Haggle - Under the radar penny auction site

Penny Auction Insider has been taking a break to get some much needed work done, but I came across a penny auction site by accident today and wanted to share. Haggle (which to my knowledge has not been discussed on Penny Auction Watch nor is listed on Penny Auction Traffic - as of this post), is running a Facebook ad that caught my attention just long enough to make me want to investigate whether it was a penny auction or not. Verdict: penny auction. However, they make no mention of the industry phrase in the ad or on their site, which suggests they are going after new customers, not existing penny auction players.

That is all. Hope everyone is having a lovely holiday season.
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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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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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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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The Auction Squirrel Looking Healthy

Today I took a look at the last 30 ended auctions on The Auction Squirrel, and it looks like they may be making a profit (or close to it!). A few physical products aside, The Squirrel sold 24 gift cards and bidpacks for revenue of $677 (assuming 15% of bids are free) and a total COGS of $550 + $120 for shipping (24 products @ $5 each), for a profit of about $7 (EBITDA). In looking at this estimate I would say that my estimate for number of free bids is too low, meaning the Squirrel is probably not cash flow positive quite yet. I'm also not factoring in all of their fixed costs, mainly hosting the site. I'm also ignoring a promotion The Squirrel is doing which gives winners free bids if the price of the auction goes over $1.00 (Squirrel, why are you torturing me?). And this also ignores the fact that The Squirrel has been bleeding cash the last few weeks and has some serious ground to make up from losses early on. But maybe The Squirrel has passed the lowest point on it's J-curve and is heading toward break-even and then on to more profitable pastures. The holiday season is also coming-up and I'm sure there will be an abundance of people looking to fill Christmas wishes on the cheap this year, so if The Squirrel can make it till then it might be OK.
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Case Study: The Auction Squirrel needs to go cash flow positive

This is part of an ongoing examination of The Auction Squirrel, a penny auction site I decided, almost at random, to analyze on Penny Auction Insider.

The Auction Squirrel has been bustling along for a while now after launching last Wednesday and now has 202 ended auctions. As a new site, The Auction Squirrel suffers from two problems, 1. convincing users that it can be trusted and 2. getting enough traffic to make the business cash flow positive.

I have been informed The Squirrel is not shill bidding and quickly shipping won items. Most people who are bidding at the site probably know this, meaning they will become repeat customers. Since I've been informed of this by a credible source, I am willing to confirm the legitimacy of The Squirrel on this blog, meaning my readers should feel comfortable bidding on the site also. This helps to solve problem 1 above.

For problem 2 - getting enough traffic - The Squirrel is clearly struggling. To give them the benefit of the doubt, they've only been live for a week, however by looking at ended auctions anyone can see that most items don't have much bidding competition and are selling at a loss for The Squirrel. To solve this problem, I think The Squirrel is going to have to think outside the nut shell. If The Squirrel goes the way of Bidcactus - that is to be really good at being average while spending thousands per day on AdWords - then they're going to struggle. There are already a half dozen good penny auction sites with significant traffic and positive reputations with bidders. The Squirrel is either going to have to take significant, month after month losses from ad spending to get site traffic, find a way to differentiate its self, or be content with coasting along staying cash flow neutral (if it's lucky).

I doubt The Squirrel has the cash reserves to start a massive AdSense campaign, most penny auction sites don't. Competing with the big guys is not a good strategy for The Squirrel, they need to find a way to differentiate themselves. My next Squirrel post will address this issue, but I should say upfront, I certainly don't have all the answers.
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Pposh Up For Sale: Asking a pretty penny

Penny Auction Watch just broke the story that Pposh.com is up for sale. Pposh is the penny auction site focused on travel packages that employed some very suspicious practices after launching late this summer. According to Website Broker, where Pposh is listed for sale, the site has a monthly income of $3000, expenses of $350 and an asking price of $500,000.

As someone with a little bit of experience in the private equity world, let me evaluate this deal for all you prospective buyers, free of charge.

While PAW said some Pposh employees were not getting paid, let's just assume this is a wash and that it really only costs $350 a month to operate Pposh. That brings EBITDA to $31,800 per year. With the asking price of $500,000 you are looking at about a 16x multiple for Pposh. That's on the very high side, a good multiple on a brick and mortar operation of similar size might be 4 or 5x. However, before we declare Pposh overpriced by nearly $350,000, let's dig a little deeper and evaluate it's business potential, market potential, competition and barriers to entry ie let's do a quick and simple SWOT analysis:

Strengths: The site looks good for a penny auction.

