1998 Direct Marketer of the Year - Jay Walker
The Execution. Walker Digital identified the five methods of commerce, starting with the dawn of humankind: (1) barter; (2) the classical agora or marketplace; (3) retail, a scheme developed in the Renaissance whereby price was fixed in a store and a buyer paid that price; (4) the auction where many buyers bid for one item; (5) the Request for Proposal (RFP) in which a buyer solicits bids from a number of suppliers.
Walker Digital's radical concept: buyer-driven commerce with a take-it-or-leave-it offer to sellers. Under the priceline.com model, if you want fly to Los Angeles, you make a reasonable offer (say, $250) via the Internet or an 800 phone call and agree to the following stipulations: you choose the dates up to six months in advance for your round trip and the departure and arrival airports. You will fly on only a major airline (the DOT's definition is an airline that does at least $1 billion a year in revenue) and will leave any time between 6:00 am. and 10:00 p.m. with the possibility of one stop or connection. You will arrive the same day and will not fly a red-eye unless you agree to it.
This is no browsing service; it's only for those who are ready to buy. Your offer is secured in advance by a credit card. You don't know which airline or what time you will depart. Priceline's computers will circulate the offer and, if accepted, your credit card is charged; the tickets are non-refundable and non-transferable. You will be notified within hours and the e-tickets will be issued. If you want conventional printed tickets, there is an additional $12.50
delivery charge. Priceline.com makes money on the spread between what the customer bid and what was finally paid. Customers who don't get seats the first time can try again, offering a higher price or different dates at no charge. The buyer trades flexibility for price. The system is not in competition with travel agents; the participating airlines are not revealed. This represents revenue to the airlines that they would never have enjoyed.