New Reserve Based Penny Auction Awards 3 Winners Each Item

New penny auction just recently launched their new reserve-based penny auction, they plan to auction off a new Smart Car, however in order for it to sell they have to receive the reserve of59,900 bids. What is your opinion of high-reserve penny auctions, are they worth bidding on? PonGow is a bit different from other reserved-based penny auctions in that they reward early bidders, those that have bid before the “PonGow Price” has been reached with 2x the number of bids they placed below the reserve price regardless of whether or not they win the item.

Read our interview with David, the founder of PonGow, to learn more:

Penny Auction Watch: What got you interested in the  penny auction industry?

PonGow: We discovered the model in 2009 while surfing the web. At that point we were looking for a business idea and decided to learn more about the business model, going from one penny auction website to another, reading articles, blogs (POW was really helpful!) and reviews about the concept. At that point a lot of bad press started to emerge and we immediately thought this would be a good challenge: how to legitimize the penny auction model by making the process more transparent and rewarding to users and by offering more expensive prizes. After a few weeks of brainstorming we had refined the concept and here we go 10 months later.

Penny Auction Watch: What kind of items do you offer/ have lined up?  Do your auctions run on a schedule?

PonGow: We want to differentiate ourselves from the rest of the industry by offering an exclusive line of products right from the beginning:

– For women, we carry designer handbags, accessories, shoes and jewelry.

– For men, we carry electronics and luxury watches to start with

– We also have a kid’s selection where we auction high-end strollers and pieces of furniture

Auctions will be scheduled ahead of time so that we always have a couple of auctions running simultaneously.

You will realize that for a brand new penny auction website, we have ambitious goals and a good product selection. Our model is different from what you have seen so far as it allows us to control our costs so that we can offer the transparency this industry needs, the guarantee that our platform is legit and a selection of products of higher value. Here is how it works:

  • Each auction has a starting price of $0
  • There are always at least 3 winners: the last bidder gets to buy the item at the auction ending price, the  2 runner up get 10% and 5% of MSRP in bids equivalent (ie: if MSRP=$200, the second to the last bidder gets 20 free bids, the third gets 10 free bids).
  • Each bid makes the price increase by $0.01,
  • Each auction has a RESERVE PRICE and what we call a PONGOW PRICE both of which are displayed on the auction description.

From there 2 scenarios are possible:

  • The reserve price has been met: in this case, the top bidder wins the right to buy the item at the ending auction price. The second to last and third to last bidders will each receive a pre-defined number of free bids (PonGows) that can be seen in each auction detail page.

In addition, if the PonGow price has been reached and a user placed bids BELOW the RESERVE price (using Purchased bids, not PonGows), our system will double those bids and credit them back to the user’s account in the form of free bids (PonGows). This feature is unique to PonGow and allows everyone (even beginners) to win.

  • The reserve price has not been met: in that case, our system will extend the auction up to 24 hours by increment of 30 minutes. If after 24 hours the reserve price is still not met, the auction will be cancelled and everyone will get their bids back.

This feature removes the risk of early bidders as you get 100% of your bids back if the auction does not reach the reserve price.

In conjunction with the PonGow price rewards, this gives an incentive to bid early in the process as opposed to only bidding in the last few seconds. This is actually a strategy we discuss in our Strategy section.

Penny Auction Watch: What are the timer increments between bids/does this vary by auction?

PonGow: When the time left reaches 15 seconds, each additional bid resets the timer to 15 seconds to give other bidders a chance to place a bid.

Penny Auction Watch: How much are your bids?

PonGow: Bids cost only 50 cents and are available in pack of 50, 100, and 200. We also have an exclusive free membership called “Le Club”, where one can buy bids in bulk between 40 & 45 cents. In addition, this membership gives access to exclusive offers like upgraded complementary 2-day shipping on every wins and “Le Club” only luxury auctions.

Alternatively there are 2 ways for users to get free bids:

– Referring friends gets users 20 free bids when friends make their first purchase of a bid package of 50 bids or more. Friends get 5 free bids as well.

– We have also implemented a system that let users get free bids by buying things they would usually buy like sending flowers, subscribing to netflix or even giving to charities. Once users participate to one offer, the number of bids associated with that offer is automatically added to the user’s account at absolutely no cost.

