“Advertising will get you customers—but value and a great customer experience will get you repeat customers, which was our ultimate goal.”

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Ben Federman (born 1983), is an entrepreneur and the founder and CEO of 1SaleADay, a large daily deal website. Ben has subsequently founded other online deal sites, including bensoutlet.com, dynamitetime.com, and shadora.com. He donates half of his companies’ earnings to charity.

1SaleaDay.com offers the deepest discounts on a variety of merchandise with a new deal posted every day at 12 midnight EDT. With Deals of the Day in six categories, including Wireless, Watch, Family and Jewelry, 1SaleaDay leverages its global buying power to offer discounts up to 90% off retail prices for electronics, collectibles, housewares, toys and more.

MO: In 2007 when you initially launched 1SaleaDay, your discounts were so great that you were actually losing a lot of money. How did you manage to stay focused on the bigger picture? Did you ever contemplate giving up?

Ben: Our initial losses were part of our deliberate plan to create loyal customers. Advertising will get you customers—but value and a great customer experience will get you repeat customers, which was our ultimate goal.

Every retail business needs to create the conditions where customers will come back again and again. It’s critical to create inventory turnover—if products are moving, you can reuse your startup capital again and again. With that strategy, as we grew to half a million daily visitors we were able to be profitable while staying true to being the lowest price on the market.

I’m a firm believer in investing in my customers, instead of advertising. It created the firm foundation for our profitability and we don’t ever plan on changing that.

MO: How are you able to offer up to 90% off retail prices to your customers?

Ben: Obviously you have to be willing to purchase single items in massive quantity, which gives you negotiating power. But you also have to enjoy the process. I like to negotiate deals to get the best bargain. It’s something I’ve worked at, and I think I’m good at it.

Nowadays we have buyers who doing the deal-making, putting 25-30 bargains on our site every day. But I still like to get involved directly when I can, either by working the phones a bit myself or by sitting in on buyers meetings, listening to discussions and looking for opportunities.

MO: You donate over 50% of your earnings to worthy causes. What influences the decision making process for your philanthropy?

Ben: We talk to a lot of charitable organizations, to be sure. We help a broad mix of educational and special needs organizations, inner city children’s support groups, veterans’ organization and victims of natural disasters.

We also like to take ideas from our Facebook friends so they feel connected to our philanthropic mission. After the tsunami in Japan last year, for example, we posted a status reflecting on the tragedy and received dozens of comments and suggestions in return. Another time we posted a status stating that we would give $1.00 to charity for every “Like.” Within a few hours we received over 1,900 “Likes.”

MO: In just over four years you’ve become one of the most highly trafficked Web sites in the U.S. without spending any money on advertising. How have you managed to gain such an impressive amount of traction? What strategies worked for you in the beginning when you had little or no marketing budget?

Ben: We didn’t have much of a marketing budget in the beginning because we didn’t believe in it—at least through traditional channels. We were growing like wildfire, and yet there were competitors 1/10th our size who were outspending us.

Our secret was, and continues to be, deal marketing. We always come to market with the items people want, priced lower than anywhere else. Because we reach out directly to customers via Facebook and other social channels, we’re building relationships. And now our customers are thrilled to spread the word for us.

MO: Can you talk about what inspired your decision to create 1SaleADay.com?

Ben: Growing up in a middle income family, I always had a great interest in gadgets but usually wasn’t able to afford my own. Once I got interested in business, I was looking for a model that would allow our customers to buy the gadgets they wanted, at a price they could afford. The best way to do that—while turning a profit—seemed to be the daily deal model.

Today, as the largest independently-owned daily deal site, it still excites me to be able to sell items at 75 to 90% off. I don’t ever plan on changing that.

MO: You’re entrepreneurial spirit started to surface back in the fourth grade when you had a business selling candy to your classmates. Was there anything from that early experience that gave you insight or ignited your interest in becoming an entrepreneur?

Ben: Honestly, back then I was just thrilled to be able to put some money in my pocket. It wasn’t until much later, after I left the army and was working at a camera store in Brooklyn, that I realized that there was real potential in selling a very limited number of items at steep discounts. I started putting money away in anticipation of starting 1SaleADay, and two years later, at the age of 23, with a combination of cash credit cards and other loans, I did it.

These days I feel very privileged to be able to give over 50% of our earnings to charity and help those in need. That’s the driver that keeps me constantly focused on growing the company.

MO: Has your definition of success changed since first starting out when you were 23?

Ben: Not really. As I’ve been exposed to more and more charitable organizations and the people running them, I realize how much they sacrifice in order to do what they feel is right. In my mind anyone can start a business—but the more I reach out to others, the more I realize how great the need is out there. 1SaleADay simply gives me the ability to grow and help people on a much larger scale.