From A to BeeZid: A Beginner’s Guide to Winning Penny Auctions

Amanda Lee 15 comments

By PAW member muchomaas

Introduction

Many of you who are members of, Penny Auction Watch℠ are seasoned penny auction pros. This article is not for you. This is for the beginner. It is for people like me. A few months ago, I had no idea that penny auction websites existed. If I made the mistake of clicking on a Quibids ad on MSNBC, I quickly closed it. “IPads for $2.75, impossible,” I’d tell myself.

But like many new participants, I saw an ad for Beezid on television. This was back in December of 2010. I had not started my Christmas shopping, so the timing was perfect. I signed up, purchased bids, and without understanding the format, the bidding tool, or really, any part of the auction process at all, I went straight for the toy that was on the top of my shopping list: the xBox with Kinect.

Predictably, I met with instant, complete failure. Like many new penny auction participants, I made a number of mistakes. A number of these mistakes are avoidable, and had I not been so eager to hit the bid button, and spent some time studying up and contemplating basic strategy before getting started, I would have saved money at the outset.

I now do almost all of my shopping through Beezid, and along the way, more experienced participants (through the Facebook page, www.facebook.com/thebeezid) have provided a lot of very helpful tips and suggestions. This article is my attempt to put in one place a list of basic pointers and suggestions that I believe would have been helpful to me before I sat down for the first time and wildly threw around my bids. It is focused on Beezid, because that is the site that I started on, and after experimenting with other traditional penny auction sites, it is the one that I prefer because of their bidding tools and their exceptional customer service.

I. Reality Check.

Penny auctions should be fun. It is called “entertainment shopping” after all. The websites cater to shoppers from all different backgrounds, and it is up to the participant to set his or her own limits and stick to them. It is important to treat money spent purchasing bids as money already spent. If you find that you are spending more than you would as compared to your “non-entertainment” shopping budget, you need to give yourself a reality check. Most importantly, if you are not having fun, you should not be participating.

My core premise is the complete newbie should start small, and should start out on auctions that are the easiest to win. There are two reasons for this. One, a Beezid auction is far more complicated than it appears at first, and there is a lot going on that is not immediately apparent. A new user may not see the significance of who is bidding, and when (at the top of the timer, at the middle, at the bottom), who has a sniper set, and so forth, and as a consequence place bids in a higher-value auction that have no chance whatsoever of either winning the auction or contributing to a win.

Two, it is far better to try Beezid (or any site) in the lower value auctions, where the competition is a lot easier and the cost of participating a lot less, to make sure that you like it. Beezid has a win limit policy (discussed below at more length) that discourages the more experienced users from participating in too many lower value auctions. This increases the chances for the new user to be the high bidder. In addition, the process of going through the complete process provides the foundation for the skills you will need to compete in the higher value auctions: auction selection, deciding when to enter with your first bid, learning how to use the sniper and auto bid function effectively, winning, and then claiming your item.

If you do not like it, after making a modest investment and competing in the easier auctions, then you can quickly determine that penny auctions (or Beezid) is not for you.

II. Before You Get Started.

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Should You Be Intimidated By Penny Auction Usernames?

Amanda Lee 4 comments

You don’t have to be a penny auction bidder very long before you notice the sheer number of users with names like IWillBidUntilIWinOrElse - 10000Bids – AlwaysBiddingRetail.

But – What’s in a Username?

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Skip the Bidding War and Win Penny Auctions with 1 Bid

Amanda Lee 10 comments

Patience & timing is everything on penny auctions, you might really want a particular item and there may be dozens of others that want it too.

There really are times on a penny auction site when items end for a very small number of bids, we’ve even seen auctions that have ended with no winner. It really depends on the site and this is often easier to predict on newer sites with less traffic and users.

Perhaps you’re feeling frustrated because you can’t seem to catch a bargain and any time you try to bid you get in a bidding war. It can be hard to know when to jump it. We’d like to suggest that you place just one bid on an item right before it’s about to end, you might just win!

Be sure to join the penny auction forum for more bidding tips, strategies and penny auction site reviews!

Happy Bidding!

