Bidder’s Greed Is Destroying Penny Auction Startups

  • SumoMe

greedIt’s happened time and time again: Brand new penny auction sites come on the scene and a select number of diehard bidders jump in when the site first opens, all while using the same name that other penny auction bidders have come to know them by, and win a lot of items at very low prices. These bidders have not only made penny auction bidding a hobby, they’ve made it a career.

Advertising outside of the penny auction industry is imperative. 

There needs to be more bidders who are not familiar with penny auctions  signing up, bidding and winning for penny auctions to continue to grow and prosper. If not, the model is not sustainable when the same group of bidders win time and time again. And don’t think these bidders don’t network and communicate with eachother. Facebook and penny auction forums with private messaging and social functions have already made this possible.

It’s happened so many times, so many sites have already shut down and many more that are just opening, sadly, will probably eventually go the same route. 

It can often be talked about how much penny auction sites are ripping people off, and with reason – some are, but what isn’t stressed enough is that there are bidders who are ripping off sites. A few short months ago we posted a guest article from a penny auction employee who experienced this firsthand, and though I’m sure these bidders didn’t like it, and will especially not like this post, it’s what’s happening.

These bidders are partly responsible for running legit penny auction sites to the ground. 

Because a select number of bidders have made it their game to dominate, their game plan is simple. They “stamp,” “defend,” and seek “revenge” on anyone who dares to “jump” in on “their” auctions. For them penny auctions have gone from a fun hobby to an outlet that fosters their rapacious desire.  Sure, if you wish to bid against them, and wish to lose a lot of money in the process, you might just win, this is part of their strategy, by the way, but does anyone think of the site and the future of penny auctions when they are consistently carrying out this strategy?

I know bidders who have lost hundreds of dollars in bids due to these sites shutting down.

Of course we can’t put all of the blame on these bidders, the sites need to really market themselves on a wider scale.

Take for instance the penny auction sites SkoreIt and Beezid:

SkoreIt advertises on the radio, and has been heard by thousands of listeners of ESPN’s Mike & Mike show, as well as by late night listeners on Coast to Coast AM. After radio campaigning their userbase has skyrocketed. A few bidders who were once able to win items cheap then started to wonder if the site was ripping people off due to the influx of new bidders.

Beezid has been found to advertise on TV,  and we recently saw that they’re sponsoring a prize in Redbook, they’re getting the word out there about penny auctions, but neither are really not calling themselves a penny auction.

Why? The word penny auction, thanks to the real scam artists, has been equated with scam and while attention needs to be put on the penny auction scams,  it has started to, but less attention has been put on sites that are legit.

We try to give many new sites a neutral start here, which is why we’ll post interviews with sites & talk about promos on sites that seem to be running their site right, but it’s not enough for a site to actually keep going if they just go for the keyword “penny auction” when they advertise. If a penny auction startup does not have the money to also invest in other areas of media, they really won’t be able to sustain losses that are handed to (vice versa) the select bidders who have made bidding a career.

Entrepreneurship and ingenuity is great, but after these bidders win so many of the same items isn’t that enough? Not when bidders are resellers.

“Powerbidders” are not likely to bid on high traffic sites like Skoreit and Beezid, they just won’t do it because to themlosing is not a smart business decision.  They won’t win items for less than retail time and time again. In fact, one bidder in particular even proclaimed on his bidder name specific Facebook page that he won’t bid on the larger sites because he can’t win as easily. Why do so many sites shut down? Losing is not a smart business decision.

This is why you’ll see the same bidders always signing up on new sites and winning items, so many items that the site ends up shutting down because they can’t sustain the losses.

This is why sites should try anonymous bidding out, sites like BargainsandFun and CheetahBids already do. 

Imagine, no history on who you’re bidding against. No stats to look up and see that your opponent has won so much they probably won’t stop, so you do.

There’s a large number of bidders who are no longer bidders anymore. Why? Penny auctions aren’t fun for them. They weren’t bidding to make a profit – they were bidding for fun. They were bidding because they had a chance to win a few items that they couldn’t otherwise afford. Now they’re gone and they won’t return. There may be a winning strategy to penny auctions, but it’s one fueled by greed.

Greed has more than likely overtaken all of us, desires are inexhaustible. You don’t have to travel to a 3rd world country to see that there are people who are suffering. On the other side of the coin, there are some who are even thriving on less than what you think is necessary.

Is enough ever enough? Will penny auctions last?

There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less.-G.K. Chesterton (1874-1936)

Photo Credits:  CC – Some rights reserved by windsordi

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13 comments… add one
  • Tres July 16, 2011, 10:49 pm

    This is such a good article. In fact, I was on a site today and recognized a name that had already put the first bid on a high priced item that was not going to start for about another 3 hours. I knew who was getting that item. Hopefully with any business, someone will ‘build the better mouse trap’ business model.

