From the May 2007 issue of Entrepreneur

Deal-a-day sites--websites that sell one deeply discounted product each day--are sprouting up all over. They sell pretty much everything, from jewelry to electronics, in limited quantities at up to 90 percent off retail prices. These sites resemble blogs in that they're updated frequently and usually provide catalog summaries of previous deals shoppers can browse.

Deal-a-day sites were pioneered in 2004 by Woot.com in Carrollton, Texas. Founded by electronics wholesaler Matt Rutledge, Woot's product selection emphasizes computer components and electronic gadgetry--all at closeout prices.

Today, nearly 100 deal-a-day sites can be found on the web, many started by e-tailers looking to expand. One such entrepreneur is Ellen Craw, general manager and co-founder of Bits du Jour, which started in 2006. It sells downloadable software discounted 40 percent to 50 percent on average. Craw is also general manager and co-founder of sister site Ilium Software. She co-founded both companies with CEO Ken Morse, 48, and CTO Dan Amstutz, 50. The sites log combined annual sales of nearly $1 million. "I was a big fan of Woot," says Craw, 54. "I checked their site every day to see what they had and because it was so much fun."

Craw was working on promotions for Ilium when she got the idea to create a site like Woot where Ilium could discount without changing prices on its main site and devaluing its products. Today, Craw sells merchandise from Ilium's site on Bits du Jour and uses an affiliate model for software from other vendor sites. Consumers can track daily deals with sites like Deal of the Day Tracker, DealSucker and ZeroDayDeals.

Before setting up your own deal-a-day site, consider these tips from Craw.

1. Find your niche. Craw says about 10 to 15 sites sell electronics. "On the other hand, there are no deal-a-day sites for luggage, personal care items, tools or office supplies right now," she says.

2. Know your product. "I would not sell software if I didn't have knowledge and contacts in the [industry]," Craw says. "You don't want to sell junk--you want to have good discounts on good products."

3. Limit your quantities. Doing so makes it easier to control your processes and adds a sense of urgency.

A Closer Look
Get up-to-the-minute info on your customers with session monitoring.

Many e-tailers are turning to session monitoring tools that capture real-time data of each customer interaction as it happens. This relatively new type of software--from companies like Coradiant, Quest Software's Xaffire unit and TeaLeaf Technology--lets e-tailers capture screenshots of every consumer action.

"We capture everything a user sees and does," says Geoff Galat, vice president of marketing and product strategy for TeaLeaf. The company's product, TeaLeaf CX, is used by both large and small e-tailers, who pay one-time costs ranging from $75,000 to seven figures. The software is designed to work with web analytics software or services but differs from that category.

For example, web analytics software lets a website owner track the checkout process and find out when visitors are not completing it. Session monitoring tools can tell the business owner why it's happening--the color of shopping cart merchandise was different from a customer's selection, for instance.

"These tools are really souped-up site analytics," says Sucharita Mulpuru, a senior analyst who studies e-commerce at Forrester Research in Cambridge, Massachusetts. "While most analytics tools are hosted solutions that roll up vast quantities of data, session monitoring tools go in the other direction: They enable companies to drill down to individual transactions by capturing screenshots of every consumer action."

Mulpuru adds that since these tools sit on servers, they don't have to rely on cookies, which can often give an inaccurate view of click-stream analysis and other metrics. And Mulpuru says session monitoring tools enable real-time, replicable session data, so everyone from the IT team to merchants, marketers and call center agents can see problems as soon as they happen. When interacting seamlessly with an analytics package, these tools will enable companies to have both bird's-eye and microscopic views of their customers.

Melissa Campanelli is a marketing and technology writer in New York City.