Weaknesses: As I have long argued, the only barrier to entry in this space is credibility, Pposh has none. In fact, for such a young site Pposh actually has a very bad reputation (see earlier posts on PAW and Penny Auction Insider). They have no site traffic. Travel packages have huge inherent challenges. For example, selling a flight from one city to another requires the bidder to be in one of those cities and have a need or desire to go to the other city within a limited window of time. This severely limits the number of potential customers.

Opportunities: I believe there is a lot of room for growth in the penny auction industry.

Threats: Pposh has no barriers to entry. There are nearly 100 sites offering similar services for a similar price. The only thing that makes Pposh unique is its product set - travel packages - which poses inherent challenges, and even if there was an attractive market here, more established sites could easily enter this market and leverage their existing customer base to win this sector. There are many larger, more established penny auction sites with experienced management teams and some with VC funding.

In conclusion, Pposh has a weak business model in a competitive industry with no barriers to entry. Pposh has very little site traffic and what reputation it does have is negative. The stated costs are far lower than would be required to adequately run the site and income potential is small given the limited customer set in travel auctions. One big problem is that if expenses are only $350 per month, Pposh can't actually be selling much of anything, which raises questions about the legitimacy of their earnings. According to the Pposh ended auction page they sell over a dozen items a day, including expensive travel packages, car rentals, flights, computers and other electronics. Clearly, Pposh is either not counting the products it sells in its expenses or not actually selling products, which is something we accused them of doing weeks ago. This is very suspicious and appears to be one big fraud.

After doing a basic analysis of the company fundamentals, I believe Pposh.com is overvalued by approximately $500,000 and wouldn't pay a single cent for the "company."
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Day 2: The Auction Squirrel

So today is the second day of operations over at The Auction Squirrel. I've been following the site with an unexpected degree of interest since it's launch at noon yesterday. I think The Auction Squirrel holds my interest because I've never watched a penny auction site go from pre-launch into open-for-business mode before. I also don't see how the Squirrel could possibly make it (with nearly 100 similar sites out there), which gives it a bit of an underdog feel. I am also very curious to see what the Squirrel's strategy is because as I've loosely monitored it's progress these past two days I've seen it sell everything for less than $1. Clearly this cannot be sustained for very long and I don't see them spending any money on Adwords so I don't know how they are planning on getting enough traffic - and bidders - to make the site sustainable. I think with penny auctions the most important thing for bidders is not that they can get a good deal on your site but that they can trust you. Bidders need to believe there are no shill bidders and that they will actually receive there winnings before they spend money. This is the biggest hurdle for a penny auction site and I think the several largest sites, namely Swoopo and BidCactus, have been able to win customers' trust, this is why they are so successful. I would like to see if and how The Squirrel is able to build trust with users.

I'm going to make The Auction Squirrel my little case study. I'll monitor their progress and share my thoughts with the community. If you have any experience with The Squirrel, please share it with me. I am especially interested in hearing from people who have won things on the site. Thanks for your help with this!
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Enterprising eBay Seller Sells Penny for $1

I found a penny for sale on eBay today with a Buy It Now price of $1. What's so special about this penny you ask? Well, it's a randomly selected, circulated coin with a face value of 1 cent - making it strikingly similar to many other pennies in the world. So what's the appeal? The seller claims this penny could be your lucky one! "Never quite found that "lucky" penny? Well let us find it for you!" You might scoff at the idea of selling a run of the mill penny for one dollar but I couldn't help but laugh at the sellers entrepreneurial spirit.

Only one of these "lucky" pennies has been sold but the seller (jerrys-stuff-shop) has more than 10 available in case you're thinking ahead to the Christmas season - makes a great gift in these hard economic times!
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Penny Auction Site Pposh.com is Complete Scam

I rarely blow the whistle on penny auction sites, frankly because we can almost never know for sure whether a site is legitimate or not. Even if Swoopo users like their experience and receive their products, how do we know the site doesn't throw in an autobot every once in a while just to give the house an extra buck? Well, fortunately for penny auction players, the sites that seem to be complete frauds make it pretty obvious.

