I ran across several sites one day when I was looking for some clearanced out items. Who isn’t looking for a great deal these days? But then I came across the idea of penny bid auctions. Well what the heck are those?
Basically, these sites offer you the chance to buy “bids”, and prices vary from site to site, and you use those bids on merchandise in an attempt to win it. Time runs out on these bids, but as soon as someone bids on an auction, it adds time back on. Kind of like a bidding war.
Not this kind of war! Crazy Canucks!
Now while this seems good in theory, sites like this are raking it in. You see, the bids can cost about 75 cents each and then you pay whatever price the auctions get up to on top of it. So if I’m watching a “penny bid” auction and it goes for $1.00, that means the winning bidder pays $1.00. The site, however, made 75 dollars for the bids alone.
True, the site could take a loss on items, but unlikely. These auctions see furious amounts of bidding in the last few seconds, which add time back on, and then repeat ad nauseam. Truly, patience is the virtue we are looking for here. And for patient people, this could pay off quite well. Me, I would just get ticked off and say forget it.
So are these sites scams? In a way yes, but not like most scams. They have a way that they know they’ll make their money back on the items. However, if you pay $75 for 100 bids and don’t win an auctions, you just threw away $75 bucks. And that is a distinct possibility unless you’re really patient. You could also run out of most of those bids in one auction. So there is an inherent risk/reward system going on here.
Once again, the Bid Cactus trucks make off with another haul!
In my brief study, I found that the most “tenacious” bidders usually won out. That means you aren’t going to “sneak one by” on anybody. Those who try, automatically fail as the “tenacious” bidder quickly outbids them. So the hit and score system does not work at all. Like I stated before, patience seems to win out.
To further my study, I saw a $50 Target gift card that nobody had won yet at $3.00. That means the site made $225 on bidding for a $50 gift card. And the same guy kept bidding back in. Tenacious eh? Seem like a scam to you? You decide there.
Is it worth it? Probably not. There may be some people who do fairly well, but those people have to be pretty dedicated to that site. So, unless you’re going to be the “tenacious” and “dedicated” type, don’t even bother. The odds just aren’t stacked in your favor.
Let’s chalk one up for BidCactus.com for the Hobo Shame Award for the Week!
Mark,
ReplyDeleteFirst, the victory bonds poster is hilarious, so I want to give you credit for that.
As it relates to penny auctions, you've done a good job of summing up the basic model. People pay to play, and without research, they also pay to lose. At the same time, users can score a great deal if they research carefully and stick to a strategy. The safest sites to bid on are sites that offer a bid to buy option (they let you invest the cost of your bids into buying the item at retail price). Even if you lose, you can avoid being out the cash. Several bidders that frequent my site have done well on Bidcactus, but I encourage those who are new to penny auctions to start on small sites first.
Many of those "tenacious" bidders you've referenced are called powerbidders, and they win lots of items by intimidating the competition.
Thanks for the post.
Josh
http://pennyauctionlist.com
Thanks Josh,
ReplyDeleteLike I said, with a lot of those sites, there's a risk to it all. But some people can and do make it pay off. Nice site btw.
Penny auctions are definitely gaining popularity lately it seems. At first I was a little hesitant to use a penny auction site but I won a couple of penny auction gift cards at work and so I thought I would give it a try. At first I didn't really know what I was doing but once I got the hang of it I loved it and ended up winning several auctions!
ReplyDeleteNice post about Penny Auctions Sites.
ReplyDelete