Penny Auction Watch: What are your shipping costs? How long does it usually take for users to receive their items?

PonGow: We want our members to enjoy playing at and feel they are getting an exceptional value. Therefore, winners never pay for shipping/handling or sales taxes. In the event winners need to return an item within our return policy timeframe, we will also cover the shipment costs associated with the return.

Our system processes orders every night. In most cases, users should receive their items within 2-7 business days depending on the item and the partner we ordered it from.

For more exclusive items like designer handbags or accessories, luxury watches or high demand electronics, the delay might be longer, but we will always keep our winners posted as to when to expect their items.

Alternatively, we also offer our members the choice to receive the retail price (MSRP) equivalent minus the auction ending price in the form of a SuperCertificate. Those certificates can be exchanged for original gift certificates from hundreds of popular stores, airlines, hotels, theaters, restaurants and more. So if a member does not want to wait for the item to arrive, she/he will have to opportunity to receive the certificate by email within 24-48 hours. With this option, there is also no reason not to bid on every auction!

Penny Auction Watch: What states/countries are you open to?

PonGow: We are opening in the USA first and are operating out of New York City. We have already developed our international version and should open in France by the end of the year and other European countries in 2011.

Penny Auction Watch: What is your policy for bid refunds?

PonGow: Because we implemented different methods to get bids (credit card, free and by mobile payment), it becomes difficult to differentiate between the different types of bids a user has, so for that reason, used and unused bids are NON refundable, unless an auction fails to reach its Reserve Price, in which case the user gets 100% of her/his bids back.

Penny Auction Watch: Are there any win limits, limits /household?

PonGow: We believe we have changed the dynamics of bidding by developing a unique platform that is fair for everyone and that lets users of every levels win something just by bidding early in the bidding process. So we don’t believe limits are necessary at this time but as we go, we will listen to our members and implement limits if they feel there is a need for it.

Penny Auction Watch: Is there a story behind the name/theme?

PonGow: As you can imagine finding a name in .com is pretty hard those days. We wanted our name to be as unique as our model and came up with One of the things that came to our minds when thinking about the word auction was Ping Pong as in the battle between 2 or more users to win the game. After trying different variations around that theme, we came up with PonGow which also rhymes with Bingo.

Penny Auction Watch: Thank you! Is there anything else you’d like to add about PonGow?

PonGow: We have listened to feedback of penny auctions users and are pretty excited about the system we have developed as we think it is the answer to most requests users had.

The one feature we wanted to insist on is transparency, as we believe this is the only way to gain our members’ trust. On, users can see at any time whom they are bidding against by using our interactive chart feature which shows the whole auction price history along with each bidder’s public profile. Public profiles can be accessed by clicking on a bidder’s username.

We hope Penny Auction Watch users will enjoy playing on and wanted to offer a 20% discount coupon valid towards regularly priced bid packages, bringing the price per bid to 40 cents. Simply enter WELCOMEPAW during the checkout process. PonGow is also offering a 50 bidpack for $9 today on Penny Auction Coupon.

Thank you and happy bidding!

Discuss PonGow and all other penny auctions in our forum!

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2 comments… add one
  • Adam June 1, 2011, 7:26 pm

    Hello, i just wanted to comment on this site { even though i don’t usually bother commenting on things}. I just wanted to say that there are better websites out there for reserve auctions. Perhaps the best one i have seen that is opening this summer and is called They say that if the reserve price is not met then the winner can get three options:
    . 150% of their bids back
    . 125% of their cash back

  • Adam June 1, 2011, 7:31 pm

    Hello, i just wanted to comment on this site { even though i don’t usually bother commenting on things}. I just wanted to say that there are better websites out there for reserve auctions. Perhaps the best one i have seen that is opening this summer and is called
    the winner of these auctions never pays the closing price or sales tax, no matter what the final price is. Also winners get three options if the reserve is not met.
    . 150% of their bids back
    . 125% of their cash back via paypal
    That means if the reserve is 12.00 and it closes at 10.00 then you can get any item{s} up to $400.00 and winners don’t pay the closing price or sales tax


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