained by the manufacturer and/or distributor as
part of
a catalog of other products as illustrated in Fig. 1. The product descriptive
page can
also include information on pricing, such as the manufacturer's suggested
retail price
and prevailing prices at conventional retail and/or discount shopping outlets.
Text
and graphic or visual displays indicating the base price, target price, target
date and
current price can also be provided on the same page or on a separate page with
the
partially completed order form for the product or service. For example, the
webpage
can include a visual display such as that depicted in Fig. 2 which depicts a
series of
bar graphs reflecting time and increasing quantities purchased.
If the order form is on a separate page or is to be called up an appropriate
instruction or icon is provided to guide the prospective purchaser, and to
assist in
completing the purchase order form. In addition to providing any necessary
prompts
to the buyer in order to correctly complete the purchase order, the buyer will
be
asked to select a target price and/or a target date for confirmation of the
sale and
fulfillment, and will also be asked to acknowledge the financial terms of the
transaction including any non-refundable deposit, handling charges, service
fees, and
8
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
the like that will be billed to a debit or credit account holder. The
purchaser will also
be prompted to electronically store or print a record of the purchase order as
completed and authorized for future reference in determining any price
reductions,
the status of the order and/or its fulfillment upon receipt of the product or
service.
The website will preferably include information displays relating to the
original or base sales price and the current reduced price, if any, based on
orders
received. This information is presented in real time so that those who have
already
placed purchase orders as well as prospective buyers can see what price
reductions
have occurred since the product was originally entered at the website and
offered for
sale. Pricing information can be displayed in any number of graphic forms,
including
bar graphs, pie charts, numerical tabulations, or the like. Target price
reductions can
be correlated to display an estimated date upon which the target price will be
reached
based upon the number of units sold; or the estimated final sales price can be
provided as of the target date, where the sale will conclude on a date certain
period.
The system can also advantageously be programmed to provide a real time
graphic display at the website to display the purchase price as it may be
reduced by
each confirmed purchase order, or to indicate the rate at which orders are
being
received to achieve the next incremental price reduction. In either of the
above, or
in alternate displays or graphic representations of a dynamic nature, the
actual number
of units sold need not be disclosed, should the seller consider that to be
sensitive
competitive information.
Although it is contemplated that the invention will be practiced by the
transmission of individual purchase orders directly over the Internet by
consumers,
orders can be placed at stores, either directly by the customer or through the
9
CA 02362467 2001-08-10
VVO 00/48104 PCT/US00/03421
intermediary of a store clerk, at kiosks, or the like, established for the
purpose, or
even by telephone. It will be understood that the preferred method of
establishing
purchase orders will be via direct Internet connection with the consumer's
computer
terminal, since that mode eliminates the need for additional personnel and
display and
order entry apparatus.
The method of the invention comprehends and can accommodate a variety of
payment and billing systems. In one preferred embodiment, the prospective
buyer
includes information identifying her credit or debit card account with the
purchase
order, and a "hold" of the base price or then-current reduced price is entered
on the
buyer's account. At such time as the final purchase price and order shipment
is
confirmed, the "hold" amount is replaced with a charge and fund transfer to
the
seller's account.
In another preferred embodiment, a deposit in a predetermined dollar amount
is charged to the buyer's credit or debit account at the time that the
purchase order
is processed and confirmed. Depending upon the conditions of the sale, all or
part
of the deposit that has been received can be made non-refundable. Establishing
a
non-refundable deposit can insure the seriousness of the buyer, and provide an
incentive for the buyer to complete the transaction at the target date, as
well as
covering some or all of the seller or website operator's expenses and the
profit
margin on incompleted sales.
It will also be understood that payment can be accepted by check, money
order, or similar instruments from the purchaser, but that the processing of
such
"cash" transactions will result in additional overhead charges to the seller
and/or
website operator. Additional processing fees can be imposed on such
transactions to
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
cover the additional costs and to encourage purchasers to pay via credit or
debit card
accounts through which payment can be processed by computers using existing
technology.
Once the purchase order form has been completed by the buyer and the
acceptance of the price and terms confirmed by the buyer, the data is
processed in
accordance with the computer software program and transferred to various
prescribed
data storage areas and registries. In one preferred embodiment, the product
transaction is stored in a register that can be accessed by the website
operator and/or
provider of the product on a real time basis so that sales data can be queried
and
displayed and/or reported as requested. Alternatively, the computer can be
programmed to provide periodic electronic or printed reports, e.g., daily,
weekly,
etc., so that the product's manufacturer or distributor can timely determine
the
requirements and prescribed manfuacturing schedule and/or shipping dates. The
apparatus and method of the invention thus provides a management tool to
assist in
the efficient planning of inventories, manufacturing, and raw material
requirements.