The latest one, Pposh.com, is so pathetic it's almost funny.

Pposh.com is a penny auction scam site that claims to sell vacation packages; everything from flights to cruises to rental cars and even Hooters gift cards.

While winning travel packages sounds more appealing to me than electronics, they present a logistical nightmare for penny auction websites. Vacation packages which include flights, hotels or cruise cabins are time sensitive, they include components that change in price and that need to be reserved so the seat or room doesn't get overbooked. Also, departure locations will need to depend on where the bidder is located, another logistical challenge. For these reasons auctioning off vacations is very difficult and will likely draw a very small audience. Take a recent example from a Pposh.com auction which was for a round-trip flight from Orlando to Pittsburgh or vise versa. Orland to Pittsburgh or Pittsburgh to Orlando, are you kidding me? A site that just launched and has such low traffic it isn't even covered by compete.com can't auction off a product that is only of interest to people in Orlando and Pittsburgh (and who have an interest in visiting the other city) and who want to fly in August or September (the terms of the ticket being auctioned).

So Pposh is trying an innovative penny auction concept that seems deemed to fail, but why are they a fraud you ask? One Pposh penny auction for a Disney vacation is going for $31.22 which sounds suspicious - really Pposh, you've had more bids on this item than pageviews to your whole site?

I was pretty sure at this point Pposh was a scam but when I looked at the ended auctions I started to laugh. First, the site has over 170 ended auctions, which seems high for a site that's only been open for a short while. But if you look at the bidders you see one user, Shasta1 seems to win quite a bit. This might not seem that odd if the items were electronics, but how many vacation packages, hotels and flights can one person use? Let's review what travel auctions Shasta1 has won on Pposh (feel free to laugh out loud).

1. 8/13 - 3 night Bahamas vacation
2. 8/13 - 2 night stay at a Sheraton in Philadelphia
3. 8/13 - a second 2 night stay at a Sheraton in Philadelphia
4. 8/13 - 2 night stay at a Hilton in Paris, France
5. 8/13 - roundtrip airfare from New York to Miami (or vise versa) to be used in August or September
6. 8/13 - 2 night stay at a Sheraton in Boston to be used in August or September
7. 8/13 - roundtrip airfare from New Orleans to New York (or vise versa) to be used in August or September
8. 8/13 - 2 night stay at a Sheraton in Cleveland to be used in August or September
9. 8/13 - 2 night stay at a Hilton in Tel Aviv, Isreal to be used in August or September
10. 8/13 - roundtrip airfare from New York to LA (or vise versa) to be used in August or September
11. 8/13 - 2 night stay at a Sheraton in Dallas to be used in August or September
12. 8/14 - 3 night stay at the Bellagio in Las Vegas to be used in August or September
13. 8/14 - roundtrip airfare from Boston to Ft. Lauderdale (or vise versa) to be used in August or September

Then Shasta takes some well deserved time off, presumably to enjoy his recently purchased vacations, before coming back 7 days later to purchase more.

14. 8/21 - 3 night cruise to British Columbia departing from Seattle to be used in August or September
15. 8/23 - roundtrip airfare from Atlanta to Denver (or vise versa) to be used in August or September
16. 8/23 - 3 night stay at the Marriott in Orlando to be used in August or September
17. 8/23 - 2 night stay at the Hilton in Chicago
18. 8/23 - a second 3 night cruise to the Bahamas departing from Orlando to be used in August or September

Shasta1 is quite the jet-setter now isn't he? I thought I'd plot his travel plans on the map below to help make sense of all those vacations! (green = hotel stay, red = flight, blue = cruise)


Pposh also has a blog with three entries on it. Two of the entries announce the new site and the third so funny I had to show you instead of tell you, see image below. Note the person who posted the comment and if you click on the link to the ended auction (you need to go to the Pposh site to do so) you will see the winner was none other than Shasta1.

I rest my case. Since I first heard about Pposh in the comment section here on Penny Auction Insider, I hope the owner of Pposh sees this post and responds. I will also ask Penny Auction Watch to chime in on this site because they seem to have a knack for uncovering fraud from the bid patterns on sites.

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Bidcactus Overtakes Swoopo After Just Five Months

Bidcactus overtook Swoopo in unique visitors in July according to data collected by Compete.com. This is surprising news to the penny auction universe where Swoopo has long been seen as the industry leader, both in the US and Europe and is the oldest penny auction website, having launched four years ago in Europe and one year ago next month in the US.








