Penny Auction Site Closes After 4 Days in Operation

[pullquote]We would rather cut our losses now then deal with the headache that Penny Auctions website bring to the business owners and the many that will never win an auction[/pullquote]PennySlam.com, a penny auction site that opened on October 15th just closed on the 19th, they were in business a total of 4 days before they concluded the penny auction industry high risk for both site owners and bidders.

They’ve posted the shut down message on their homepage and state that they will refund customers for unused bids.

“As of October 19th 2010 PennySlam will be closing it’s doors. We have come to the conclusion that the Penny Auction Industry is a much higher risk then we had originally thought for us and the Bidders.

While we did have tons of traffic the conversion rates were low, and the bidders that did signup would get stomped on by power bidders. We entered this industry because of our own past experiences with Penny Auction websites and after seeing how well most newly opened Penny Auction websites were doing. Now after our own person experience of developing our own software and launching a Penny Auction business we now see that any new site that has many bidders must be using bots or using shill bidders in order to look active or bring up there item values.

For us we had our Winners and Losers, and dealing with people that lost was no fun. If you are going to play on a Penny Auction site you must treat is as gambling. You can’t win every auction you bid on, for the Penny Auction business to work there must be 3X the number of losers as there are winners (3 out 4 people will walk away with losing money).

Add to this our discovery of many News sources that are claiming Penny Auction websites are a Scam. There are many places that offer ready to use Penny Auction software, making it easy for anyone to start a Penny Auction website and even outrite rip people off. While we did spend the time and development to create a website that was unique and was truly fair, it is just not possible with the current Penny Auction website climate.

For our customers that did pay for bids, won auctions, etc, you will see a full refund within 48 hours. If you paid by credit card it may take up to 30 business days for the credit to show up on your statement.

We are sorry that things did not work out as planned and we would rather cut our losses now then deal with the headache that Penny Auctions website bring to the business owners and the many that will never win an auction.”

Here’s just another example of why penny auction sites are just not flawless as some advertise them to be. If you’re looking to start a penny auction site you may just want to think twice. As with any business, in order to succeed one must do proper planning, research, have exemplory customer service, and get the word out with marketing.

Discuss PennySlam and all other penny auctions in our forum!

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4 comments… add one
  • Nick October 21, 2010, 5:58 am

    There's no doubt this is one tough business to get in to. They cash needed to get started must me massive. It's good to see them doing the right thing here though, the last thing this industry needs is more bad press.

    Reply
  • Rich October 27, 2010, 4:33 pm

    It is a shame to see a site closed after such a brief foray into the auction world – it may be linked to other factors than they will disclose openly, but one of the things any auction site needs when it starts up is products to sell as well as users.

    I recently created my own auction site aimed at the retro and vintage computer / electronics market – http://www.sellmyretro.com – luckily I had several hundred items of my own ready to list and sell, as well as a large mailing list of existing customers from the past 20+ years of being in that particular line of business.

    The other issue is making sure that you are using a good auction platform – at least I have a good script (the Enuuk auction platform) and that is one that I can develop and improve as time goes by as well.

    Reply

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