Penny Auction SnipKit.com is Shutting Down

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After six months in operation the penny auction site SnipKit.com has announced that they will be shutting down on Sunday.

In a letter sent out to penny auction bidders today SnipKit tells why they are shutting down, citing that forums and social media have done them and the penny auction industry a great disservice.I just did a quick search in our forum and didn’t really find any feedback at all from bidders that tried SnipKit out, but social media does have a lot of power.

The penny auction site also cites social collusion, “tag & defend” strategies  and “cutthroat mentality” all as deciding factors for their shut down.

“Hello Shoppers,

With great sadness we are announcing our departure from the entertainment auction industry. This Sunday, March 4th, will be our final round of auctions. We encourage those of you who have remaining bids to use them at this time.

Our intentions were to join what appeared to be a profitable and exciting industry. A place where people could have fun shopping from home, enjoy the thrill of winning an auction and enjoy some really great bargains.
However, it has become evident that the allure of great bargains has brought an undesirable element to the industry. We imagined providing a service where shoppers would be seeking out a product they might enjoy for them self or finding a gift for someone. Careful reviews of shoppers accounts have proven a trend that the majority of shoppers will not bid in this manner. Instead some shoppers have approached the auctions with a cuthroat mentality, bidding on dozens of sites and conducting themselves in a very poor manner. Not all shoppers are overcome with this greed or sense of entitlement, but there are enough to make the climate very uncomfortable for new comers.

Social media and auction site forums have created an atmosphere that attacks the industry at its very core. Shoppers have fallen into a groove so to speak.

Examination of accounts and click history point to a recurring theme that shoppers will not bid against anyone who they find a record of at a ranking site nor will they bid against any acquaintances. This creates a massive front of inadvertent collusion.

When this happens what you are left with is a large number of shoppers offering a professional courtesy to other recognizable names. While we understand shoppers are not actively conspiring to do this and this can be construed as savvy bidding on there part it does leave a problem. Any new shopper who comes along is immediately out of their league in even the most random low cost auction. After running thousands of new customers through our site most all left bitter and scorned with no products, in the meanwhile out of the thousands of registered users we have, only a few dozen have actually received products.

After six long months we have determined that this situation will only grow worse as the number of forums grow.

The people who enjoy the industry the most are doing it the most damage without actually realizing it. The trend of tag and defend leaves uneducated shoppers defenseless. Veteran bidders who are checking the sites and refreshing pages twice a minute looking for auctions to tag will immediately run back to a forum and announce the arrival of new auctions. This leaves auction sites with a litany of semi-pro shoppers aligned on every auction prepared to doom any new shopper who comes along while never bidding against one another.

We have enjoyed a lot over the last few months, we have received nice gifts from shoppers, encouraging words, and even the support of some of the established sites. We are thankful for all of these things but in order to continue we are left with a hurdle that we feel we can not clear.

We wish you all the best of luck, we hope you enjoy our final auctions and we hope that perhaps some of you will heed our advice and allow a break to some of the up and coming sites so that their efforts are not in vain.

We will ship all outstanding wins in accordance with our payments from our merchant services accounts. Our rolling reserve balance at our two payment gateways is more than sufficient to cover all delinquent products. These payments come in daily over then next sixty days and each and every day we will send out products until we have fulfilled all orders.”

What do you think about SnipKit’s announcement and reasoning? Agree or disagree? Click the following link to discuss SnipKit with us over in our free penny auction forum!

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