How to Approach Penny Auctions

Amanda Lee 5 comments

For the most part, novice bidders have very little experience with the pay to bid process. More experienced players have evaluated multiple strategies and determined the best course of action for their individual comfort level. Professional bidders tend to have a very aggressive approach regardless of their opponent. The biggest question is, “How do you know what is best for you?”

Bidders need to determine how much they are willing to lose before getting fully involved with the penny auction format. Set your weekly or monthly limits and stick to them. Don’t let the fun be ruined by money woes.

Which of these statements best fit your personality and level of assumable risk?

Lucky or Lose
For Fun and Friends
In-it to Win-it (within reason)
No Holds Barred

Regardless of which profile fits you, please take the time to set up separate accounts for penny auctions. E-mail, PayPal, credit or debit accounts and Facebook/Twitter. Your personal privacy and financial security are more important than online shopping.

Some bidders have established their Core Values and adhere to those values regardless of the auction style or site they are bidding on.

Here are a few of those values which have become known to me and the reasoning the bidders give on why they follow these tenets or why they may feel they are not compatible with their bidding style:

Do not machine gun an auction - Rapidly bidding immediately after another bidder overbids your bid:

The site generates revenue from the bids placed. When the “machine gun” tactic is used it leaves out those bidders who are waiting for you to give up or give in. Bidders also feel that pinch because there may be a strong bidder just waiting for you to tire out the opponent. Then you will follow with another bid war.

Stamp the auction early to let others know you intend to participate. This process may backfire if you are not the type of bidder that is auction online when the auction begins. For those very well-known bidders it also may detract from the income generated by the site, Some bidders have experienced retaliation from other bidders and this will also give them a heads up as to when you will be on the site and they may make it a point to participate in this auction.

No Retaliatory Bidding

One example is bidding against someone just because you lost fairly. The consensus regarding retaliatory bidding against someone who has jumped into your auction late or targets you repeatedly from site to site is less clear, especially for the buy it now sites. Be careful of making rash judgments! This bidder may also be looking for the same items you are, If they are bidding on all the home depot cards and you are too this is NOT usually an aggressive action.

Avoiding Collusion Concerns

This one can be a two – way street so always look at both sides when bidding. If you are friendly with certain bidders or related you may be caught in a catch-22. If you bid against your friend, others may accuse you of tag-teaming, If you don’t then you may be accused of being in agreement to not bid against them. Different bidders take different approaches so consider your stance carefully.
Respecting the sites terms and conditions in regards to the resellers. Every business has the right to restrict buyers and not sell to resellers, If they spell it out and you have been participating as a reseller they may takes steps against you including terminating your account. This is reasonable to expect since many retailers have the same policy.

Respect the site and site owners

Don’t use fraudulent cards to pay for bids, Never ask for a credit on bids just because you lost. Obviously if there is a problem with the auction itself it would be reasonable to ask for a credit in bids, but if you are bidding and experience lag or your computer freezes keep in mind it is all part of the game. Never file disputes for bids that you have used in legitimate auctions. This is important whether you won and they shipped the items or whether you lost. If you have a dispute later, it is not appropriate to chargeback for all bid packs just because the value of your win is the equivalent of all the bid packs you purchased. You are only entitled to dispute the bid packs and auction prices of items not received and fairly won.

Bid with Dignity

Know your limits and don’t make rash emotional decisions to buy more bids just to prove a point to another bidder. You may regret it later or have some explaining to do with your significant other.

Some tips for the novice bidders that have been successful for others:

Actively pursue bid packs on newly formed sites: I have heard that you typically have an overall profitable percentage of bids to value with this strategy. When the site then starts running higher value items as the site grows you may have a sizeable “bank” of bids. The alternative side to this is there will be more competition on the site at that time and you may still lose that bank of bids.

Start with sites that offer 100% Buy it now. This allows your bidder name to be recognized in the PA environment when you cross over to other sites which offer limited Buy it now or no Buy it now.

Watch a new site for several weeks before joining or at least before buying their “Jumbo“ bid pack. Watching individual auctions helps you to see which bidders will go all the way and which ones will only go to a certain percentage of retail. If the closed auctions are available check those out as well.

Never use personal information as part of your bidder name. Some sites promote the name of the city for their winners and you don’t want sore losers looking for you.