Bidcactus, a Connecticut based company, launched on April 23 of this year and has experienced phenomenal growth. The company reached 693,013 unique visitors in July, to Swoopo’s 578,712, despite being in operation for less than five months and launching with only 36 users on its first day. Swoopo's growth in terms of unique visitors for July was 13.34%, BidCactus’s was 275.38%.

Penny Auction Insider spoke with Bidcactus Director Marjorie Almansi earlier today to discuss her company’s breakout success in a marketplace than has become crowded with competitors, knockoffs and scams.

“We’re growing in leaps and bounds,” she said. “We have great customer service; we’re the only [penny auction] site that offers 24/7 customer support and 9 a.m. to 5 p.m. phone support.” Almansi also credited ... player referrals, satisfied users who become repeat players, a strong engineering team and successful online marketing strategy that targets Google and Yahoo as key components to her company’s success. “We’ve surpassed every monthly goal we’ve ever set,” she added.

However, Bidcactus also appears to have spent slightly more than Swoopo on keyword advertising in July, an advertising method popular with penny auctions that drives significant traffic but can also be expensive. According to data collected by Spyfu.com, Bidcactus is spending between $991 and $7,370 on keyword advertising per day, while for Swoopo the number was between $725 and $6,530.

In turning to questions about the state of the penny auction universe, Almansi said she is concerned about rumors of fraudulent practices at some penny auction sites. “Unfortunately many people who are getting into [the penny auction business] are questionable. With box software you can get [a site up] for next to nothing. There are a lot of new sites out there and I don’t know what is going on behind the scenes,” she said. Almansi said she would be happy to lead the push to develop an audit panel that examines penny auction sites and certifies them as being legitimate. She also said she would welcome auditors to inspect her company and hopes others would be willing to do the same. “I’d be happy to carry the torch,” she said.

Almansi is optimistic about the future of Bidcactus and the penny auction industry as a whole. “There are very few people who know about us or who use penny auctions, but I think this could be a whole new way for the masses to shop,” she said. Amazon.com and Ebay, the two preeminent ecommerce storefronts on the internet each get about 70 million unique visitors per month, or about 14 times the number of visitors Swoopo and Bidcactus receive.

Bidcactus is currently running about 150 auctions per day and will soon expand operations to offer bidding around the clock.

Correction: An earlier version of this article quoted the advertising expenditures of Swoopo and Bidcactus in dollars per month, the figures given were actually for dollars per day. Thanks to Weronika Cybulska over at BidRodeo for pointing this out.

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The Sunk Cost Fallacy

Penny auction critics say these auctions exploit the sunk cost fallacy, ie "throwing good money after bad." I don't know if the average user experiences the pitfalls of sunk cost (irrational) psychology, but Zorro2612 certainly did in this recent auction over at Swoopo. This user spent $108 on bids and $155.40 on this iPod Nano worth $199 retail. Swoopo gives users a hand by automatically calculating their savings on an auction (retail price - (bids +cost)). Too bad this calculator only goes to $0 because you can have negative savings, they're called losses. Zorro2612 had savings of $199-$155.4-$108 = -$64.4. Didn't exactly slash a bargain now did we Zorro?

Here is what I bet Zorro was thinking:

Aye corrumba, i've already spent $100 on this auction, now I have to win it no matter what. If I back-off now, I'll have wasted that $100.

The problem with thinking about sunk costs this way is that it leads to irrational decision making. Having "sunk" $100 worth of bids into an auction does not make you more likely to win, therefore Zorro would have been best off to walk away after his total money spent on bids + cost of the item passed the retail price of the iPod. However, he did not do that, and in this case did end up winning the auction. Note that the outcome he received ie paying $263.4 for an iPod (including bids) is a better outcome than walking away at say $90 in bids and then buying the iPod at the street price of $199. However, when he made the decision to "go for it, all or nothing," there was no way of knowing he would be the winner. There very well could have been only one competitor on that auction who's strategy was also "go for it, all or nothing," and who got nothing. Zorro could have easily been out $200 with no iPod, instead of out $90 with no iPod as in the hypothetical situation I construct here.