The fulfillment of product orders is preferably undertaken by the
manufacturer, a national distributor or a regional warehouse facility by means
that
are, at least in part, determined by the nature of the product and the most
efficient
and/or cost-effective mode of delivery. Existing package delivery services
such as
the U.S. Postal Service, UPS, etc., provide reliable cost-effective service.
These
shipping charges, as well as any additional packing and handling charges can
be
determined at the time of the acceptance of the purchase order, e.g., by
calculations
based on the buyer's postal zip code. The system software identifies all
purchasers
11
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
associated with products having a specified target date for fulfillment and/or
a target
pence.
In a further preferred embodiment of the invention, the target date, whether
a first, second or subsequent date, is the parameter used to initiate the
fulfillment
process.
According to the terms of the sale, the entry by the buyer of the purchase
order may complete the transaction, with only the final sales price to be
determined
based on the total volume of sales within the target date. In that form of
transaction,
the initial or current sales price at the time the purchase order was entered,
has
already been held or deducted from the debit or credit account of the buyer,
and
where the final sales price is lower, a credit transaction is processed to the
buyer's
account holder.
In one embodiment, the sales transaction is contingent upon the buyer's
acceptance of a final sales price, and the system transmits a message via e-
mail to the
buyer requesting confirmation. Alternatively, a message can be transmitted
electronically to the buyer's facsimile address and/or via mail, requesting
confirmation. Upon receipt of confirmation of the order at the final purchase
price,
the purchase order is entered on the fulfillment database and appropriate
electronic
and/or printed instructions are issued to the agency responsible for shipping
the
product. An acknowledgement can also be transmitted to the buyer with
information
of the expected shipping date. If no confirmation is received from the buyer
within
a prescribed period of time, the purchase order information is transferred to
a
canceled file for storage. If the terms of the transaction require a full or
partial
12
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
refund, an appropriate credit notice is transmitted to the buyer's credit or
debit
account holder, and preferably, a notice is also transmitted to the
prospective buyer.
The method of the invention is based upon the principle that it is less
expensive to purchase items in larger quantities than it is to purchase them
individually or in smaller orders. In the method of the invention, there is a
direct
correlation between the price of the item and the quantity of items ordered.
The
success of bulk discount shopping stores attests to the fact that there is a
great
demand for this type of price discount. The invention is based on the
recognition that
the Internet can serve as a practical means to economically offer a unique
service to
the public by means of specially programmed computers that would otherwise be
impossible to provide. The invention differs from other quantity discount
sales
methods because it takes full advantage of the Internet's global commerce
environment, allowing many people to take part in a unified purchasing
transaction
that simultaneously benefits all parties by reducing the purchase price of the
product
or service. Consumer, wholesaler, manufacturer and regional distributors alike
all
stand to profit through the practice of the invention. In the description and
examples
that follow, the designation quantitydiscount. com will be used to identify a
website
that exists to create a mutually beneficial commercial environment to all
purchasers
in the marketplace based on the principle of quantity discounts.
Determining the Discount
The initial offering price, as well as one or more incremental discount
prices,
must be determined for each product or service offered at the website. In some
cases, the website operator may choose to commit to the purchase of a certain
volume
13
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
of goods with the expectation that they can be sold over a specified period of
time at
one or more incrementally discounted prices. Products in this category could
include
photographic film, batteries, small appliances, and the like. which are
readily
available from manufacturers and/or wholesalers in large volume on short
notice.
S Products that are not expendable and/or that are more expensive, such as
power tools, home appliances, jewelry, watches and more expensive gift items
which
can be expected to require a longer period of time for the accumulation of a
significant number of confirmed purchase orders would preferably be sold in
conjunction with the manufacturer, distributor or wholesaler, which entity can
establish the discount schedule and related sales volume, as well as the time
period
and delivery schedule. The specific information for each product and/or
service is
entered into the memory storage device of an appropriately programmed general
purpose computer of the type conventionally employed to support an Internet
website
in order to provide product/service inventory information in response to
inquiries
received from a plurality of individual sources via the Internet. The data
processing
software will also include an interactive purchase order display and entry
system, a
debit or credit account holder billing system and an accounting system. The
implementation and use of commercially available systems to support and
practice the
method of the invention is within the skill of a systems and software
designer.
