Flooz is a currency that can be used to purchase goods from many stores on the Internet and as online gift tokens. Flooz.com is not the first company to attempt electronic cash on the Internet. In the past six years, companies like DigiCash, CyberCash and First Virtual Holdings led the way, but Digicash went bankrupt; First Virtual Holdings changed its name to MessageMedia; and CyberCash switched its focus to merchant-transaction processing.
This next generation of payment systems on the Web offers an online alternative to credit cards. Companies like Flooz.com, Beenz.com, Giftcertificates.com, Netcentives.com and MyPoints.com have slightly different concepts but all want to encourage consumers to shop online.
New York-based Flooz.com was co-founded in December 1998 by Robert Levitan (38) who had previously co-founded iVillage.com, the successful women's website.
Flooz.com received a first round of venture capital financing valued at $16.5 million (€18.4 million) when it launched in September 1999. It recently received an additional $27 million from investors. In addition, Jim Manzi, the former chairman and chief executive officer of Lotus Development has invested in the company and sits on the company's board. Flooz.com has had a high profile since its launch partly because it has signed up the actress Whoopi Goldberg as its celebrity spokeswoman. As part of her payment she received more than 100,000 shares of the not-yet public stock.
To send an electronic gift all one has to do is go to Flooz.com and purchase Flooz gift dollars using a credit card. A personalised greeting card can be included in the e-mail notifying the recipient of your gift. The sender also receives an e-mail saying his gift has been received.
In order to spend flooz, your recipient must activate his account at Flooz by clicking on a hyperlink within the e-mail. The disadvantage is that the recipient must enter personal information such as an address and phone number to have the account activated. She or he is then supplied with an account number to be used when spending the Flooz gift dollars.
Currently more than 60 stores accept flooz as payment and these include big-name companies such as Starbucks coffee, Barnes and Noble bookstore, Tower Records, Toys R Us, and Godiva the chocolate-maker.
The Flooz icon is displayed at the online retailers' sites along with other payment options. If the recipient wants to buy something that costs more than the amount of flooz in his account, he can add more value to it.
To date, about 600,000 people have sent or received Flooz certificates worth about $5 million. Flooz has proved to be particularly popular among university students and at the corporate level. Half of Flooz's sales now come from businesses. It has already signed 75 corporate clients including Bell Atlantic, Eastman Kodak, Sun Microsystems and Cisco Systems which gives flooz to its employees, business partners and customers as rewards.
A UK version of the site will launch in June so a user could send and shop with flooz converted into pounds.
One of Flooz's New York competitors is Beenz.com. It launched in Britain and the US in March 1999. This product is a universal, incentive-based currency for online merchants. It works by rewarding people for simply being online. For example, people can earn beenz as compensation for say, providing an e-mail address or reading a document. For the 350 online merchants that have agreed to participate, beenz is an inexpensive way to attract customers to their sites.
A participating merchant agrees to buy Beenz from Beenz.com and puts up its red bean logo to advertise the availability of beenz. The merchant also decides what the customer must do to earn beenz - for example, whether to divulge personal information, join a club, buy something, fill out an online survey or simply click on the site. Some, but not all of the merchants giving out beenz, also accept them as payment. Two sites - BeenzQueen.com and GotBeenz.com - take payment exclusively in beenz.
Although one beenz is only worth one penny, this hasn't stopped more than 1.4 million people collecting them. Once they build up a critical mass of beenz in their own private Beenz accounts, they can trade them in for merchandise. According to its chairman and chief executive Mr Philip Letts, Beenz is adding 300,000 new customers a month.
