Continued from Part 2

We began the year 2000 full of hope and excitement. A few months into the year we raised an additional round of private equity and we began to plan an international expansion.

In March we filed to go public, which didn’t change our day to day operations, but did get the core management team to accelerate our thinking about other ways to expand the business. With nearly a year of rapid growth and enthusiastic customers on the e-tail store side, it was clear that we had proven the group buying concept. Now it was time to realize the second part of CEO Tom Van Horn’s vision for the company: the “We-Commerce Network.”

As mentioned in Part 1, from the start Tom saw our flavor of group buying as something that would be useful to other sellers. He even had an internal code name for the project: “We-Bay” (a nod to eBay’s selling platform). A good part of 2000 was spent developing the technology, processes, and infrastructure necessary to make this happen. In the fall of 2000, we launched the “We-Commerce Network” and added a new tab on mercata.com: “The Mercata Marketplace” where anyone could sell using our PowerBuy system of falling prices.

Our biz dev team of Warren Meyer, Eddie Pasatiempo, and Jerome Pache also were speaking to other companies about using our technology in innovative ways to sell their own products and services. In October of 2000, eight years before Groupon existed, we launched “Mercata Dynamic Coupons” which were, according to the sales info I wrote, “online coupons whose value (or rebate) increases as demand grows—in real time.” Our first big customer for the Dynamic Coupon was General Motors. We powered a group buying coupon for the Buick Century on October 19, 2000 which started as a $200 discount, but grew to over $500 as more people bought the coupon.

At the same time we were expanding our offerings, I worked with SVP Terry Miller to increase the efficiency of our marketing efforts. In the second half of 2000, we were able to decrease our customer acquisition costs by 90%.

But as hard as we worked and despite the traction we were getting, the economic climate had turned against companies like ours. Formerly high-flying dot-coms were collapsing left and right. Pets.com flamed out in November and it was becoming increasingly clear that we would not be able to go public, nor would our investors continue to support the company with additional rounds of investment. In January 2001, Tom Van Horn made the difficult decision to shut Mercata down with enough runway left to pay suppliers and employees.

Mercata was certainly ahead of its time (possibly too ahead of its time, some might argue). We anticipated not only social shopping, group buying coupons, online video product reviews, but also social networking as well. In 2000, I was working on a feature called “PowerGroups” which was an early vision of today’s social networks.

According to my notes at the time:

Mercata’s PowerGroups provide special interest groups, shopping groups, support groups, sports teams and their fans, small businesses, and thousands of other organizations an integrated package of free net services for effective group communication.

With PowerGroups, groups can easily disseminate information, debate issues, poll group members, make plans, schedule events, shop, and much more. Group members can participate either via standard e-mail or by using the PowerGroups Web interface. Because there is no software to download, anyone can participate.

PowerGroups are the new, spam-free, easy-to-use way to trade information on great deals, keep in touch with friends and family, a non-profit organization, or a book club. Try starting or joining a group. It’s easy, fun, and free.

I was even kicking around the idea of small, mall-based Mercata “brick & mortar” stores which would feature a limited stock of noteworthy items (mostly electronics and small housewares) marked with dynamic electronic price tags that would tie into prices on the website.

Picture a Sharper Image type store (back when they were still around). People could watch as prices went down on the items. If the price went down after someone bought an item, we would credit the difference to their Mercata.com account. I didn’t necessarily see this as a huge revenue driver, but thought the “wow” factor would be effective for building awareness and driving people to the website.

P.S. In 2010, I saw my first electronic price tag at a Kohl’s store. I watched the item for a minute or so, but sadly the price did not change.

Next: Mercata Q&A