The Marketers' Advantage
From a marketing perspective, the use of the method of the invention offers
a significant opportunity to increase sales. At such an enormous potential for
discount, there are incentives for buyers to encourage others to order through
the
14
CA 02362467 2001-08-10
VVO 00/48104 PCT/US00/03421
Internet from quanitydiscount. com to obtain a lower price price. Creating a
website
where a buyer can go and be virtually guaranteed a discount will draw on
consumers'
desires to obtain a lower price, increasing web traffic for those value
shoppers, while
at the same time maintaining customer loyalty to favorite brands of products
and
services by offering otherwise unobtainable discount are among the objects
achieved
by the invention.
The advance placement of orders creates a lead time that allows manufacturers
and wholesalers to anticipate sales and to offer their products at a greater
discount
based on volume. In anticipating orders and having immediate access to the
status
of sales, marketers have a floating sales forecast. They are able to see
information
simultaneously with the placement of orders, providing a continuing and
ongoing
status of sales in process. For example, a graphic display such as that shown
in Fig.
3 can be displayed to manufacturers or other suppliers by the website
operator. By
being able to anticipate sales, the overhead that was previously expended to
generate
such sales is decreased. Marketers can accumulate orders without having to
warehouse the goods for indeterminate time periods, thereby creating more
efficient
channels of distribution. They also have the advantage of determining their
own
profit margins. The cost of funds is decreased. There is no "float" money.
There
is less advertising, fewer personnel, less storage and less waste in the
overall practice
of the method of the invention as compared to existing purchasing systems.
Having a central location where these businesses can be found, and making
this location user-friendly and interactive will attract a high volume of
consumers with
future purchases in mind. Furthermore, the inclusion of a company's product or
service on the website will constitute a continuing advertisement which itself
will
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
serve as an incentive for businesses to participate in the system. The
invention will
serve to create a website for electronic commerce that consumers trust as
reliable and
reputable, where new information is added, continually updated, and that
offers the
best price and quality service at a discount for a wide variety of products
and
S services.
The apparatus for the practice of the invention includes one or more
appropriately programmed computers of the type conventionally used for
establishing
an Internet website used for electronic commerce. Appropriate software is
commercially available for transmitting appropriate purchase order forms
receiving
the data entered by the prospective purchaser communicating with the
purchaser's
credit or debit account holder and confirming the placement in terms of the
order.
Appropriate network servers, magnetic memory devices and processors are also
commercially available and can be configured to practice the method of the
invention
by one of ordinary skill in the art.
Examples
The utility and advantage associated with the invention will be apparent from
the following examples. A prospective purchaser knows that she is going to
purchase
a compact disc player for a relative as a gift in the near future. Knowing
this fact,
the shopper accesses the qualitydiscount. com website and locates information
describing the particular CD player of interest. The prospective purchaser
initiates
the ordering process by clicking on an appropriate icon associated with the
product
displayed on the screen which calls up a partially completed purchase order
form
upon which the remaining information is entered. The order is paid for using a
debit
16
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
or credit card account number and the buyer is given the option to either
provide a
date by which the player is to be billed and shipped, or to place a cap on the
number
of orders to obtain a target discount.
From the time the order is placed until the time it is billed and shipped,
there
will be other shoppers who have also placed orders for the same item. As more
orders are placed, the price of the CD player will be reduced in accordance
with a
predetermined price reduction schedule. Thus, there is a direct correlation
between
the price reduction and orders received and confirmed. Customers are able to
check
the status of their order via the Internet whenever they choose merely by
accessing
the website. As the orders are registered, the data processing system will,
when
queried, calculate and display the discount, which the shopper can compare to
the
original retail or initial offering price, thereby determining then-current
savings. In
accordance with existing interactive telephone systems, a toll-free number can
be
provided so that customers can determine current price information in response
to,
e.g., entry of a product and/or purchase order identification number.
