WO2002003287A1

WO2002003287A1 - Tier-driven reverse auction system and method for electronic commerce

Info

Publication number: WO2002003287A1
Application number: PCT/US2000/041391
Authority: WO
Inventors: Timothy D. Schubert; Clemente G. Garcia; Steve Karakas
Original assignee: Shop All America.Com Inc.
Priority date: 2000-06-30
Filing date: 2000-10-20
Publication date: 2002-01-10
Also published as: AU2001222982A1

Abstract

Methods and systems for selling goods (figure 1) and services involve the formation of a contractual alliance of distribution associates, promotion of sales of predefined goods offered by the distribution associates via a centralized web site, and a tier (302) driven reverse auction.

Description

TIER-DRIVEN REVERSE AUCTION SYSTEM AND

METHOD FOR ELECTRONIC COMMERCE

Related Applications

This application claims priority from United States Patent Application No. 09/609,655, filed June 30, 2000. Technical Field

The present invention is in the field of electronic commerce and, more specifically, pertains to methods and systems for arranging and conducting on-line sales transactions in a manner that is focused on and operates with respect to the actual geographic locations of both buyers and sellers. Background of the Invention

E-commerce (electronic commerce), i.e. commerce conducted via communications that involve one or more computers, is exploding. While estimates vary widely, business-to-business ("B2B") e-commerce plainly accounts for many millions of dollars in trade. Business-to-consumer ("B2C") commerce is already well established and growing rapidly as well. B2C on-line stores such as Amazon.com have become very well known. B2C portals and vendor sites on the world-wide web (the "web") are growing dramatically in numbers and dollar volume of sales. Entry into these markets requires a business to buy or build a high-quality web site, and then make sure the site is robust, up to date, and reliable. It must be available or "on-line" at all times (sometimes called "24x7" alluding to 24 hours a day, seven days a week). The web site must also be e-commerce enabled, providing for secure processing of orders and payment transactions. It must also address customer privacy protection; an area the Federal Trade Commission is now begiiining to address. All of these requirements are challenging and relatively expensive for a small business. A local, single-store retailer or goods or services in most cases cannot afford the necessary technology. Nor can the small retailer afford the kinds of advertising budgets that large chains or "superstores" spend to draw customers ("eyeballs" or "traffic" or "hits" in the vernacular) to their web sites. The Internet, although egalitarian in theory, is instead becoming dominated by very large corporations with enough capital to influence the popular search engines so that they steer most customers to those corporations. What is needed is a way to allow the small, local retailer to participate - and compete effectively — in the 21st century e- commerce marketplace.

Another challenge facing small business is that of maintaining an adequate and appropriate inventory of products. There is of course a cost associated with almost any inventory, and the larger the inventory the higher the cost. A large chain or superstore can maintain a huge inventory because the cost is spread over high volume and the operation is more efficient than the small, single-store location. But to compete in e-commerce, any merchant must have a reasonably broad product offering available "on-line" and stand ready to ship the product within a day or two. There remains a need to enable a small business merchant to maintain a large inventory and be able to ship product in a timely manner.

The retail merchant must be able to compete on price as well. E-commerce consumers are very price sensitive. There are sites on the web that provide price comparison data acquired by searching other sites. Consumers have many options and especially with respect to fungible or standard products they have little motivation not to buy at the lowest price. Large businesses, be they pure Internet players like Amazon.com or "click-and-mortar" merchants like Eddie Bauer or Sears all potentially enjoy the benefits of volume purchasing and thus can be very price competitive. The need remains to enable a small business to better compete on price in the e-commerce marketplace. What distinguishes many local businesses from the "big guys" is just that - they are local — and have a store in the customer's neighborhood or a short drive or bus ride away. The customer can visit is person to see the merchandise and get advice. Often the merchant is personally acquainted with many of her customers. These local customers feel some loyalty to the local merchant, yet they are drawn to the web by advertising, price and convenience. It would be beneficial to local merchants to preserve their local clientele without requiring loyal customers to abandon the benefits of e-commerce.

It is known in e-commerce to identify merchants in the same locale as the Internet customer. For example, the Yahoo portal can provide a list of merchants for a given product or service line within a postal zip code or city specified by the user.

