So you’d think that the online daily deals space is way too overcrowded – and you’re probably right. So how does a site like New York-based 1SaleADay.com compete with the rest? We check in with Ben Federman, CEO of 1SaleADay.com.
First, some background. 27-year old Milwaukee native Ben Federman launched the company from a tiny apartment with just one employee – today 1SaleADay.com is a 30-person operation with a 10,000 square foot warehouse. 1SaleADay.com offers discounts on a variety of merchandise with a new deal posted every day at 12 midnight EDT in five different categories, such as jewelry and watches, for a period of 24 hours or until the products sell out.
Tell us about yourself, Ben.
A. I am a Milwaukee native with no more than a high school equivalency degree that joined the military as soon as I turned 18. The discipline gained during my combat experience fueled my entrepreneurial spirit, and shortly thereafter, I launched 1SaleADay.com from my living room, with no financial backing beyond a handful of credit cards. Now, at 27 years old, I also own five other successful websites, with over 40 employees and a revenue stream that last year allowed the company to donate over 50-percent of its profits to charity.
What is the inspiration behind 1SaleaDay.com? What’s different about it compared to other daily deals sites?
I’ve always loved new products, gadgets and electronics. Growing up, I didn’t always have the money to buy the items that I wanted, so I became really adept at hunting for, and making deals. In 2006 at the age of 23 I incorporated 1SaleADay.com, because I believed I could offer the items consumers want at a price they can afford, by selling a very high volume of only one item a day, at very low markups. I figured that with this model, I could beat the prices of Amazon and other similar sites that carry hundreds of thousands of items, with my high turnover of only one item a day, and its associated low overhead.
1SaleADay.com differs from other group buying sites because our deals are available nationwide, and, I’m proud to say, because our growth came uniquely from our customers virally spreading the word about our great deals, not from advertising.
What kind of users or customers are you targeting or trying to attract, and what is your business model?
1SaleADay.com leverages incredible buying power to offer customers the steepest discounts available anywhere, attracting over a hundred and fifty million visits a year and allowing the company generate revenue based on volume rather than markup. While other online retailers carry hundreds of SKUs and a 50 to 100-percent markup, 1SaleaDay carries just 5 products each day, at a single-digit markup. No deal makes an appearance on the site unless it is hands-down the best deal available anywhere. Driven by this commitment, 1SaleADay.com has earned the trust of hundreds of thousands of customers who make the site their first web stop of the day.
What have your achievements been so far? What have been the key challenges?
Under my leadership, I have grown 1SaleADay.com exponentially since its launch in 2007. The company has experienced a 23,000% increase in revenue since its first year, with a projected doubling of revenue in 2011.
1SaleADay.com attracts and retains customers through consistently offering the products people want, at prices lower than they’ve ever been offered before. We also constantly excite our customers with innovative promotions including offering free products. The company also offers a “chunk of junk” promotion, which provides a surprise box of merchandise (often including TV’s and computers) for US$5 cost and US$5 shipping, building customer appreciation and instant word of mouth promotion. My appreciation to our customers is boundless, and I constantly pass up on opportunities to increase the markup on our merchandise, in order to give customers the best possible deal.
As the company recently reached its status as a top 1,000 website traffic-wise, the opportunity arose to earn substantial revenue through third-party advertising. I decided to forego this revenue potential and instead focused on posting links to my other deal businesses. These businesses include jewelry-focused Shadora, Ben’s Outlet for electronics, and Dynamite Time for watches. This move towards internal promotion maintains my investment in my customers by offering Black Friday deals every day, instead of spending money on advertising. Launching during the recessions proved to be fortuitous as many retailers were stuck with excess inventory and were looking to unload those extra items, while consumers were, and still are, looking for ways do stretch their dollar.
How much have you pumped into the company?
I launched the company with US$200,000 in savings, credit cards, and family member loans.
Tell us a little about your views on entrepreneurship and why you have chosen this path.
I embrace a low-key yet hands on management approach. I’m constantly encouraging our employees and suppliers alike to stay innovative to enable us to keep offering our products at the lowest price available online. I also make sure to provide our employees with a freethinking and comfortable atmosphere that allows our employees the space and freedom to be creative.
My appreciation for our customers is the reason I run the company the way that I do. I’ve learnt that when we push our limits to bring an item that our customer’s love, to market at a price they can afford, they let us know by telling their friends and family about us, and grow our business exponentially that way, every day. I love our customers, and always prefer to spend our marketing dollars, by offering them even steeper discounts and letting them organically spread the word, as opposed to traditional marketing.
What are you most proud of?
I also attribute my entrepreneurial spirit, and success, to my focus on donating at least 50-percent of the net earnings of 1SaleADay.com to charity. I primarily donate to charities supporting educational, outreach programs, homeless shelters, children with special needs, multicultural community events and military affiliated charities. Being that I have only limited needs, giving charity helps to give me focus on my business by expanding my focus and driving me to push the company to achieve more success in order to donate more.