Insurance companies hate adverse selection bias and have actuaries work to control its effects. Won't those who beat up their stuff be most interested in a "put option" on their investment? So, ztail must control for this somehow. They can stipulate that the item must be in like-new condition, but that would make the stroller customer mentioned in the article unlikely to place value in the ztail guarantee. It's hard to push kids around in a stroller for a year without some damage occurring. So, ztail is stuck between a rock and a hard place. They could stipulate "normal" use, but how many scratches should an iPhone have after a year?
Do consumers really want to purchase a put option on their stuff? If something's cheap enough, I don't worry about the manufacturer's warranty claims -- I "self insure" by taking on the risk myself. Options are insurance. We know that that $900 stroller (hopefully a quad model for that price!) will likely have some value two years from now. And, most mommies (at least my wife) take a lot of time when shopping for a stroller, so they know approximate resale values by brand, etc. So, one could easily calculate the likely value of the option at the date of expiration. The option doesn't seem like its worth that much given that most items aren't likely to be worth nothing in a year or two.
As another poster pointed out, the whole process is complicated -- both in terms of comprehension and execution. Is it worth incurring this fixed cost to purchase an option that will be a pain to execute?
I have a $2500 deductible on my home insurance for two reasons: (1) it makes the insurance cost less (partially by proving to the insurance company that you don't think you're likely to incur a loss!) and (2) because it's a PIA to file a claim for a gutter bent by a fallen tree branch.
I don't get this much like I don't get BillMeLater.
How do they figure the guaranteed price? Is it based on historical auction data? If so, won't the increased volume of these items drive down the actual sale price at auction? Does their model take that into account?
eBay has a program that lets you see historical selling prices for goods, so I'm guessing that's where they started.
Who knows what kind of cash reserve they're working with though, I wouldn't trust them for anything more than a vague estimate of what products are selling for in second hand markets. And that much is free!
What a terrible headline, Ztail doesn't even sell any merchandise. They are no competition to Amazon. In fact, they may even add Amazon as one of the merchants you can purchase through.
Ztail is selling a put option on retail products (well sort of, with eBay being involved too), interesting but not revolutionary. Considering all the bail outs we're having to do for firms that wrote tons of paper they couldn't back, who knows if Ztail will even be around next year when you want your $50.
It's sad that the HN headline is less reactionary than TechCrunch.
I guess I have always looked at Amazon as a portal to buy other merchants' merchandise. ZTail is doing that.
Do you think it is in ZTail's best interest to add Amazon? I read that Amazon does not pay for referrals anymore.
The truth is, I posted the article right after I read the TC article, and was super hyped about it. I thought to myself: "For once, I might actually buy some stuff from ZTail as opposed to Amazon" (Big deal for me). Looking back, I agree that this idea is certainly interesting but not revolutionary.
maybe I just don't get it, but I don't think this site will be stealing any of Amazon's thunder. while Ztail's concept is interesting, it's way too complicated for the average consumer.
If you can't explain an idea in a sentence or two it's general appeal is likely quite limited. The basic premise is sound, but why can't I just buy something from Ztail and then have an option to return it a year later directly to them for a fixed price (like Chegg for textbooks)? I don't want to deal with eBaying it myself. There are way too many intermediaries involved for me to feel comfortable as a consumer. Are they planning on making all the affiliate revenue first and then figuring out how to handle the refunds a year down the line?
I like the example in the TC article of the $900 stroller. Forget the guaranteed return, just buy a cheaper stroller!
(Why was this title not retained when submitting to HN?)