Managing the Digital Enterprise | Case Study | Priceline.com (print version)

CASE STUDY: PRICELINE.COM

About Priceline.com

Priceline.com is a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises. Priceline.com also has a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee. Priceline.com operates the retail travel Web sites Travelweb.com, ActiveReservations.com, Lowestfare.com, Rentalcars.com and Breezenet.com. Priceline.com licenses its business model to independent licensees, including pricelinemortgage and certain international licensees.

Priceline.com pioneered a unique new type of e-commerce known as a "demand collection system" that enables consumers to use the Internet to save money on a wide range of products and services while enabling sellers to generate incremental revenue. Priceline.com is the world's first buying service through which consumers name the price they're willing to pay. Leveraging the unique attributes of the Internet, Priceline finds sellers willing to meet buyers' needs and price, thus facilitating thousands of buyer-driven transactions each day.

[Source: Priceline.com, March 2005]

Things to read:

Questions to consider:

What is the basis of the Priceline "demand collection system" model? How does Priceline make money in its business?
The Priceline model is frequently referred to as a "reverse auction". Is the Priceline "name your own price" service in fact an auction, strictly speaking? Why or why not?
How widely applicable is the Priceline model?