Zecco’s Ambitions Widen

Zecco, the online zero dollar trade commission firm, is planning to expand its businesses in the coming months. Within the next week or so, Zecco will launch an IRA product. This will be followed by an options section that will allow customers to trade complex options.

But, in the mind of Zecco chief operating officer Allard Luchsinger, the company’s most important innovation will be a social network for stock and option traders, according to an interview with him yesterday. This part of the business is scheduled to launch in April, and, in the words of Luchsinger, it will be "the true face of Zecco". Social networking sites have drawn huge audiences, especially among the Generation X crowd, and Zecco is betting that it will add substantially to traffic at its trading website.

Zecco currently ranks about 51,000 in Alexa. 24/7 Wall St. estimates that this would put pageviews somewhat above 25,000 a day. The company uses Google’s Adsense system, and our estimates are, that at these pageview numbers, monthly revenue from this source would be between $5,000 and $10,000.

But, that is not where Zecco makes its money. Margin and interest fees on current accounts will be one source of income. The firm also charges for options trading and execution of trades that exceed more than 40 per month per customer.

The company says it opened about 5,000 accounts in January, with almost no paid marketing, and that this number is expected to accelerate in the next month or two. Zecco also plans to step up paid marketing over the next few weeks. Management decided to hold off on advertising while some of the infrastructure problems with its trading product were worked out.

The jury will be out on Zecco until the market sees the results of its social network model for the trading crowd. It has never been tried before, but that makes it all the more interesting.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.