Never use funds reserved for bills or other necessary expenses for penny auctions. (As a side note, I have heard from one bidder who uses their grocery budget to bid on Buy it Now sites for Walmart and Target cards. If they win the funds are increased for the grocery budget and if they lose they still get their original investment back with only a small fee for shipping the card)

Be wary of any site! Find out everything you can about their site, customer service, shipping times and privacy policies. Even sites that are established may start having issues.

Successful penny auctions are constantly changing, upgrading and [click to continue…]

Penny Auction Protection Tips

Amanda Lee 0 comments

“After being on the boards for nearly a year, I have made many adjustments in my “penny auction” persona. Changed the ways I interact with auctions and definitely changed the way I pay for auctions.”

Here are some penny auction protection tips posted by our member, KSteven7. These are very important tips, thanks KSteven!

Don’t use your real name: Consider your bidding name carefully and avoid using identifying information especially your real full name.
Keep track of what you’re spending: Track your bid purchases, final cost and retail of wins. Be sure you know what your win ratio is.
Dedicated E-mail: Have a separate email address used only for penny auction and do not use your biddername as part of the address. This will allow users to contact you when it is released via Firebug and it may not be a postive experience. Some bidders have threatened or harassed other bidders when they lose an auction.
Social Networking Tip: Don’t mix your personal and penny auctions Twitter account, use separate ones. You may not want someone from the penny auction world to locate you and there are folks that will expect you to get them deals. The same for Facebook. Many sites offer incentives for “sharing” your win info on Twitter and Facebook, but it may not be something you want your friends or co-workers to know about. I get people asking me to “win” them something and they seem to think they should only pay the auction end price and not for expenses and time to win. They don’t seem to understand it is not as quick and easy as they think.
Read the terms and conditions, you may find that your personal information may be shared with affiliates.
Your quality of life should come first! Bills first, penny auction should never take the rent money… Never.. ever.. ever…!

Payment methods:

Use one credit card for penny auctions and nothing else, review the online statement frequently for unauthorized charges.
Be sure your billing address on the card matches your shipping address.
VERY IMPORTANT: Review the chargeback or dispute process before committing to buying bids with the card. A 30 or 60 day dispute period may leave you unprotected for some sites that have long shipping periods.

Photo Credit:

http://www.flickr.com/photos/jenosaur/ / CC BY-NC-ND 2.0

Penny Auctions: The War of Attrition in Practice

Amanda Lee 7 comments

Did you know that when you bid on penny auctions you’re actually partaking in a game theory problem? It’s called the War of Attrition.

War of Attrition Defined: a contest that is settled without any escalation (no chance of injury from direct interaction between the contestants) with the winner being the individual who is willing to pay the most (essentially via display) to obtain the resource.-College of the Holy Cross, MA

The winner of this Xbox on Bidrodeo spent $127.82 in bids and won, the others lost.

Let’s say you’re bidding on an item worth $299, you’re always bidding against another bidder, and you each take turns bidding for the item. After each bid your opponent places you may choose to either bid or to walk, so may the other bidder. It’s obvious that the first bidder to drop will walk away with nothing, if you don’t drop you can win the auction and walk away with the item, this is if there were only two bidders. The odds of you winning with more bidders bidding becomes greatly diminished, but it depends on how many bids the other bidders will place and when they will stop bidding. Sometimes it’s better to be bidding against multiple bidders than one-on-one, ego comes in here (more on this later).

But do the odds really become less or greater? Since you don’t know how many bids the other bidders will place, you only know how many bids you will place. Is there any predictability? Some argue that they are able to “size bidders up” by keeping tabs on their bidding style, but your opponents could change this up at any time and anyone can enter the auction and bid at any time.

Both bidders can choose to walk away, you or your opponent, whoever stops bidding will forfeit the item and the money spent (in bids) to try to win the item.

With each bid placed you’re losing $0.75, so when do you call it quits? When you run out of bids or do you ever? When you spend the value of the item and want to try to cut your losses by winning and not walking away with nothing? Or do you only spend a % of the item’s value so you don’t lose too much then stop bidding?

What is winning worth to you? Do you bid to win at all costs? there are some that do, (don’t answer this question with your bidding username, if you choose to).