    Reply
  • Jeff July 17, 2011, 3:37 pm

    Powerbidders are the cancer of penny auctions, they will claim how much they help auction sites but in reality they are the cause of the shut down of dozens of LEGIT penny auctions. Its almost satisfying whenever you hear about one of them being “screwed” out of $20k when an auction site goes out of business.

    Reply
  • nick July 18, 2011, 11:01 am

    sounds like someone got ‘outbid’!

    Reply
    • Amanda July 18, 2011, 6:02 pm

      No, just an observation.

      Reply
  • Bob MacReynolds July 18, 2011, 7:50 pm

    Amanda –

    I appreciate the thoughtful articles you continue to write and publish on PennyAuctionWatch. As a site owner, it’s obvious to me that you are interested in seeing the industry grow while weeding out the people who are giving Penny Auctions a bad name. I appreciate that more than you know.
    I would like to emphasize that I believe it is the responsibility of the Site Owners to set parameters that allow new Penny Auction Users to become familiar with the industry while experiencing the same thrill we all know and love when the clock hits ‘zero’ and you see your username listed as the winner. Whether it’s Win Limits, Beginner Auctions, Category Win Limits, cracking down on re-sellers, etc.
    I sense in a lot of people a real disdain for ‘Power Bidders’, and I’m not sure that’s totally fair. They are doing what is allowed in this great country. If you find a way to make money, create a niche for yourself, and you are allowed an avenue to continue that practice then I think it makes total sense for them to continue with the same bidding strategy. They have created a reputation over time, but remember that probably costs them a lot of money up front. They’ve earned the reputation and are reaping the rewards, but they still have plenty of cases where they are spending much more money than an item is worth in order to keep their reputation going.
    I don’t condone all of their practices, but I certainly don’t think they are doing anything more than what the system is allowing them to do. It’s not illegal, it’s not deceptive. They spent the money to create a niche and a reputation for themselves. As long as Owners allow them to bid and win in mass quantities, then I think the criticism should fall on the shoulders of the Owners. I have talked to many ‘Class Acts’ out there who are considered some of the toughest Power Bidders in the industry. I would recommend that we remember they are real people with families, and they are trying to earn a living just like all of us. They invested a lot of money in Penny Auctions and have found an avenue to make a profit for themselves. I say ‘It’s America’, and more power to them.
    We do need more new customers, and more new Penny Auction users in general. This article is absolutely correct about the need to advertise and reach out to a different audience. If there is a problem with Power Bidders on a website, then I would recommend bidders DEMAND more of those Owners and Operators to establish safeguards and limits instead of blaming a group of people who are just operating within the rules of the game.
    Bid-Bob.com has done a lot of things to create a fair and equal opportunity to win items, learn about the industry, and crack down on resellers. Here are a few of the policies and features we have that are meant to encourage new people to try Penny Auctions, and to give our overall userbase a chance to win auctions. If anyone thinks these are good ideas for the sites they play on, or if you have other ideas then send those directly to the Owners of the sites you like. I always take feedback very seriously, and you will find out very soon if that website is responsive enough to earn your business in the future.

    Bid-Bob.com Policies and Features:

    1) Win Limits of 2 per day, and 15 per month. For all items with a Retail Price of $100 or more, the win limits are 1 per day and 3 per month.
    2) Beginner Auctions – Open to all customers who have between 0 and 4 Career Wins. We want new Penny Auction users and new customers to have a chance to earn multiple wins in the beginner class so they can truly understand the benefits and entertainment factors involved with our auction environment.
    3) Intermediate Auctions – Once you earn your 5th win, our Intermediate Auctions kick in. All customers with a Career Win total between 5 and 15 wins can play on the Intermediate Auctions. I don’t think many other places offer a 2nd tier of auctions, and I certainly don’t see another site that allows customers to win 15 TIMES before they have to face the most prolific bidders in our Normal Auctions. We think this will give new auction users an extended period of time to learn how Penny Auctions work, learn about the strategy of winning at Bid-Bob.com, learn about other bidders and their strategies, and rack up some great wins before they move on to our normal auctions. Everyone can bid on a normal auction, but we give new users a fair shot to earn wins and learn the industry before being affected by ‘Power Bidders’.
    4) Resellers – We have removed 2 Customers from our User List because we have found concrete proof that they operate a commercial re-selling business. We can’t catch them all, but we’re always on the lookout.

    Let’s turn up the heat on the Site Owners if the ‘Power Bidder’ situation is such a huge problem. If we don’t, then let’s remember these people are trying to make a living like the rest of us. If you are still reading this post, thank you very much for your time.

    Sincerely,

    Bob MacReynolds
    President, Bid-Bob.com

    Reply
    • Amanda July 19, 2011, 11:51 am

      Yes, you’re right Bob – but it’s true, sites cannot sustain the losses, they won’t be around long if they can’t find a way to make it fun for all – it’s too much like gambling when risk is there. Thanks for your comments 🙂

      Reply
  • new bidder July 20, 2011, 12:54 pm

    I notice the same thing, especially on Nitrohawk, it seems the value return is high, the power bidders “CLAIM” item once it’s listed and they would put numerous auto-bids to who dare to touch the item they have claimed.

