Zecco is no longer free, will it survive?

Things are not going well for Zecco, an online stock brokerage that launched last year with an innovative free trades concept. At least not well enough to use the original idea as a sustainable business model.

The company just announced that they are changing the pricing structure and starting October 1, 2007 will charge new customers $4.50 per trade for all trades in excess of 10 per month. In addition, minimum balance of $2500 is required to be eligible for the free 10 trades. Existing customers will go away without the balance requirement but that will change with the new year as well.

This is going very much against the original idea that generated so much buzz back in 2006 and made Zecco heavily dependent on visitors traffic to bring the revenue consisting primarily of per click ads and interest from the cash in customers account. If you trust Alexa, the traffic has been slowly creeping up but obviously not fast enough to support free trades. My guesstimate is that the startup has been slowly burning cash since these trades are costing Zecco money. Hence this recent announcement.

Zecco Alexa chart

10 free trades with $2500 minimum balance still looks like a very attractive offer compared to other alternatives however as I mentioned earlier, my problem with Zecco is not pricing but the lack of feeling that I deal with a well established business. Customer support has also been an issue.

Let’s assume that free trades Zecco initially offered were a kind of marketing trick to build customer base. What will happen now? Zecco is definitely going to lose a lot of customers and advertising generated revenue will drop, but some people will stay and will bring extra revenue from trade commissions. The real question is will that extra revenue make it worthwhile for Zecco to continue offering the service, and it looks like I am not alone asking these questions.

See also:

7 Responses to “Zecco is no longer free, will it survive?”

  1. 1 Lazy Man Oct 9th, 2007 at 2:16 pm

    I don’t see who it’s “no longer free”? With 10 free trades a month, I still consider it free. If you believe their press release this will allow them better customer support, so perhaps it’s no longer an issue.

  2. 2 Raymond Oct 9th, 2007 at 2:48 pm

    I think the original appeal of Zecco has waned a bit since they cut back the number of free trades. Personally I’ve never executed more than 10 per month with my Zecco investment. I see Zecco more as a novelty rather than a true brokerage in my opinion.

  3. 3 Yan Oct 9th, 2007 at 4:26 pm

    Zecco for me is a business experiment. I have opened an account a while ago but never funded it. I can’t seem to overcome that lack of confidence…

  4. 4 chadpatrick Oct 13th, 2007 at 6:14 pm

    Zecco shot itself in the foot with their new deal. Betraying a loyal customer base by going back on what they sold as “not an introductory offer” is going to be their nail in the coffin.

    The funny thing is, they now have ads that say “10 free trades a month with $2500 account Not an introductory offer”

    Why do they keep advertising it as “Not an introductory offer” when they have shown they have no plans of sticking with it.

  5. 5 Marc Nov 5th, 2007 at 7:46 am

    I have been using Zecco since they opened. I do about 25 trades a month. Not alot of money i’m playing with, but enough to make gains on short selling.

    I’m very upset with the way they handled the situation. I’m moving my money out on DEC 30th. And I think many more will do the same, which will strap them for cash as they payout the nose.

  6. 6 Dave Jan 25th, 2008 at 3:48 pm

    If not Zecco, then what brokerage? I can’t seem to find a better deal for low trading activity (less than 40 trades a month).

  1. 1 Roundup for week of 7 October 2007: Back in the Saddle Edition at Mighty Bargain Hunter Pingback on Oct 13th, 2007 at 12:16 am

Leave a Reply