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Nextag.com Brings Brick and Mortar Advantages to E-Commerce

While e-commerce has taken off immeasurably, there can still be advantages in going to a brick and mortar store. There is (in the best of all worlds) personalized service, as well as the opportunity to negotiate the best deal. And if you shop all day and travel to different stores, some real deals will emerge. NexTag.com brings this behavior online, drawing elements from auction, aggregate buying and make-me-an-offer sites to yielding a whole that exceeds the sum of its parts.

Here's how it works: You log in, register and find the item you want; for example, the "Good Vibrations: Thirty Years of The Beach Boys" box set. A list of retailers is presented, ranging from $49 to $61. So you make an offer, like $45. The retailers then accept or decline the offer; if the former, you click "buy" and the stuff is on its way.

In this case, CD World came through, going down $6 on its retail price and kicking in shipping to meet the $45 offer. Similar negotiations are available for computers, books, movies, electronics and software, with an estimated 8.1 million items from 35 different merchants included.

"When we started the company, we found that you could generally get a better price by going in to a store and negotiating than if you bought online," said Rafael Ortiz, vice president of marketing. "The sites don't always include shipping and tax information, so you end up spending more than what you intended. Here, you negotiate a price that includes everything, and know exactly how much you're spending."

Gary Little, general partner of Morgenthaler Ventures, feels the NexTag offerings are superior to anything on an auction, aggregate, or priceline-type site. Shoppers don't have to make any compromises, or accept old or outdated merchandise.

"HP is not going to auction off products they have just announced," he said. "And it takes a lot of time for an auction to be conducted, with no deal assurance."

There is a catch: If a shopper negotiates a price and then does not buy the item, his or her "reputation" number will decrease. Should it sink low enough, no merchant will take their offers seriously and they'll be better off shopping at Wal-Mart.

The company's first round of venture funding closed in August, followed by a second $7 million round in November. Both were managed by Morganthaler Ventures.

Ortiz didn't find fundraising particularly grueling, saying, "We were fortunate." At the same time the process brought its own perspective. "The VC is at the top of the Silicon Valley food chain," he said. "They are like the great white shark. The interaction with them is designed to optimize their time and not yours, and this is very humbling. I now know what it must be like to sell a screenplay in Hollywood."

Morgenthaler's Little proclaims of NexTag, "They have the right mix, and their team is excellent." He added that his company has offered to take on the next round, under the condition that more categories are added.

"This process is attractive to both the buyer and the seller," he said. "The buyer gets a good deal, while the seller is able to sell their products and include the 'upsell' which allows them to sell additional products and accessories."

Company Name: Nextag.com
Address: 1670 S Amphlett Rd, #214, San Mateo, CA 94402
Phone: 650-378-8528
Fax: 650-378-8585
Contact e-mail address: rafael@nextag.com
Web address: www.nextag.com
Investor: Morganthaler Ventures