Yahoo lists the approximate distance to the merchant from the reference location. It is also known to provide maps and "turn-by-turn" driving instructions to help a user go to a listed merchant. And of course, for those merchants who have their own web sites, a user can "click" to that site from a portal, search engine, directory or the like. These features enable a user to find a local merchant if they wish, but they do nothing to motivate or encourage the user to patronize the local merchant. The now famous eBay consumer auction Internet site also provides a "regional" option for users who choose to trade or limit their searching within a fixed region such as a selected state or the Midwest. A "reverse auction" is where multiple sellers offer goods or services for sale, and the sellers may "bid" down the asking price until they find a buyer. This is often done with excess inventory in the B2B space. Cite Commerce One. Another model is where a customer specifies a desired product or service and optionally the price the customer is willing to pay. The first vendor indicating its willingness to sell at the specified price can close the deal, or the buyer can purchase from the vendor offering the lowest price (in a timely manner and duly responsive to the original request). In the latter case, the customer may be soliciting an "e-RFQ." In any event, a "reverse auction" is characterized by multiple vendors potentially responding to a single customer's request, as distinguished from the conventional auction in which multiple potential customers may respond to a single seller's offer to sell. The Internet is an effective medium for reverse auctions and makes these processes relatively fast and convenient. In general, however, Internet reverse auctions are focused on price and do not take geography or locality into account. Nor do they do anything that would specifically support a small, local merchant's efforts to participate. The need remains to empower the small business to profitably participate in these various forms of e- commerce.

Summary of the Invention

A primary aspect of the present invention comprises a method for facilitating commerce that leverages the communication power of the Internet so as to benefit relatively small, local retailers of all types of goods and services. This method can be described as a "tier-driven, reverse auction" strategy as follows. First, a group of interested retailers are enlisted for participation as affiliated distribution associates or "D/A"s. A sponsor or coordinator (SAA) builds a high-quality, high-reliability enterprise web site where customers go to shop on-line. The enterprise web site is "centralized" in the logical sense that there is only a single, primary site, at least initially. (The "site" may in fact comprise a distributed architecture for improved performance, reliability and other technical features.) Multiple sites, each dedicated to a particular line of products or services may be developed, but initially a single site can be used, where multiple goods and services are listed, organized into perhaps 30 or 40 product categories to facilitate "browsing" and fully searchable. The goods and services listed on the central web site correspond to those offered by the affiliated D/A's. A relatively modest fee paid by each of the D/A's helps support the cost of developing and maintaining the central site.

Data regarding each of the D/A's is maintained in a database coupled to the enterprise web site, such data including product categories (or SKU's) selected by the retailer at sign-up as reflecting the goods that retailer chooses to offer. (Throughout the remainder of this specification and the claims, we'll use "goods" generically to include goods and services, except where otherwise specified.) The database also includes a unique identifier for each D/A, instructions for communicating with the D/A and, importantly, the geographic location of the D/A.

A retail customer using the central web site can identify a product he wishes to purchase, and submit a "purchase request." The web site sends back an acknowledgment to the customer indicating that the purchase request has been received. Responsive to the customer's request, a tier-driven server system ("TDS") coupled to the web site selects those distribution associates, as reflected in the database, who are geographically located proximate to the customer and who previously identified a category that includes the specific product or service requested for purchase. The TDS then sends a bid request message to each of the selected distribution associates, communicating with each of them in the respective manner specified in the database, e.g. by email, voice mail or fax. The message essentially solicits an offer to sell the specific product or service requested for purchase. The TDS then collects response messages or "bids" from the selected distribution associates that respond within a specified time limit, e.g. three hours. Each seller response or bid is responsive to a specified seller request message and includes a price term. The bids can be submitted by various communication means that may be available to the responding D/A, such as return fax, telephone call (to an IVR system), email etc. Participating D/A's need not have a computer, yet the central web site will expose them to substantial business opportunities on the web as explained further herein. The TDS server next validates each of the received seller response messages, and determines the lowest price valid bid. Then the TDS server sends an offer to sell the specific product or service requested for purchase, at the price indicated in the "winning" bid, to the customer (on behalf of the distribution associate that submitted the lowest price valid bid). If the customer timely indicates acceptance of the offer, the TDS server processes the acceptance so as to complete the sale, whereby the customer's purchase request is fulfilled by a distribution associate within the same geographic area of the customer and at a competitive price. Each pending or open transaction is maintained on the TDS, and can be deleted after completion of the transaction or expiration of a predetermined time limit. If none of the selected D/A's submits a valid bid within the initial time limit, the TDS defines a second tier of D/A's to receive a second round of bid request messages, again to find a seller to fulfill the customer's purchase request. The second tier D/A's are geographically located somewhat further away from the customer than the first tier, but the second tier is nonetheless defined as centered about the customer's location. Thus the second tier can be viewed as a concentric region or

"do-nut shape" region generally surrounding the first tier region (which includes the customer location). Bid requests are sent to the second tier D/A's, responses are collected, and a winning bid is processed as before if one is received. Processing the sale transaction (in any tier) preferably includes collecting a commission or fee for the benefit of the central web site sponsor.

