More about penny auctions

Penny auctions such as Beezid, Swoopo, Bidray, Pardoo, Nab-n-Grab, etc. are becoming more prevalent thanks to Beezid’s television ads.  When you visit these penny auction sites, you will see high dollar items going for just pennies on the dollar.  Sounds like a great way to get a great bargain, and it actually can be, but at what price?

I looked at Swoopo and found that someone had purchased a $2099 iMac for $161.00 plus $42.60 for the bids.  So for 200 bucks, this person bought this mac and saved over $1800.  How can they do that and remain in business?

These sites sell bid packs anywhere from about 75 cents to a dollar, so you have to pay to bid.  The bid prices usually increase by a penny, hence the term ‘penny auction’.  The bidder in the above auction placed 79 bids to win this item, which really isn’t bad at all.  But consider that there were probably at least 1000 bidders and say the average number of bids is 50 and each bid costs 75 cents.  The total the auction site raked in for this item would be $37661.  Not a bad profit even if they paid retail – $35562.  Even if they had a  fraction of the bidders, say 100, they still cleared over $1000 profit.  Not bad at all.

And the bidder didn’t do badly at all, but everyone else just spent money for nothing.  So, is it a scam or a great marketing strategy?

I’m sure there are penny auction sites that will scam you and the above listed auctions are not endorsed by me to be legitimate, I just found them on a search.  I actually participated in Beezid and I don’t feel like I was scammed even though I didn’t win anything.  If a site is open about how it works, how much the bids are, and what it will actually cost you to participate, it is probably not a scam.

It is a great marketing strategy as it is making these companies a pant-load, but I consider these sites closer to gambling.  Since I have to pay to play (like a slot machine) and have a small chance of winning the bid, I feel like I’m playing slots.

So, as I said in my previous article, Beezid – scam or legitimate, I think I will stick to eBay where I don’t have to pay to bid.

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