The Winners Curse: The cost to win an item ends up becoming more than the item’s value, this happens quite often in penny auctions. Here’s a good lecture from Yale University that illustrates Winner’s Curse:

Is There a Secret Strategy?

Many have argued that there’s strategy involved in penny auction bidding and we’ve really tried to think up various strategies and put them in practice over the past year and a half, but we’ve really come to conclude that there is not much real strategy.

Only different modes of bidding. Ultimately, to win you must be the last man standing, so to speak, so in order to win you must bid until you win (obviously). Just when you think you might be able to win, a new bidder armed with hundreds of bids could come in, but is this what makes the game exciting?

How do you feel when you bid?

Do you get stressed out after you’ve poured more money into winning and you’re still hitting bid?

How do you bid?

Well, you could do this a number of ways, from bidding each time an opponent bids against you, not letting the timer drop more than a second (we call this bid throttling), to sitting back and only hitting the bid button when the timer ticks down to mere seconds before 0, all while watching your opponents bid more than you do. Or, you can wait until the auction has been going for quite some time and then begin to place bids after you think you observe weakness (let’s say the bidders have lost a significant amount of money) in your opponents, but this does not guarantee that either of the current bidders will back down and let you win after you start bidding.

And then, Why do you bid?

Maybe you end up getting great deals on items, maybe you resell what you win or keep the items for yourself. Maybe you just enjoy the feeling of winning, or you became hooked after getting a significant deal. Or maybe we’re missing something, tell us why you bid!

Beware: Emotions & Ego Can Take Center Stage

Are you an emotional or competitive person?

Ok, maybe you’re not characterized as either of these, nor have you ever been known to show signs of anger nor have you ever let your ego cloud your perception, that was until you started bidding on penny auctions.

Losing – The Major Downside to Penny Auction Bidding

Ego has been known to overtake a lot of people while bidding, after all, they’re spending their money & time and just want the auction to end, but at the same time they want to win the item so ruthlessly that they will, haphazardly and at all costs bid, and purchase more bids until they win.

Is this a problem? It can be if you are overtaken with a drive to win and you’re not careful. Some penny auction bidders have spent much more in bids than they have in items won. Some argue that they bid for fun and don’t care if they have to spend more in the process.

Becoming reactionary by succumbing to ego and refusing to see defeat and let go of winning an auction can come with consequences, and unfortunately, bidders that let this happen are oftentimes reminded with their monthly credit card statements.

If you would like to diminish your losses you may be interested in trying sites that offer a bid-to-buy option, where your bids can be put towards purchasing the item.

After taking all of this into consideration would you still try penny auctions?

Since you have no idea of knowing when your opposing bidders will stop bidding and you will be able to win, what do you do?

Would you say that there is pure strategy involved or is winning penny auctions merely a matter left to chance?

Let’s talk about it!

Dunny http://www.flickr.com/photos/hyperballad_/3908423454/

Penny Auction Bidding: Bid to Bid or Bid to Win?

Amanda Lee 3 comments

Over the past few months we’ve seen many comments in our penny auction forum and on the net from skeptical penny auction users that immediately call a penny auction site a scam just because they see a particular user bid far over the value of an item before they win it. Does this mean that the user is a bot or a shill? Absolutely not. A few penny auction bidders have joined our forum and have asserted that a user must be a shill/fake only to find out that the user who they are accusing of as being a shill bidder was another one of our forum members, someone who has the same bidding strategy across many penny auction sites.

Bids= $

There are two methods to penny auction bidding, we can bid-to-bid or bid-to-win, of course everyone is bidding to win, but we won’t always win. Winning a penny auction item isn’t always easy.

Bidding to Bid

Bidding to bid, do you bid just to bid? Do you throw a few bids out there and hope you will win? It is likely that you will win a few auctions by doing this and if you watch your spending you may be able to get items at a discount, but you may also be throwing money away.

But are you really throwing away your money? This is entertainment shopping, after all.*

Bidding to Win

Do you bid to win? Do you consider each bid placed as money spent and want to get the auction item at all costs? Sometimes this could cost a user dearly, depending on how many users are bidding and when everyone stops bidding against you and you win. We really cannot predict when we will win an item, and it’s not always wise to always bid until the end and until you win the item.