If none of the selected second-tier D/A's submits a valid bid within a predetermined time limit, the TDS defines yet a third tier of D/A's to receive a third round of bid request messages. The third-tier D/A's are geographically located somewhat further away from the customer than the second-tier D/A's. Bid requests are sent to the third-tier D/A's, responses are collected, and a winning bid is processed as before if one is received. If none of the selected third-tier D/A's submits a valid bid within a predetermined time limit, the TDS defines yet a fourth tier of D/A's to receive bid requests, and so on, until the customer request is satisfied or preset limits are reached. Successive tier regions can be defined as may be necessary, expanding to the customer's city, region, state, country and even globally if necessary. However, this is not to imply that tiers are defined simply along political boundaries. To the contrary, as further explained later, tiers are dynamically defined with respect to distance, driving time, shipping costs, taxes and tariffs, shipping time and other factors generally relating to the convenience of the customer, and based on the customer's location. A second important aspect of the invention addresses the inventory problem faced by relatively small, local retailers as mentioned above. Even where a retailer customarily deals in a particular product, he may be temporarily out of stock in that item when a bid request is received on that item from the TDS. To promote customer satisfaction, contractual arrangements between the central sponsor and the D/A's should require each D/A to ship the product within a predetermined time, say 24 hours, after the customer indicates acceptance of the D/A's bid. The present invention, and specifically the tier-driven server TDS system, can be leveraged to help the retailer obtain the required stock from other participating D/A's in a timely manner for resale to the retail customer. According to this aspect of the invention, a second TDS system similar to the one described above unites the D/A's into a wholesale bidding network. Where a D/A wants to respond to a purchase request, but does not have the requested item in stock, the D/A can issue a request to other D/A's to purchase the item at the wholesale level. More specifically, the D/A sends a wholesale bid request message to the second TDS system, which in turn identifies a first tier of D/A's who may have the item, and then sends a corresponding wholesale bid request message to each of them. This process is similar to the customer request process in several ways. The system communicates with the D/A's by whatever means the D/A chooses, for both retail and wholesale level messaging. Time limits and other terms and conditions are agreed upon in advance. D/A's responding to a wholesale bid request again provide a price term, in this case a wholesale bid. The expanding tier process is invoked as necessary, incrementally broadening the wholesale inquiry until the product is found. As a result, even if the local retailer did not have the item in stock initially, he has a process to get it very quickly, at a competitive price, so the sale is not lost. The retail customer still has the benefit of dealing with a local retailer who has now received the product from another dealer.

A third aspect of the invention presents the web site user with options to "buy local" or use the "bid wheel" option. The "bid wheel" refers to the tier-driven process described above, alluding to the concentric tier regions forming an image like a wheel. Using the "buy local" option, the web site server identifies D/A's geographically close to the customer who have listed the product category, or specific product SKU, requested by the customer. The server provides a picture of the local D/A store, map, driving directions or bus route info and the like to help get the customer to the local neighborhood D/A. It can also link to the D/A's own site but the D/A need not maintain its own web site to participate in this system. Under the

"bid wheel" option, the central site provides a tier-driven reverse auction system as described above, defining incrementally expanding tiers to meet the customer's requirement.

A fourth aspect of the present invention is directed to a process for enlisting retailers to participate as D/A's in the system described above, and includes creation of web presence for the small retailer in "real time" as further explained later.

The present invention thus addresses the needs of smaller, local retailers so that they can compete with larger businesses on the Internet. The local retailer enjoys the benefits of a high-quality, high-reliability presence on the Internet without the corresponding costs. The retailer can effect retail transactions via the central web site without incurring the costs of e-commerce transactions processing infrastructure such as credit card applications. The retailer maintains a local advantage and relationships with local customers who use the Internet, because local customers will be "connected" to the nearby retailer through the methods and systems described herein. The retailer also has a new mechanism to quickly obtain inventory as necessary to close a sale opportunity.

Additional aspects and advantages of this invention will be apparent from the following detailed description of preferred embodiments thereof, which proceeds with reference to the accompanying drawings. Brief Description of the Drawings

Fig. 1 is a conceptual illustration of a customer-centric, geographically tiered arrangement of retailers herein referred to as Distribution Associates.

Fig. 2 is a conceptual illustration of a customer purchase request sent to a central web site and communication of corresponding seller requests to DA's located within a local tier region proximate to the customer's geographic location. Fig. 3 is a conceptual illustration of communicating the corresponding seller requests of Figure 2 to a second set of DA's within a second tier region.

Fig. 4 is a conceptual illustration of communicating the corresponding seller requests of Figure 2 to a third set of DA's within a third tier region. Fig. 5 is a conceptual illustration of a series of geographic tier regions generally concentrically centered about the geographic location of a customer who submits a bid request.

