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A YBUY Executive Explains the Company's Try-Before-You-Buy Revolution

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By , dealnews contributor

It's only been 10 months since YBUY signed up its first customers, but the consumer electronics startup has racked up more headlines than some competitors land in a decade. Of course, it helps when none other than Google Chairman Eric Schmidt gives you $1 million in Series A funding, via his investment firm Tomorrow Ventures.

But it's also YBUY's business model that is turning heads. For a flat fee of $24.95 per month, you can sample consumer electronics and kitchen gadgets — both new and refurbished — for 30 days before actually agreeing to buy them. So many people find the idea appealing that as of press time, YBUY has more than 30,000 people on its wait list. Imagine a line that long at the nearest big-box store on Black Friday.

To get an inside glimpse at what's going on at YBUY — and how you can increase your chances of getting to the front of that wait list — dealnews spoke with Monica McArthur, YBUY's chief technology officer. Here's what she had to say about the feisty website that's carved a self-styled niche in the crowded internet retail marketplace.

Can you explain to newcomers how the system YBUY works?
Monica McArthur: YBUY is based on a monthly subscription fee, but customers can skip any month. If you don't log in for a month, you get a purchase credit; it's kind of like a bank. And if you cancel, [which you can do] at any time, the purchase credits are refunded to you. If you pay the $24.95 [for a month], receive the tester product, [and want to keep it] that price is then applied to the product. If you send the product back, we keep the $24.95, because you got to use the product for a month. For now, customers get to try one product a month, but we are looking into different models.

At what rate is YBUY's business growing right now?
MM: It's at least 20% month-over-month, but it could grow more. Every month we put a cap on how many people can sign up. Last month — for the cycle where they'll get their first products on August 1 — we added 108 new customers and then we shut it off. For next month, we're hoping to hire some people and get the cap up to 300, then remove it all together by the end of the year.

What's the wait list like right now? Reports put it as high as 50,000 people.
MM: The queue just grows and grows. Right now it's at 31,000; hopefully we can let more people in. We have 350 customers total, with the rest on the waiting list, so we definitely have to scale up.

To what do you attribute your incredible success at such an early stage of development?
MM: It's a very basic fact that with Internet commerce, you can't touch a product before you try it. The other thing people are responding to is that we have a very curated site, with the newest and best products, so you can be an early adopter [at a much lower] cost. Our customers have told us that they love being able to try products out without having to spend $200 or $400 to buy [them].

Do you sell items at retail, or can you afford to offer discounts?
MM: We're not offering super cut-rate deals, but we're not selling at full retail, either. Unless Amazon is offering some crazy deal, we try to match Amazon's price. It's not formal, but it is part of our process where we'll see what a product sells for on Amazon, and then we'll try to match it if we can, or get close to it.

How about special deals?
MM: We do actually have some things built into the model; especially if a product is refurbished, we will order some sort of discount initially. And we will occasionally have some flash sales, but they are very customized for each particular person. People are responding really well to that; I'd call it more of a "personalized additional discount."

YBUY has an unusual approach to customer service. Can you tell us about that?
MM: Each person is assigned a PCA, or personalized customer assistant, who explains to a new customer how the system works. Afterwards, you can contact that person via email, or call them on direct line. It's nice, and people really like it. We've found that it reduces a lot of returns. The general policy is that we're the advocate for the customer, and if they have an issue, we try to resolve it in a way that makes the customer happy.

What happens to a product if someone returns it after the 30-day trial period?
MM: For some of them, we will refurbish them and send them out again. With iPads, for example, it's a matter of wiping the data and disinfecting them. We make sure to identify them as used. For other products, it depends on the deal we have with the given distributor.

Who's buying on YBUY and what are they buying?
MM: There are certain patterns [in sales]. Fitness products sell really well. Products that are not complicated to use sell really well: An espresso coffee machine won't sell as well as a one-touch coffee maker. The typical customer is male, late 20s to early 50s, and he reads TechCrunch and Engadget. He's fascinated by new gadgets, but doesn't want to buy every new gadget that comes along. He wants to explore.

So with 31,000 people on the waiting list, can you give our readers any tips that will help them get to the front of the line, even if they haven't signed up yet?
MM: You can post on our Facebook wall, mention us on Twitter, publicize us on social media, and that will get our attention. Then we'll try to invite you in. It won't guarantee anything, but it will up your chances of getting invited.

Readers, what do you think of a service that allows you to test out electronics before you buy them? Is the monthly fee reasonable? Does YBUY seem flexible enough for your tech-shopping needs? Sound off in the comments below.

Photo credit: TechCrunch


Lou Carlozo is a dealnews contributing writer. He covers personal finance for Reuters Wealth, and was most recently the managing editor of WalletPop.com, and before that a veteran columnist at the Chicago Tribune.

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Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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1 comment
snaimpally
Brilliant idea!  Best Buy recently mentioned that they are trying to address how they are used as glorified show rooms; people check out eletronics products (e.g., TV, camera etc.) in a Best Buy store, determine what they want, and then buy it online.  YBUY is targetting a need for exactly this type of service.  The main issue with YBUY is that there is no barrier to entry for competitors.   For example, Best Buy could easily offer this as a perk for Reward Club members or Credit Card holders using a similar "only pay if you use it" model.  Best Buy has the advantage of offering instant gratification compared to waiting for a shipment from YBUY.  As another example, Amazon could also easily offer such a service for Prime members.  Again, it could be a "pay only if you use the service."  The personal shopper offered by YBUY is the only distinguishing feature, but if Best Buy or Amazon were to undercut the monthly fee (e.g., $19.99 or $14.99 per month to try before you buy), people might opt for the cheaper offering and forego the personal shopper.
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