    No wonder on this site item sold so cheap, if you look into, all the same people get on very low price, even few cents most of time again and again.

    Reply
  • David May 8, 2012, 7:27 pm

    Hi Bob, I’m still new to the Penny Auction world. But, what is the concern about resellers winning auctions? I don’t quite understand. Could you elaborate? Anyone could jump in and elaborate, actually. Thanks.

    Reply
  • Lu February 1, 2014, 2:29 pm

    I have been on penny auction site’s for about 3 plus years. I have used several of of these sites and even closed down Pennyauctionisland myself due to poor mailing. Come to find out it was evening run by a hired out company or person’s. I did get the item but it cost this penny site a lot of money too, over $10,000.00 just for that month they were online. Now I find that another site IBid2save is in the same class. The power bidders are forcing us little people off like myself. I saved over 3000 bids for a chance to win just on more $100 gift card and I just checked to see where it was at. Well if good timing420 wants to spend all bids out and pay $123.00 for a $100 gift card then those fools deserve what they get. That includes the bidders old and new as well as the company. But after putting out just my free bids plus the new fools that probably bought bids and the power bidders bids you and I both know that IBid2save came out the winner for sure. I personally only used the site to help out with gifts, fun and to win some items for a alittle savings, but each month gets worse so I suppose my penny auction site days are just about done because these companies put no hard limitations on old and new alike. There was once fun with this company and Quibids.com, Gigazz, pennyauctionisland just to name a few, but not with today’s power bidders it isn’t. Restriction are needed for new bidders to have a chance to win as well.

    Reply
  • Chuck February 10, 2014, 11:54 am

    The issue with power bidders is because every bid extends the auction they are impossible to snipe. This is what makes the power bidding model sustainable.

    Also, they will tend to be resellers as well, because buying lots of stuff from penny auctions without reselling isn’t sustainable either.

    Reply
  • Nadine Zachary (@deenie61) October 21, 2014, 6:31 pm

    Things haven’t changed all that much. I used to bid on so many sites, now I barely know what’s out there, or care. I play on Gigazz because the customer base is too large for Powerbidders to dominate. I gave Beezid another shot a few months ago, thinking I was safe from all the PB’s. I did ok on the “cherry” beginner auctions(only won once when I tried before). After that I just lost money. Took me a bit after being away but the names started coming back to me-mostly BidCactus(closed now) Powerbidders. Despite a good plan, Bid Bob is gone. Along with iBid2Save, SkoreIt-just a few of the big ones that we thought could survive. But every site seems to have a group dominating. I looked at a couple new smaller sites recently, maybe not all, but most of the same old gang is there. As far as advertising and bringing in new blood, those new people will quit after losing repeatedly, usually assuming they must be bots. Because the Powerbidders will not lose, they will bid beyond retail to protect their reputation, but new bidders don’t understand this and end up thinking the site is cheating. Certainly they may invest alot now and then to protect their name, but overall I’m pretty sure they come out fine, they’re still around. Above Bob says they only do what we allow them to do. Must they be patrolled constantly? How about a little consideration? They have so much they are constantly trying to sell it or trade for something else. If only they’;d give someone else a chance. I think it’s like a disease with many of them. If they see it, they must have it, so that no one else can. With the bigger, older sites closing, clearly something’s not working well. Yes the Powerbidders all have a long spiel about how they are needed, and don’t hurt a thing winning IPad’s for pennies. Then they blame the site for not having enough backing. Bullcrap, it would never be enough. Whatever they have, the PB’s will take. The articles title says it all, it is pure GREED. I don’t know who’s set up is pictured but I don’t imagine it’s an exxageration in many cases. Always wondered how they could know when every site posts new auctions, get tags in, watch auction that don’t have autobid, and so much more. There has to be some collusion there, I’m fairly confident many help each other in various ways, maybe not in the actual bidding(often) but just keeping all this going. They can’t possibly have a life unless they take a day off. Of course some make their living and feed families reselling what they steal from the auction sites. I wonder if they even get any thrill seeing “sold” across the screen and their name as last bidder. Or do they ever see it, with multiple auctions going at the same time? OK, said my piece, or some of it. The above is why FinalBid left the building. I get an email now and then from new sites offering some free bids. I’ve tried a few,
    and some slipped past me. A few years ago I lived and breathed penny auctions, but a few bad apples nearly spoiled the whole bunch for me. When I do play, it’s Gigazz, Deal Dash and might I revisit Quibids. He’s older now, but I did enjoy surprising my son with an itunes gc, flash drive or a rare coin now and then. At Christmas he fared better than I could have afforded outright. A big smile and two minutes being the best mom ever was my favorite win.

    Reply
    • Amanda Lee October 24, 2014, 9:47 am

      This is great. I just featured you today on the homepage:

    • The State of the Penny Auction Industry: A Bidder’s Commentary
    • .
      Thanks!

Reply

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