Fig. 6A is a conceptual illustration of a series of geographic tier regions generally concentrically centered about the geographic location of a customer but biased by a shipping zone boundary that affects product shipping costs.

Fig. 6B is a conceptual illustration of a series of geographic tier regions generally radiating from the geographic location of a customer but bounded by a natural obstacle.

Fig. 6C is a simplified map illustrating a series of geographic tier regions generally concentrically centered about the geographic location of a customer, but biased by an interstate highway affecting driving times to various DA locations.

Fig. 7 illustrates the principle components of a database for implementing the present system.

Fig. 8 is a simplified, high-level diagram of the tier-driven server ("TDS") system software.

Fig. 9 is a flow diagram illustrating the TDS logic engine of figure 8 in greater detail.

Fig. 10 is a flow diagram illustrating the bid system logic of figure 8 in greater detail. Figs. 11A, 11B, and 11C are pseudo-code listing descriptions of the TDS logic engine; the TDS bid system; the Quick Response System; and the Create Tier Region logic of Figure 8.

Fig. 12 is a flow diagram illustrating the Create Tier Region logic of figure 8 in greater detail. Fig. 13 is an example of a web home page for customer interaction with the tier-driven reverse auction system of the present invention.

Fig. 14 is an example of a web page for product selection and local versus bidwheel options. Fig. 15 A illustrates a C to B to B to C process in accordance with another aspect of the present invention that enables distribution associates to locate and purchase merchandise at the wholesale level utilizing the bidwheel process.

Fig. 15B is a conceptual illustration of a Distribution Associate bid request and communication of corresponding wholesale bid requests to DA's within a local tier region proximate to the originating DA's geographic location. "BizWheel"

Detailed Description of Preferred Embodiments

Figure 1 is a conceptual illustration of a tier-driven reverse auction system in accordance with the present invention. In Figure 1, the diagram 100 illustrates a commerce space in which the consumer or customer 102 is at the geographic center. A concentric region 104 surrounding the customer 102 represents the reverse auction system, preferably implemented on an Internet web site, here shown as "SAA.com" ("Shop All America.com"). The next concentric region surrounding the SAA.com region 104 is a first tier region 106 comprising a plurality of distribution associates as further described below. A second concentric tier region 108 surrounds the first tier region 106, to illustrate the concept that each successive tier region is geographically more distant from the Customer 102 located at the center. Additional tier regions can be defined, in a theoretically unlimited number, each successively more distant from the center 102 and surrounding the next preceding adjacent tier region. This figure is merely conceptual - in practice tier regions will rarely be perfectly round. Figure 2 is a conceptual illustration of an e-commerce process according to the invention. In Figure 2, a customer 206 (corresponding to the customer 102 of Figure 1) sends a purchase request 210 to a store web site 208. The store web site 208 corresponds to the "SAA.com" website 104 Figure 1. A purchase request message typically includes identification of a specific product or service requested for purchase by the customer. In practice, the customer does not literally prepare and send the message. Rather, a process to do so is implemented in software operable on a web browser, and the user simply interacts with a graphical user interface of the type illustrated in Figure 13, largely "clicking" to indicate choices and submit the request. Preferably, the store website 208 automatically sends an acknowledgment message (not shown) to the customer indicating that the purchase request has been received.

In response to the received purchase request, software located at or in communication with the website 208 selects a set of distribution associates, i.e., retail merchants, who may have the requested product or service available for sale. (This software system is referred to and further described later as a "Tier-driven Server" or "TDS" system. For now, we assume that the website 208 includes the TDS.) The website 208 then sends a seller request message or "bid request" to each of the selected distribution associates, for example bid request message 212 is sent to distribution associate ("D/A") 204. An identical bid request message 214 is transmitted to D/A 216 and so forth. The selected group of distribution associates, also called Bid Community No. 1, is indicated by reference No. 202. This initial bid community 202 which is geographically close to the customer 206 corresponds to the first tier region in the conceptual diagram 100 of Figure 1.

Each of the distribution associates in the bid community 202 has an opportunity to send a seller response message or "bid" back to the website 208 within a pre-determined time period, for example two hours. Contractual relationships and arrangements for communications between the website 208 and the various distribution associates is predetermined as will be described below. Each bid, from those D/A's who chose to bid, includes an indication of the price at which the responding D/A is willing to sell the specific product or service requested by the customer. Preferably, the bid is below the manufacturer's suggested retail price of the item. The lowest price valid bid will be used as an offer to complete the transaction requested by the customer as explained in more detail later.

