With the current recession, and the prevalence of computers, it is no surprise people have begun to turn to the internet as a means of finding a good deal. Sites like Ebay, Amazon, and Woot offer a few, or many deals, over the year giving millions the chance to get the things they want at a reduced price. Recently another form of site has sprung up offering members deals on brand new items at heavily reduced prices. These sites are known as “penny auction” and “reverse auction” sites. These sites bill themselves as a chance to buy items such as LCD TV’s and Macbook Pros for as low as 5% of the price. While these sites are not lying that you can get these items and more for much less than they cost, there are some thing any user will need to know about penny/reverse auction and bid sites before they jump in.
First off, bid sites are not selling Xbox 360’s in bulk that they can offer a severely reduced price. While you can get an Xbox or Playstation 3 from them for a low price, they are offering them, generally, one at a time and to one winner. The second part to this is that the items go to a winner. This means that multiple people bid on an item, and the winning bidder gets the item for whatever price it is listed at. This means that out of five, ten, or fifty people, one will actually receive the item for a reduced price. So, while there are opportunities to get electronics and other expensive items for cheap; it is not a simple log in and buy system.
Secondly, you pay for your bids. This part is likely the most contentious and debated part of reverse and penny auction sites. Instead of starting with a high bidding price, and encouraging bidding though standard channels, like Ebay, bid sites set a very low entry price (usually 1 cent) and charge the participants for each bud they cast. The bid then drives the price of the item up a preset amount. That is if an item is set at $.01 and you cast a bid, the price would then rise to $.02, $.07, or $.25 depending on the setup of the site. This is in addition to the bid price, between 10 cents and one dollar. While the bid price is paid by all users, the final price, whatever the final total of the item after all bids have been placed, is paid by the winner only. This means that, depending on the system each participant may end up spending ten dollars, with the final person spending another $2 on top of this for a new video game or iPod shuffle. This means the final cost to the winner may be $12 or $15 still
better than half off the item, but not the $2 advertised on the site. This has caused some to call bid sites a scam, though most sites in no way hide how they make their money.
Thirdly, penny and reverse auctions are not scams. Yes, they are a business that makes money, and yes there is an inherent risk in bidding on items, but that does not make them a scam. Bidding sites are a form of entertainment shopping. They offer a unique experience that is exciting and intriguing, with a major pay off for the winner. Are some dishonest sites out there scams? Yes, but the same is true for clones of EBay and Amazon and other websites designed to simply take people’s money and never give them anything in return. Bid sites, like Biddor, Swoopo, and BidRay are not scams; they are a form of entertainment. Just like any other entertainment shopping experience one should always obey some basic rules for their own safety. Investigate the site you are looking at, are there pictures of actual, varied, people receiving their items, do they have any major complains or a history of not sending items, are they a registered corporation or being run out of someone’s basement. Answering these questions can
help you avoid actual scam sites, trying to collect money without paying out to winners. The second thing to do is set your limit. Like many forms of entertainment bidding is easy to get caught up in. Having a defined limit and sticking to it is key. If you set a twenty bid limit, set it and keep it, you may miss out ona good deal, but keeping your limit and letting an item go is more important than spending twice what you could afford to get an item for half off. Sticking to these two simple practices can keep you safer on the web in general, and help ensure you don’t end up over extending yourself as you get caught up in the excitement of bidding and the hope of a good deal.