Within the past year more and more consumers have become penny auction bidders on the legit, established sites there could be as many as thousands of registered bidders. Penny auction bidders argue that when they bid until they win, each and every time, they are establishing a reputation. Depending on how frequently these users bid, how they bid and if they watch their spending, this may prove profitable or they may also just be throwing their money away.*

Powerbidders

No, they don't look like The Hulk, but maybe this is what comes to mind when you think of a powerbidder.

We first coined the term “Powerbidder” here a year ago, this is what we call bidders that bid at all costs to win an item, they don’t back down and they make this clear by the way they bid. Powerbidders consider spending over retail on an item to be an investment in the long run, they bid until they win even if they lose money. The more bidders they “wipe out” the more bidders there will be in the future that won’t bid against them. This is pretty much the psychology behind the powerbidder strategy.

In the past we’ve told you about Sunk Cost.

Why do users bid and continue to bid?

Sunk Cost

“Sunk costs are unrecoverable past expenditures. These should not normally be taken into account when determining whether to continue a project or abandon it, because they cannot be recovered either way. It is a common instinct to count them, however.”-About.com

“Sunk costs greatly affect actors’ decisions, because humans are inherently loss-averse and thus normally act irrationally when making economic decisions.”-Wikipedia

Sunk Cost Fallacy: We’re more likely to continue investing in something even after the decision turns out to have been a bad one. In penny auction bidding we continue to bid hoping we win sooner because we have already spent the money and haven’t won yet. Do you look at what you’ve spent and know that you don’t want to walk away empty handed so you spend more? Or do you walk away?

It is the sunk nature of penny auction bidding that leads bidder to continue to bid.

“Once you’ve irrevocably paid for something you should take that into account when considering what to do next… The only time you should take into account sunk costs, is when you’re learning from previous mistakes.”-Plonkee

Toomas Hinnosaar in his equilibrium analysis of penny auctions, shows that the huge change in prices in penny auctions is in fact implied by fully rational bidders who are not prone to any sunk-cost fallacy.

Bid-to-Buy Penny Auction Sites, Possibly Better for Your Wallet

A more bidder friendly option are penny auctions that provide bid-to-buy. Bid-to-buy provides users with the option of applying already spent bids to receive a refund to purchase the item, this way a user will never have to bid over their specified retail price. We highly recommend penny auction sites that provide this option, especially those that provide a 1-1 ratio on bids spent.

A few sites that provide this option are BigDeal, QuiBids, Wavee, Swoopo, BidBlink (and others).

Take this Canon EOS Rebel T1i DSLR on BigDeal for instance, I placed 1 bid on the auction, let’s say I placed enough bids to have been able to purchase the item already, when this happens BigDeal shows you that you have reached a 0% off discount and you can then purchase the item for the full retail price, the auction end price+your bids spent. You may not have spent up to 0% off but as you can see I can purchase the item now for $798.25 because I already spent $0.75, thus I won’t lose the money I sunk into bidding and walk away empty handed, such as the case on penny auction sites that don’t provide this option. However, if I was going to spend the retail price on the camera right now with the auction still going that wouldn’t be as fun as bidding to try to win the camera before I purchase it at retail, sometimes I might get lucky and win the item for less.

How do you bid and what do you think of bid-to-buy penny auctions? Discuss this in our forum!

Today is the last day to enter our giveaway to win prizes and dozens of bids to penny auction sites, enter now!

photo credit: artysmokes The Incredible Hulk, x-ray_delta_one- Sinking ship, amagill- Money

Helpful Tips for Avoiding Penny Auction Scams

Amanda Lee 10 comments

Pay Attention to Alexa Rank

An Alexa rank is a rank given to websites by Alexa, an Amazon.com owned company. Alexa provides web analytics such as traffic rank, country demographics, site load time, pageviews/ user, and much more. The lower the Alexa rank, the better it reflects on the quality and  popularity of a website. For example, Google holds the number 1 traffic rank on Alexa.  The higher the Alexa rank, the more risk you are taking when participating in that website’s  penny auctions. [click to continue…]