In the event that no valid bid is received within the allotted time from any member of the first bid community 202, the website 208 (TDS) defines a second, larger tier region illustrated as bid community 302 in Figure 3. Referring now to Figure 3, the website 208 sends a bid request message 306 to a D/A 308 located in the second tier region 302. The same bid request message 310 is sent to D/A 312, and so on to all members of the second bid community 302. Recall that the bid community generally does not include all distribution associates within a given region. Rather, the bid community is defined dynamically to select only those distribution associates who are located within a specific area (centered around the customer's location) and that have indicated (during "sign-up") that they generally carry the product requested by the customer. This second bid community 302 corresponds to the second tier region 108 in the conceptual diagram 100 of figure 1.

Thus if the D/A's located in the first tier region closest to the customer cannot satisfy the customer's request, a similar bid request is automatically distributed to this second tier region which spans a larger geographic area and includes a greater number of D/A's. For example, a first tier region might be selected that includes six D/A's whereas the second tier region might include a dozen retailers, although these numbers merely represent initial values. The tier-driven server (TDS) software can be designed to gather statistical information about operation of the system over time, and it can use that information to optimize how it defines tier regions, including the numbers of qualified D/A's in a region, the allowed response times, etc. The goal would be to send the bid request to a sufficient number of D/A's to solicit a satisfactory response within a reasonable time.

Figure 4 illustrates the process that occurs in the event that no D/A in the second bid community 302 submits a valid response or bid within the amount of time. In that case, the website system 208 defines a third tier region and identifies a group of distribution associates in the third geographic region that may wish to provide the specific product or service requested by the customer 202. This third tier region 402 is illustrated in Figure 4. Again, all of the D/A's in the current tier region received the same bid request message, e.g. message 406 sent to D/A 408. Additional tier regions can be defined in similar fashion as may be necessary. In this way, the community of distribution associates receiving bid requests is automatically expanded until the customer's request is satisfied (or predetermined limits on time, geography, etc. are reached). Figure 5 is another conceptual diagram illustrating this "bid wheel" process in which tiers of retailers are identified first in the geographic area proximate to the customer and then in successively larger tier regions expanding generally concentrically about the customer's location.

The concept of "proximity" of a retailer to a customer is not based solely on distance "as the crow flies". Other factors preferably are taken into account in fashioning tier regions. Referring now to Figure 6A, several tier regions are shown generally surrounding a customer location 102. In this drawing, D/A locations are shown by small x's such as the D/A location 604. The first tier region 202 is shown generally surrounding the customer 102 as described before. A second tier 302 is generally concentrically arranged around the first tier 202. Figure 6 A also indicates the location of a shipping zone boundary 610 which may be defined, for example, by a freight carrier in connection with assessing freight charges. In the figure, a third tier region 402 which is circumscribed by a border 602 might have crossed over the shipping zone boundaries 610. Instead, the third tier region is truncated so that it is entirely within a single shipping zone boundary. Consequently, a D/A such as D/A 612, which may in fact be geographically closer to the customer 102 than another D/A, say 604, is excluded from the third tier 402 because of the shipping zone boundary. This strategy will give preference to other distribution associates in the third tier in order to fulfill the customer's request without crossing the shipping zone boundary if possible. Figure 6A also illustrates a postal zip code boundary 614. In many cases, zip codes conveniently can be used for defining tier regions. Here, however, the shipping zone boundary 602 took precedence over the zip code boundary in defining tier region 402.

In Figure 6B, a customer 102 is located near the tip of a peninsula 620 that extends into a lake or other body of water. In this case, the tier regions are limited by the water and consequently they assume a somewhat parallel arrangement rather than concentric circles. In some cases a body of water would not impose constraints on a tier region definition, for example where a distribution associate bids to download digital content from a satellite. (Licensing digital rights is within the broad concept of sales of goods or services as described herein.)

Figure 6C illustrates another example of a series of tier regions, in this case defined predominantly by motor vehicle travel time rather than distance. In this example, the customer is located in a city (Portland) 630 which lies on an interstate highway 634. A second city, Salem, is shown some distance away from Portland and also situated along the interstate. Here, a first tier region is shown circumscribed by boundary 632 generally surrounding the Portland city limits. A second tier region 640 surrounds the first tier region but, as indicated by its boundary line 642, it is elongated so as to extend largely along the interstate highway. Consequently, a distribution associate such as D/A 648 falls within the second tier region 640, while another D/A such as D/A 646, even though it may be closer to the customer "as the crow flies," is outside the definition of the second tier region (and even the third tier region) because of its distance from the highway. In other words, the driving time to D/A 648 from Portland is shorter than the driving time to the apparently closer D/A

646. A third tier region 650 is illustrated, circumscribed by border 652, extending further along the 1-5 corridor and including the City of Salem. Another distribution associate 654 is closer to the Portland customer than Salem, but it is excluded from tier region 650 because of its distance from the highway, resulting in longer driving time. The reader will appreciate from these examples that the process of defining tier regions with respect to any given customer location preferably takes into account topography, shipping methods and costs, streets and highways (driving time), and other factors that would affect customer convenience or costs.

