RackUp is new auction, currently in beta stage, that falls under the entertainment shopping category. Unlike Swoopo and penny auctions Rackup is not a bid-fee auction, you don’t have to pay to participate. Auctions only takes 60 seconds and there is no risk involved.
Rackup is a gift card auction created by gift card industry veteran Marc Rochman. Rackup has already received 3.5 million in funding and has a promising Board of Advisors that include Prof. Dan Ariely author of “Predictably Irrational” and Prof. Paul Milgrom, expert in auction theory.
Rackup is teaming up with major retailers and promises that its winners will always get more than they pay for. Rackup will charge a fee of about 8% of the transaction to the retailer, so it’s essentially marketing for a retailer and a good deal for the consumer. Also, if you take a look at retailer profits on unused gift cards you’ll see that many go unused and retailers end up making a profit there, not saying that they’re intending this happens but sometimes it does.
Rackup is a fast paced auction, think of it as the Black Friday of online gift card auctions “the early bird gets the worm,” except in the case of Rackup the early bidder gets more value on their gift card.
The sooner a bidder enters an auction and commits to paying the bid price the better their odds are of winning a gift card.
Rackup will even allow winning bidders to round up the final price of the card. Say you won a gift card valued at $50, and you ended up receiving a 46% bonus, $23. If you want, you can add $2 when you purchase the gift card so that you can gift a full $75 gift card.
Watch a demo from Rackup.com:
You can register on Rackup and try out their demo auctions before they launch in November.
It looks like there will be a limit to the number of gift cards being auctioned, as for the demo auction they show there are 10. Each bid increases the bid price by an increment of $0.10.
I received a 15% bonus on the American Airlines demo. The gift card started with a value of $50 and increased in value with each bid and all of the 10 bidders received a 3% or higher bonus to their $50 gift card. If a gift card starts out with $50 in value and the bid increases to $55 the winning bidder will receive a value of $55 + an extra bonus for a cost of $55.
I then tried the Whole Foods Gift Card demo and did even better.
Let’s say the Whole Foods gift card was real and not a demo I would have just received $51.70 in free groceries with my 100% discount. It took a few tries at bidding before I was in the top ten. The final price I would have to pay is only $51.70 to get $103.40 worth of groceries at Whole Foods.
There’s even a user dashboard where you can see how much much you’ve saved on your won gift cards as well as participation history.
RackUp was featured on TechCrunch 50 yesterday, (Thanks for featuring this cool auction, TechCrunch!) watch the video and Q&A panel on TechCrunch.
What do you think of RackUp? Join the Entertainment Shopping Forum!
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Penny Auctions September 15, 2009, 7:51 am
The idea sounds too good to be true. If ever one is winning and there is no risk involved, how do the make money?
jscroy September 15, 2009, 10:58 am
Seems like a great way to get guaranteed customers rather than throw money at advertising that may or may not get me in the door, at worst they have spent $50 to get a guaranteed real live customer they then have the opportunity to upsell, build trust with ect. I noticed a few cards I would try that I have not even considered in the past just because their advertising wasn't warm and fuzzy enough to make me want to bother. Just my thought's….
Stephanie
Rob Valli September 18, 2009, 1:19 pm
Hi, I’m Rob, VP of Strategy of Rackup, and I’d like to add a few things to what was said, and hopefully clarify what we do to those that haven't yet figured us out…
First, I want to thank the folks at pennyauctionwatch.com for taking the time to learn about what we are doing and write such a wonderful article on us. We were all really happy to read such review. Thank you:)
ok… What you are seeing is a totally new auction model. It is expressed using the latest ‘chat’ technology, so that the auction is in true real time. That means all participants can bid, and see bids, without refreshing the page. Not only is this kinda cool, but in a 60 second auction, it’s critical, so people aren’t continuously refreshing their browsers to see what’s going on, and missing out on the action.
To address your other question, where does the $ come from, it’s simple… the retailers. You know those cards in the grocery store? You know the merchants are giving a piece of the sale to the grocery store, right? They are acting as a reseller.
Well, what we do, is simply give that money back to the user in the form of a bonus… and to make people compete, we have different levels of bonuses. In the case of the demo auctions, what you are seeing is a curve with bonuses ranging from 3% to 100%… which is exactly the same thing as selling 10 cards at 18% off…
Get it? By turning the discount into a bonus… and then distributing the bonus unevenly… you can guarantee anyone that buys a card will ALWAYS get more on the card than they paid. Sure, maybe it’s only 3% sometimes, but where else do you even get that much interest on your money in 60 seconds? Now, imagine you got the 100% bonus…
So basically, Rackup is a site where you put in ‘x’ and you get ‘x + y’. (Watch the video on the how it works page of our website, if you still don’t get it.) So it is definitely not any kind of scam or gambling at all… actually it’s just a really cool NEW way at looking at rewarding people for loading gift cards. It’s not smoke and mirrors. It’s just math. But don’t take my word for it; try a demo auction for yourself. There is only one button to click, and one list to stay in, so it really isn’t too complicated.
Currently Rackup.com is open to the public in 'demo beta' mode, before opening the site in November, in time for the holiday season. Try it out and use the feedback tool to help us make the user experience even better:)
LINKS:
Web Site:
http://www.rackup.com
Watch Rackup's Founder and CEO present the site at TC50:
http://www.ustream.tv/recorded/2163197
Press Release:
http://www.reuters.com/article/pressRelease/idUS1…
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