Busy, Busy

I'll be very busy studying/working through early December and won't be able to post daily/frequently like I have in the past. In the meantime, if something truly interesting happens in the penny auction industry I'll cover it, but won't be able to write as much as I previously have. However, I'm looking forward to discussing the holiday shopping season, its impact on penny auction sites and the broader economy and will share these thoughts whenever I get a moment.

Thanks

PAG
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Bidso Going for Penny Auctions

Bidso launched recently with a reveal price auction (similar to Circuspop, and one of Dubli's auctions) but according to a post on the business networking site ScriptLance, they are looking to make a foray into penny auctions.

This post shows that they are willing to pay up to $150 for a penny auction feature, and have gotten several bids. I'm surprised that the cost of implementing this feature is so low.
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The Auction Squirrel Merges with BidMyDreams

The Auction Squirrel announced on their website that they have merged with BidMyDreams, another penny auction site. Auction Squirrel also stated that their closure was due to, "as some of you know" a "family crisis," unless the family crisis was running out of money, this is news to us. I never saw The Squirrel say anywhere that their closing was due to a family crisis.

This is a bright spot for Auction Squirrel customers because bids will be transferred and honored by BidMyDreams. Also, all Squirrel customers to register with BidMyDreams before Oct. 31st will receive 5 free bids.
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Economic Papers on Penny Auctions

If you love economics read these two great academic papers on Penny Auctions. If you don't love economics, wait till tomorrow (more urgent things came up and this will have to wait, maybe by the end of the week) and I will provide a layman's summary of both. These papers are the best I've seen and provide a depth of analysis that has incredible value for anyone who plays penny auctions, is thinking about playing or operates a penny auction site.

For example, Edward Augenblick states in his paper (1), "the top 11% of bidders in terms of experience create more than 50% of the total profit [for Swoopo, which was where the data was collected]." He also finds that there is value added for experience, calculates Swoopo profit margins and makes quite a few interesting remarks.

Augenblick states, "There are strategies that have significant effects on the estimates of the effect of experience. Broadly, the most important appears to be "bidding aggressively," in which a player bids extremely quickly following another player's bids."

1) Pay-As-You-Go: Theoretical and Empirical Analysis of a New Auction Format by Edward Augenblick at Stanford:

http://www.stanford.edu/~ned789/Pay_As_You_Go.pdf

2) Penny Auctions by Toomas Hinnosaar at Northwestern:

http://toomas.hinnosaar.net/pennyauctions.pdf
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Dubli Goes Public!

MediaNet Group Technologies, an OTC company (MEDG.OB) that manages online rewards shopping programs, announced Monday that it completed a reverse-merger with Dubli (aka CG Holdings Limited). The deal grants Dubli executives control of MediaNet and allows them to choose a new board of directors. After issuing new shares, MediaNet will have 299 million shares of which Dubli will own 269 million. MediaNet has a market cap of $6.55 million, revenue of $2.55M and net income of -$911,870.

A reverse-merger is the cheap and easy way for a private company to go public, avoiding cumbersome SEC requirements. However, trading over the counter will require Dubli to file with the SEC so we will soon know much more about Dubli's financial position than we currently do. Should be interesting.
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That's It, That's All: The Auction Squirrel Has Left the Building

It is with great sadness that I report The Auction Squirrel shuttered its doors today. The penny auction site auctioned 516 items and lasted just shy of one month, it opened on Sept. 23rd. I initially mocked The Squirrel, saying it was foolish to open a new penny auction site without having a "special sauce" when there were nearly 100 other sites competing in this market. However, as time went by I was impressed by The Squirrels apparent honesty and dedication to being an upstanding business. There were a few times when it seemed like The Squirrel was a few small tweaks away from bumping up against the break-even point, however after one month of losses, the site has decided to throw in the towel.

I applaud their honesty and want to point out that, as Obama would say, this is a teachable moment. If The Squirrel couldn't make it what does that say about a lot of similar penny auction sites out there? Are they legitimate, are they shilling, do they intend to ship your products? Anyone can open a website and anyone can cheat you. It has become very difficult to make it in this business and I suspect that a lot of people who would open a site in this environment have the intention of cheating you, or even if they set out with good intentions would turn to fraudulent practices after the losses start to mount. This is a strong argument in favor of only shopping at the most established and trustworthy penny auction sites.
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Nick Lachey's Winnit.com is booming, at least its traffic is

Winnit.com has seen a huge spike in traffic since launching recently and is moving swiftly up the PennyAuctionTraffic.com rankings. The reverse auction site is now in 8th place behind Winners24 with 54,400 unique visits in September. Part of Winnit's success is undoubtedly due to Lachey's media blitz, including a recent interview on Good Day Philadelphia where the anchors conduct what might just be the softest interview in television history. Here is the clip:

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