Figure 7 illustrates the shopping website 208 which is connected to the Internet for communications with customers as mentioned above. Website 208 includes or is coupled to suitable hardware and software that implements a tier-driven server ("TDS"). The TDS is coupled to a database 700 which provides a variety of information essential to operation of the TDS including the following: A D/A directory 704 contains information about all of the distribution associates that are a part of this enterprise, including identifying information, location of the D/A, product and service categories offered by the D/A, and information for communication with the D/A (via telephone, fax, Internet, e-mail, etc.), which we call a "communication key". Database 700 further includes a product catalog 706 specifying the products and services offered for sale at the enterprise site 208, preferably including SKU (stock keeping unit) numbers and msrp pricing. The catalog also can include detailed descriptions of the goods and services, digital photographs, audio, video etc. as is known in the context of conventional shopping websites.

Another aspect of the database 700 comprises zip code information and USPS mailing costs 708. Another component 710 of the database 700 includes shipping information for various carriers and routes, definitions of shipping zones and charges and the like. A further component of the database is map data 712 which can include a variety of information such as streets and highway locations, population, topography, natural features, etc. which may be pertinent to dynamically defining tier regions. A wide variety of suitable digital map databases are commercially available. A further component of the database 700 stores transaction data 714, i.e. , records of the purchase transactions effected via the website 208, as well as payment information related to those transactions. This transaction data can also include customer data, with or without personal identifying information. It can be used to track rewards, discounts and similar incentives ("NetStamps") to encourage repeat business. Another component 716 of the database 700 can be arranged for collecting and analyzing statistical information about the website activity, including sales data. Still another component of the database includes tier region data 718, although tier regions will be created dynamically on an ongoing basis. Nonetheless, tier region experience can be accumulated and "mined" for ongoing optimization of the present system.

Figure 8 is a high-level diagram of the tier-driven server system software described in greater detail below with reference to Figures 9-12. Figure 9 is a flow diagram illustrating the TDS Logic Engine, implemented on the enterprise server. Referring to Figure 9, the server software, beginning at 902, interacts with the customer to select a product 904, and gets the customer's location 906. The customer's location can be obtained by asking the user to enter an address, zip code, city or the like, or it can be determined automatically by tracing the user IP address or the like. Some wireless applications can provide location information using a GPS system. Location and product mformation are used to build the bid request 908. The user also selects either "Buy Local" or "Bid Wheel" (Tier-driven) options 910 as illustrated below with reference to Figure 14. If the Bid Wheel is selected, test 912, the bid request is submitted 914 to a bid request queue for transmission to the tier region community as further explained below, and the bid system is activated in step 916. The system waits 918 for a predetermined period of time for a response (a bid) from a distribution associate. If no bid is timely received, test 920, the system builds and sends a "no bid" notification to the customer, step 940, and in step 942 provides to the customer a list of local (to the customer's location) distribution associates whom the customer can contact directly. These nearby merchants are the tier-1 bid community. In 944 the system also notifies those tier-1 distribution associates of the open customer request.

If there is a valid bid, see point "A" on Figure 9, the customer is notified 922 via the web site, email or the like, and more specifically the customer is sent an offer to purchase the product the customer had requested, at the lowest valid bid price, subject to adjustment, e.g. due to a commission or special promotion. Optionally, the offer can indicate a time limit during which the offer can be accepted and beyond which the offer is deemed withdrawn. If a time limit is indicated, the system waits for that period of time 924, e.g. an hour or a day, for an indication of acceptance of the offer by the customer. If timely received, then acceptance forms a binding sale contract (at least in the United States). The customer is then notified 926 of the expected delivery date, final cost savings, distribution associate identity, etc.

Figure 10 is a flow diagram illustrating the Bid System logic. The bid system handles the details of tracking tier region numbers, time limits and elapsed time, sending out bid requests, waiting for merchant (D/A) responses (bids), and sending bid requests to successively larger tier regions if necessary as explained above. Figures 11 A, 11B, and 11C are pseudo-code descriptions of the TDS logic engine, the TDS bid system, the Quick Response System, and the Create Tier Region logic of Figure 8. These structured language descriptions generally reflect, albeit more formally, the associated flow diagrams and narrative descriptions herein. They illustrate one example of a software architecture for implementing the invention although many different solutions can be used, in a variety of programming languages and operating systems, the details of which are known by those skilled in the art.

