AOL Unveils ‘Bargain Basement’

America Online, Inc. (NYSE: AOL) has announced the creation of a “Bargain Basement” area on its Web site, with brand-name clothes, consumer electronics, housewares and other items offered at prices up to 80 percent below retail.

AOL also said it made an equity investment in SmartBargains, a new company signed to be a premier Shop@AOL merchant partner. The companies did not disclose the size of the investment.

AOL members will get exclusive promotional offers, as well as first crack at bargains on the new site, the companies said.

Surplus Goods

SmartBargains was started just this month by retail, technology and marketing partners including Gordon Brothers Group, a company that helps retailers sell their excess merchandise.

Michael Frieze, chairman and acting chief executive officer of SmartBargains, is also CEO of Gordon Brothers. SmartBargains president John Kerney also comes from the group.

The company’s own Web site has yet to launch.

Attracting Bargain Hunters

AOL decided to start the site because “a third of all online shoppers are bargain-hunters,” Julie Mason, a spokeswoman for the Dulles, Virginia-based company, told the E-Commerce Times. The site is already available to AOL members, she said.

Notably, a new survey from Jupiter Communications shows that most Europeans who buy products online are motivated by better prices. Fifty-seven percent of those surveyed said lower prices would be an incentive to increase their online shopping.

Other research shows that consumers tend to use the Internet to compare prices and research products before buying items in stores. A separate Jupiter survey of kids and teenagers found that while many buy low-priced items like CDs, books and clothing online, 49 percent said they use the Web to look up information about goods and products, which they purchase offline.

Complements Recent Moves

AOL has been busy in recent months developing new strategies to attract people to its service and to keep them online for longer amounts. Earlier this month, AOL purchased Quack.com, a company with technology that allows Web users to access online information through the use of voice commands over a regular telephone.

AOL touted the acquisition as advancing its “AOL Anywhere” strategy, giving its members access to e-mail, news, traffic and weather reports, and movie times even when they are not sitting in front of a computer.

In a separate move, AOL and Citigroup Inc. announced an alliance that will enable AOL’s 23 million subscribers to pay their bills online.

Starting this fall, Citigroup’s payment services will be made available through all of its channels, including AOL.com, CompuServe, Digital City, Netscape Netcenter and AOLTV. Users will be able to conduct transfers of money from person to person and between accounts.