Another class of goods and services for which the invention will satisfy a
very
practical consumer's need is the purchase of seasonal items, such as gas
grills, skis,
ski resort passes, and the like. Consumers generally know well in advance that
they
will be buying such seasonal goods and services. Products are offered and
orders are
placed early in the year for outdoor gas grills in anticipation of summer
barbecues;
order periods for winter sports items and services scheduled in advance of
winter gift-
giving holidays and vacations. An example of an element of a graphic screen
display
for use in a sale event for a gas barbecue grill is shown in Fig. 5. A similar
display
can be adapted for use with other products and/or services posted at the
website to
17
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
rapidly convey information to purchasers. In these instances, purchasers have
the
greatest potential for taking advantage of a volume-based discount on commonly
purchased seasonal items. The same applies for holiday decorations, snow
removal
equipment, leaf blowers, and the like.
Another area of interest to a specific class of consumer is that of college
textbooks, and other standardized educational materials. College texts are
typically
expensive and the publication of new editions creates a high turnover, leaving
little
market for used books and few opportunities for discounts. For example, while
a
student in New Jersey and a student in California could have a need for a new
edition
of a standard physics text, if each student were to go to a bookstore to
purchase the
book on her own, there would be no discount obtainable from the posted retail
price.
However, if at the release of the syllabus, a student placed an order on the
Internet
for the upcoming fall classes, all other students ordering the same book
through the
discount website practicing the invention will bring the cost of the text down
for all
of the book's purchasers.
Some examples of consumer service providers that can benefit from the
practice of the invention are lawn services, landscaping services, chimney
sweeping
services, moving services and routine maintenance services. A customer rnay
purchase ongoing service packages offered at quantity discounts in a
particular area.
If a purchaser is interested in signing up for installation of television
cable service,
that person would sign up for it on the website and obtain a specified
discount as the
cable company arranged to make the installation on a particular day or during
a time
period when it would provide the service for all of the subscribers in that
neighborhood.
18
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
There is a particular advantage to a business purchaser that can anticipate
well
in advance that an item must be ordered and ready by a specific date. Small
businesses or companies with otherwise poor purchasing power and tight budgets
can
obtain an obvious cost advantage with quantity discounts. For example, the
owners
of a popular Italian restaurant forecast their sales into the upcoming fiscal
year, and
determine that they will be selling 10,000 take-out pizzas. Instead of
ordering
through a wholesaler, the restaurant purchaser would place its order on the
Internet
along with potentially thousands of other pizzeria owners who are also
ordering for
the upcoming year and generate a discount via their common need and purchase
orders for pizza boxes. Deliveries by the manufacturer is scheduled on a
periodic
basis, e.g., quarterly, with monthly payments being made. The benefit of
volume
buying discounts works for all types of business enterprises, and in many
instances
can present smaller companies with an opportunity to "even the playing field"
with
their larger competitors.
Other classes of purchasers, such as individual municipalities can obtain
price
reductions on orders for standard items, e.g., orange safety cones for new
construction projects. Stop signs and street lights, concrete and reflective
material
can be purchased at a discount when combined with time-based orders from other
municipalities, permitting smaller governmental agencies or units to obtain
savings
that otherwise could not be negotiated with suppliers.
Other examples of types or classes of purchasers that can take advantage of
the method of the invention are hospitals, churches, schools, printers,
government
agencies, nurseries, factories, newspapers, malls, agencies, farms, grocery
stores,
19
CA 02362467 2001-08-10
WO 00/48104 P~CT/US00/03421
pharmacies, gas stations, airlines, car dealers, painters, construction firms,
beauty
parlors and book stores/newsstands.
In another embodiment of the method and apparatus of invention, the website
is established to include a registry for suppliers of specialized products or
services to
fulfill purchase orders in relatively small cells or geographic regions. This
embodiment is conveniently illustrated by the following example which also
describes
a seasonal product and service that will be of interest in consumers residing
in
predetermined geographical areas. In this example, the product and service is
the
delivery of firewood in a specified unit, i.e., a cord of wood. Various types
of
wood, e.g., pine, oak, etc., can form subclasses of the product. The economics
of
handling and distribution dictate relatively small geographic areas over which
a
particular supplier can provide the service. The Internet operator therefore
solicits
suppliers at its website that will undertake to service a specified area. -
This
information is entered into a supplier's database, along with minimum pricing
and
volume requirements and capabilities.
Fireplace wood can be posted to the website at any time in advance of the
heating season with fulfillment target dates being established in relation
toaverage
temperatures in particular geographic areas. In the event of wide price
variations in
and among the geographical areas, the market can be subdivided and individual
purchase orders processed according to postal zip codes. In this example,
large
volumes of orders that an individual local business might not be in a position
to
supply can be satisfied by truckload deliveries of the required product to the
local
distributor based upon advance orders. As will be appreciated by one familiar
with
CA 02362467 2001-08-10
CVO 00/48104 PCT/US00/03421
this particular type of business, no current basis exists for this level of
accuracy in
determining the quantity requirements for a consumable product such as
firewood.