Figure 12 is a flow diagram illustrating Create Tier Region logic. The steps of this process are described in pseudo-code set forth in the drawing. Most of these steps have been explained earlier. The variable "vertical market type" corresponds to the product category, e.g. those illustrated in the web page of Figure 13, described shortly. Each distribution associate, at the time of registering to participate in the centralized, tier-driven server system enterprise, designates those product categories in which the merchant regularly trades or would like to do business. The phrase "optimize merchant list to best price schedule algorithm based on tier region parameters," refers to taking shipping costs into account in defining a tier region community, utilizing the database information mentioned earlier with reference to Figures 6 A and 7.

Figure 13 illustrates an example of a web page implemented on the central web site (208) as displayed on the customer's web browser. The particular design of the web site is a matter of design choice, but the primary shopping page preferably would include the following elements. First, the masthead 1302 identifies the central web site sponsor, i.e. the enterprise (illustrated as "Shop all America.com") with which all of the distribution associates are affiliated by contract. A list of predefined product categories 1304 is displayed, comprising links to more detailed information. A search component 1306 enables the user to search for a product or service by keyword(s). An enterprise store locator feature allows the user to find a distribution associate in her area, for example by entering a merchant name, or the user's address, city or zip code. A "featured store" component would include a photograph of a selected distribution associate and a brief description of that merchant, with appropriate links. Another optional feature is a display 1320 of "Today's In-Stock Inventory Value" showing an estimate of the value of the combined inventories of all of the distribution associates in the categories of products offered on the site. This is likely to be a huge number, illustrating to the customer the power of the present tier- driven system, aggregating the offerings of many retail distribution associates. Other more conventional web site features may be included as well, such as a "Learn More About Us" button, company profile, order information, and help links. A selection of "featured items" (that changes frequently) can be included, with thumbnail photos, and each with a "find store" link 1312 that can be used to locate a merchant (a distribution associate) who offers the product.

Figure 14 illustrates a more specific web page of the type that would be displayed in response to the user selecting a particular product category, in this example, gardening. The gardening page displays a list of gardening products (it could include gardening services), here shown under subcategories "tools" and "plants" . Each individual product includes a brief description, and can have links to more detailed information, photographs, etc. as is conventional at shopping sites. The user selects a desired product, and selects either "Buy Local" or "Bid Wheel" options. The former choice indicates a desire to buy the product only from a local merchant. The "Bid Wheel" option refers to the tier-driven process described above. The user clicks "submit" and this form implements the "purchase request" sent to the central web site to initiate the purchase process.

Figure 15A illustrates the process that can be used by a distribution associate to obtain an item from another distribution associate, in other words a wholesale purchase. This can be used to fulfill a pending customer request. In Figure 15 A, the customer "C" uses the enterprise web site as described above to request a product. The web site TDS sends a bid request to a first distribution associate "Bl". The retailer Bl wants to respond (bid) but does not have the requested product in inventory. Therefore Bl sends a wholesale purchase request back to the TDS, indicated as "B/W" for Bid Wheel. The TDS in turn sends wholesale bid requests (corresponding to Bl's request) to other distribution associates, beginning with an initial tier region, and expanding to additional tier regions as necessary. In other words, the wholesale system uses the same strategy as the retail tier region system. A second distribution associate B2 submits the winning wholesale bid, and the TDS duly sends a corresponding offer back to Bl (again analogous to the retail communication process described earlier). Bl accepts that offer, purchases the product at wholesale from B2, and then resells the product (through the TDS/web site) to the customer C. The wholesale purchase is transparent to the customer.

Figure 15B further illustrate this wholesale concept. It shows a distribution associate at the center (local to the customer), and the enterprise server ("SAA.com") broadcasting bid requests to a first tier region of distribution associates. For example, when a distribution associate responds to a (retail) customer bid request, the merchant might indicate essentially "yes, I want to bid, but I don't have the inventory; please send wholesale bid requests for me. " Within a matter of minutes or hours, the merchant will receive an offer based on the lowest (wholesale) price valid bid submitted by another dealer. He can accept it and then complete the resale. The retailer may be able to arrange "drop shipment" from the other dealer to the customer. The reader should now appreciate that the present invention not only exposes the small, local retailer to global presence on the Internet at low cost, but it garners business from local customers, and provides a mechanism to access virtually unlimited inventory very quickly.

It will be obvious to those having skill in the art that many changes may be made to the details of the above-described embodiments of this invention without departing from the underlying principles thereof. The scope of the present invention should, therefore, be determined only by the following claims.