To maximize value in all things; cars; houses; investments; penny auctions, users need to ignore sunk costs. As many critics point out, this seems especially hard to do in penny auctions, institutional investors (who I'll assume to be more sophisticated, but perhaps undeserving of the distinction) are known to be more likely to sell portfolio holdings that have appreciated in value by a certain amount to "take some profit," then they are to sell holdings that have declined in value by a similar amount, which they should do to minimize downside risk if the same standard of logic is to be applied evenly. This comes from a field called behavioral finance, which I find to have much in common with penny auctions, and is part of what initially drew and continues to hold my interest in these types of auctions.

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Attack of the clones

"Craig", presumably Craig Pratka, part-owner of Zoozle.com, wrote to us to correct the timeline we have up about bid-fee sites. I'll leave it to my co-blogger, who likes doing stuff like that, to make the correction to the graphic, but I'm always excited to hear from other people in this industry.

In doing some research about Zoozle, I came across the press-release they put out on the occasion of their going live. It included this shocking paragraph about their experience with the standardized "turnkey" software so many penny-auction sites use.

The software came with an 'Autobid' feature and instructions for the site admin to set fake user names and autobid timing from the back end. The feature can be disabled.. but when disabled, the sites critical functions, like bidding, did not work properly.

Shocking, but candidly, not surprising. It's very easy to be dishonest in this business -- even the word "dishonest" is somewhat euphemistic, here; "autobid" is shilling and in a bid-fee auction, shilling is outright fraud.

Cynical as I am, I was still shocked that the commercial software had shilling built in, had defraud-your-customer built right in. Wow, how do the people who develop that software justify what they do for a living to themselves?

So stay away from clone sites. They're easy to spot, they look just like Swoopo. Same green buttons, same unmistakeable red flicker when the timer is pushed back. They are all using the same software underneath. I have no idea what fraction of clones are actually using the shilling feature (or doing anything else dishonest), but why take the risk?
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In the mailbox: BidHof

I got an email from someone calling herself "Victoria Blechman". On the Internet, you always have to be suspicious about names (my parents didn't name me "Malvolio", for example), but would anybody pick "Blechman" as an alias?

In her somewhat eccentric English, the presumably-authentic Ms Blechman plugged her new Germany-based auction site, BidHof ("hof" is "yard" or "court" in German). The pitch involved eBay-like consumer-to-consumer (C2C) auctions. Now, I've always been a little dubious about C2C penny auctions, so I was curious to see her site.

Sadly, the site was still embryonic at best. It offered a set of ordinary bid-fee auctions, using what is obviously same software used to implement a lot of other auction sites. It talked in vague terms about C2C but didn't actually support it as far as I could tell (the site implementer has the same English-as-a-second-language style as Ms Blechman; it might have been Ms Blechman).

Ah, well, the search continues.

UPDATE: See here for more on Ms Blechman and BidHof.
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If It Sounds Too Good to be True, It Probably is, Unless it's a Penny Auction

(What do you mean these TVs don't cost $10?)

Late last night BestBuy accidentally set the price of a 52-inch TV on its website at $9.99, instead of the true retail price of $1,699, allowing shopping pandemonium to ensue. Consumers who noticed the deal in the wee hours of Wednesday morning jumped at the amazing offer, with many buying several or more of the sets. However, as age old wisdom goes: if it seems too good to be true, it probably is. BestBuy quickly fixed the mistake and told customers who purchased the $10 TV that the sale would not be honored.

While no one expects to get a 52-inch HDTV from BestBuy for $10, readers of this blog probably know of a few good sites where they might be able to snag such a deal. In the world of penny auctions, $9.99 doesn't sound like such an unrealistic price for a 52-inch TV, maybe a little low, but not unrealistic. Swoopo recently sold a similar TV for just over $100 and some of the lesser known sites can have even better deals.
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The Never Ending (Penny Auction) Story: Jungle Cents

So, as I blogged about in an earlier post, I registered with Jungle Cents and was given a free bid to get me started, this was on July 30th. I used the bid to reserve a space in a seat auction for an iPod Shuffle, which at the time was the only auction I could afford with my one bid. In my original post about Jungle Cents (also on July 30th), I noted that the seat auction for the iPod shuffle received its first bidder on July 8th. Back then I said of that original bidder, "...that person has been waiting weeks for this auction to start and only a small fraction of the seats have been sold. This isn't fair! People who buy bids to compete in these auctions expect their auction to start in a reasonable amount of time. At this rate it's going to take months before anyone can bid on that iPod!"