It will also be understood from this example that an individual purchase order
that includes multiple cords of wood delivered to a single address can be
accorded a
further discount from the shipping or delivery charges, which will have the
effect of
lowering the overall unit price for each cord of wood.
Another example of the practice of the invention which will provide benefits
and advantages not only to individual purchasers, but to the provider of the
product
and service is the delivery of one or more gifts for a specific holiday
occasion that
is chosen from a selection of traditional gifts. Valentine's Day is reported
to be the
single largest occasion for the giving of roses. Because of the perishable
nature of
this product, and the fact that buyers want the product delivered on the same
day,
premium prices for the product and the delivery service are the rule. By
employing
the method of the invention, individual orders can be placed well in advance
of the
February 14th holiday and nationwide orders received at a single location can
be
continuously sorted and allocated to regional and local flower distributors
and delivery
services in order to obtain efficiencies of scale and in the planning of
deliveries which
obviously require considerable coordination. Also, since the final purchase
price will
likely be determined well before the holiday, the final confirmation from the
buyer
can be obtained and the distribution and delivery schedule can be completed in
a
particularly orderly fashion well before the holiday period. Shown in Fig. 4
is a
graphic data display used for correlating the incremental price reductions and
reduced
prices based upon the quantity of the orders received over time.
21
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
The method and apparatus of the invention is also especially suited for the
sale
of less expensive consumer items such as batteries and photographic film under
the
terms of a sale transaction that has a very short duration. For example, the
sale
period can be one day -- or it can be measured in hours or even minutes --
with
fulfillment shipments being undertaken during the night or the following day.
In
accordance with a preferred method, the price at the beginning of the day is
reduced
incrementally as new purchase orders are received and the reductions in price
are
posted in ten cent, five cent, or even one cent increments. In the sale of
products
having a nominal value, such as batteries, film and the like, no subsequent
confirmation of the order at the final purchase price will be required and all
information will be held until the end of the day or other shortened buying
period,
to determine the final price; thereafter all orders for that day are batch-
processed and
billed to the individual buyer's credit or debit card holder's account.
Another preferred embodiment of the apparatus and method of the invention
includes the establishment of a "preferred purchaser" data list in a memory
device.
One form of preferred purchase list is a membership list in which members are
identified either by their names or, preferably, by an identification number
such as
an individual's social security number or a legal entity's federal tax
identification
number or EIN. In the practice of this embodiment, the website can display a
different lower price or percentage of price reduction that will be afforded
to
preferred purchasers who are members. Many discount retailers have established
membership fees and require all purchasers to identify themselves by
displaying a
membership card, which membership can only be maintained by payment of an
annual fee; non-members are not allowed to make purchases. Unlike the existing
22
CA 02362467 2001-08-10
WO 00/48104 PCT/US00/03421
practice in the discount retail store, the method of the invention comprehends
the
acceptance of purchase orders from members and non-members alike, with members
being afforded a lower price. In the practice of the invention, the purchase
order
includes a data entry position relating to membership status, which is
verified by
comparing the purchase order data with a membership list maintained in a data
storage register. If membership is verified successfully, this status is
maintained in
the purchase order data file and at the time of confirmation and/or final
billing the
lower member's price is identified for billing.
In yet another preferred embodiment of the invention, a database is maintained
of the names and/or identification numbers associated with purchase
transactions that
were completed in a past period of time. When purchaser identification data
from a
new purchase order is received by the website server, it is compared to the
database
of prior purchasers during the prescribed past period of time, e.g., twelve
months.
The system is programmed to display a current purchase price to a particular
"preferred purchaser" that may be lower than the then-current general posted
purchase price that appears at the web site, the lower price being based upon
the
number and/or dollar volume of previous completed purchases by the particular
purchaser within the prescribed time period. In the practice of this
embodiment, the
frequent purchaser is provided with an additional incentive in the form of a
further
discounted price afforded to preferred purchaser. This method can be applied
to the
embodiment where membership status affords the purchaser with a lower current
price, whereby the member who is also a frequent purchaser receives a greater
reduction in the final price than a non-member or another member who does not
meet
the prescribed requirements of a frequent purchaser.
23