Claims

1. A method for facilitating electronic commerce comprising: enlisting a plurality of retailers for participation as affiliated distribution associates; building a database comprising information about each of the distribution associates, the database including data for each distribution associate comprising an identifier, a geographic location, a category selection indicating at least one product or service category selected from a predetermined list of product and service categories, and a communication key; maintaining a centralized Internet web site for offering goods and services for sale to distribution associates, the web site including a selection of products and services organized based on the list of product and service categories; receiving a purchase request from a first distribution associate using the web site, the purchase request including identification of a specific product or service requested for purchase; determining the first distribution associate's geographic location; sending an acknowledgment to the first distribution associate indicating that the purchase request has been received; responsive to the received purchase request, selecting a first community of distribution associates reflected in the database who are located within a first tier region located geographically proximate to the first distribution associate's location and who have selected a category that includes the specific product or service requested for purchase; and sending a bid request message to each of the selected distribution associates, said sending step including employing a communication method selected in accordance with the corresponding communication key, the bid request message soliciting an offer to sell the specific product or service requested for purchase.

2. A method according to claim 1 wherein the first tier-region is defined as an area within a predetermined distance from the first distribution associate's location.

3. A method according to claim 1 wherein the first tier-region is defined as an area within a predetermined driving time from the first distribution associate's location.

4. A method according to claim 1 wherein the first tier-region is defined as an area generally surrounding the first distribution associate's location and having less than a predetermined population.

5. A method according to claim 1 wherein the first tier-region is defined as an area within a predetermined distance from the first distribution associate's location and not crossing a predefined shipping zone boundary.

6. A method according to claim 1 wherein the first tier-region is defined as an area within a predetermined driving time from the first distribution associate's location and not crossing a predefined shipping zone boundary.

7. A method according to claim 1 wherein the first tier-region is defined as an area generally surrounding the first distribution associate's location and having less than a predetermined population and not crossing a predefined shipping zone boundary.

8. A method according to claim 1 wherein the first tier-region is defined with respect to highway located proximate to the first distribution associate's location.

9. A method according to claim 1 wherein the first tier-region is defined with respect to political boundaries in the vicinity of the first distribution associate's location.

10. A method according to claim 1 wherein the first tier-region is defined with respect to natural boundaries in the vicinity of the first distribution associate's location.

11. A method according to claim 1 wherein the first tier-region is defined in terms of UPS zip codes.

12. A method according to claim 1 wherein none of the selected distribution associates submits a valid bid within a predetermined initial time limit, and further comprising: selecting a second community of distribution associates, the second community of distribution associates located within a second tier-region generally centered about the first distribution associate's location and generally circumscribing the first tier region; and sending a bid request message to each of the selected second tier-region distribution associates, said sending step including employing a communication method selected in accordance with the corresponding communication key, the bid request message soliciting an offer to sell the specific product or service requested for purchase.

13. A method according to claim 12 wherein none of the second tier-region distribution associates submits a bid within a second predetermined time limit; and further comprising: selecting a third community of distribution associates, the third community of distribution associates located within a third tier-region generally centered about the first distribution associate's location and generally circumscribing the second tier region; and sending a bid request message to each of the selected third tier-region distribution associates soliciting an offer to sell the specific product or service requested by the first distribution associate.

14. A method for selling goods and services comprising the steps of: forming a contractual alliance of distribution associates; providing a centralized web site to promote sales of a product offered by the distribution associates; implementing a first tier-driven reverse auction process coupled to the centralized web site to solicit bids from the distribution associates in response to a customer request made by a user of the centralized web site to purchase the product; and further implementing a second tier-driven reverse auction process coupled to the centralized web site and configured to receive a wholesale request to purchase the product from a first distribution associate, for soliciting wholesale bids from other distribution associates to sell the product to the first distribution associate, so as to assist the first distribution associate in acquiring the product for resale of the product to the customer who made the purchase request.

15. A system to support electronic commerce comprising: a server operably connectable to the Internet for communication with Internet users; a web site deployed on the server, the web site including a list of predefined product categories, and further including a list of specific products associated with each product category; the web site further including client-server software means for interaction with a remote customer via the Internet so as to allow the customer to select one of the specific products listed on the web site; the software means providing to the customer at least the following two options for transaction mechanisms: a first, local option to assist the customer in purchasing the selected product from a local merchant geographically proximate to the customer; and a second, bidwheel option to enable the customer to receive a lowest price bid on the selected product from a selected bid community of merchants via a tier-driven reverse auction process.

16. A system according to claim 15 wherein the tier-driven reverse auction process includes defining a first tier region centered around the customer's location, and further includes defining the selected community of merchants as merchants who are located within the first tier region and who have previously indicated that they trade in product categories including the product category that includes the specific product selected by the customer.

17. A system according to claim 16 wherein the auction process includes defining one or more additional tier regions and corresponding bid communities of merchants to submit bids to sell the selected product in the event that no valid bid is timely received from any of the first tier region bid community of merchants.

18. A system according to claim 17 wherein at least one of the said additional tier regions are determined with regard to minimizing shipping cost of the selected product to the customer's location.