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Treading the fine line between authorized retailers and the used equipment market, New Jersey online retailer WorldExchange.com announced last week that it has launched a consumer electronics shopping Web site that offers "deep discounts" on a broad array of mid to high-end audio/video components whose manufacturers, the company says, normally adhere to "restricted distribution and price-maintenance policies."

WorldExchange.com sells new merchandise, but its "Certified Mint" program is what will likely catch the eyes and ears of audiophiles. The company says that, under the Certified Mint banner, it sells "perfect-condition" dealer display models and customer returns at cost-plus prices and, according to company founder Nathaniel Gurien, has the cooperation and sanction of many of the industry's most prominent manufacturers.

Brands listed on the site include Adcom, Bryston, California Audio Labs, Conrad-Johnson, KEF, Krell, McIntosh, Mirage, Monitor Audio, NAD, NHT, Parasound, PSB, and many others. There is even one of Conrad-Johnson's $14,000 ART preamps listed for sale, discounted several thousand dollars. Gurien explains that his company's retailing approach is "highly innovative in its unique and successful integration of the otherwise incompatible business models of restricted-distribution/resale-price–maintenance marketing versus deep-discount e-commerce."

To stock its web site, WorldExchange.com says it has created a "winning scenario" for bricks-and-mortar authorized dealers by providing the opportunity to liquidate display goods and non-defective returns, "yielding substantial additional cash flow as well as new customers." In addition, Gurien says, the company is currently testing a business model that will provide product sourcing, direct invoicing, payment processing, and fulfillment designed for retailer e-commerce sites that are "struggling to reconcile the restrictive marketing policies of many upscale manufacturers with the rich opportunities presented by e-commerce." The company also claims that it will soon feature international brands and products currently available only in overseas markets.

According to Gurien, all Certified Mint products are delivered in "perfect, mint condition, indistinguishable in physical appearance from brand-new merchandise. We obtain merchandise from dealers, manufacturers, and private parties. Sometimes the products will be perfect display models from high-end, low-traffic dealer showrooms or non-defective returns from customers." Gurien adds that merchandise is never repaired, refurbished, or taken from so-called "B" stock. "All items are basically in the same condition as brand new and lightly used for weeks, if at all. Often, Certified Mint goods are derived from customers' returning items in original, brand-new condition, simply because they decided to upgrade their purchase or, after buying, realized that they actually couldn't afford the item."

WorldExchange claims that, since Certified Mint Condition equipment is officially considered used, it can be sold at deep discounts without interfering with industry manufacturers or their established bricks-and-mortar retailers. Gurien says that, while the campaign was rolling out and testing the new site (in addition to placing ads with eBay, Audiogon, Audioreview, Amazon, and Yahoo), sales have grown from $100,000 for the month of April 1999 to $1.8 million in net sales in November 2000. Gurien expects sales for 2001 to be around $33 million.

The site offers a 14-day money-back guarantee on most items (exceptions include phono cartridges) but charges a rather stiff 15% restocking fee and does not refund any shipping costs involved. As an alternative, WorldExchange.com says it is currently testing its new "Mint to Own" program, which offers consumers the opportunity to audition up to 12-different products at home during a 12 month period for a $500 fee that the company says can be applied towards purchases (with some restrictions). Gurien adds that "this unique program will allow consumers to employ the convenience of shopping on the Internet and still enjoy the benefits of live product demonstrations and more, in the privacy of their homes, with no obligation to purchase."

Finally, WorldExchange.com is planning to cover all of the Certified Mint products it sells with its own warranty service. Warranty coverage is expected to be five years for loudspeakers and three years for all other types of home electronics. The company adds that it will match the factory warranty period on specific brands, when longer than the above.