Now it's been over a month since the original bid was cast and 13 days since I cast mine. When I placed my bid there were 63 out of 75 seats vacant, today there were 49, and the auction can't start until all are full. In my original post I said one of the risks users face when playing penny auctions - or any "game" where money is exchanged for a product that is not received or consumed immediately - is the possibility that the company goes out of business. I don't know what Jungle Cents' financial or operational status is, and their website claims they have completed 170 auctions, but they have been very quiet since I started watching and appear to have locked-up some players' money for a very long time. I don't agree with this practice, and if I had spent money on my bid I would be complaining to customer service. If you have had an experience with Jungle Cents, good or bad, please let us know in the comments section or by email.


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GoBid.com Is Blessed by the Gods of Publicity

Local ABC affiliate WPVI in Philadelphia ran a story about GoBid this past week and had nothing but good things to say. The story, which runs about two minutes, profiles what in my opinion is one of the lesser penny auction sites out there in the station's "Saving With 6" segment.

ABC describes GoBid as a site where users can get amazing deals, but where they might spend more than they realize. An ABC reporter talks with who I will assume is a GoBid executive, but I say "assume" because the guy's name and title are never mentioned. The report never even mentions whether or not he works for GoBid.com.

I thought it was interesting that ABC chose to profile GoBid without any mention of other penny auction sites. GoBid is one of dozens of small penny auction sites that cower in the shadow of Swoopo and Bidcactus. Ok, "cower" is a bit of an exaggeration, but they're certainly much smaller than Swoopo and Bidcactus from a traffic perspective.

So why did ABC choose to profile GoBid?

Is GoBid doing something unique that warrants media coverage?
No, they're just like 15-20 other penny auction sites.

Is GoBid from the Philadelphia area, and ABC wanted to focus on a regional business to better connect with their audience?
No, GoBid has offices in Miami and San Francisco.

In other breaking news, ABC WPVI sucks.

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Penny Auctions Aren't the Only Place to Get A Great Deal

We at Penny Auction Insider enjoy penny auctions, obviously, and while we don't play as often as many of our readers, we get just as excited about the savings that can be had. However, penny auctions aren't the only sites on the web where online savvy consumers can get great deals and a little entertainment. Woot and GroupOn are two social media entertainment shopping sites that allow users to get a fabulous, if not completely random deal of the day.

Woot offers a "Today's Woot," which is a product the site has managed to buy in bulk at an extremely low price. Take a scroll down their blog for an idea about past Woots. They offer everything from mid-range laptops (today's Woot) to golf bags and talking smoke detectors. It seems like a lot of Woot-ers buy the deal of the day just so they can share their experience in the online forum. Woot also displays statistics about how fast the product is selling and how long it takes to sell out (sometimes it does, sometimes it doesn't, but there is always a new product the next day).

GroupOn is a collective buying site that features a new deal each day for 17 cities around the US. Today in San Francisco it was a bay cruise for $26 (50% of the list price). The site negotiates with the supplier and they agree that if a certain number of people buy the item, the deal goes through at the list price and if it doesn't, the deal is void. GroupOn leverages the power of the masses to get good deals. However, most of the stuff is local, so you have to be in the geographic area to take advantage of the deal.

For an interesting economic analysis of GroupOn, Evan Miller goes to town here.
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Living in SIN

I've been following Swoopo's new feature "Swoop It Now" (SIN) with considerable interest. This is a feature that allows non-winning bidders to apply the cost of their expended bids toward the outright purchase of the merchandise. My prediction was that it would drive the bid levels way up, as a bidder who was interested in buying the merchandise would have no reason to stop bidding once he had invested enough bids to make buying the item a good deal.

This has not happened. At all. At least, it hasn't happened yet. And I want to know why not.

Right now, Swoopo is selling a Nikon D90, a very nice camera, I happen to have one myself. Amazon sells it for $1,139.95 and by what is certainly not a coincidence, Swoopo shows $1,139 as its list price. So if you want the Nikon, instead of going to Amazon, go to Swoopo, buy 1900 tokens at 60¢ each, $1140.00 bucks works, and load them into the BidButler.

You might win and get the camera for something around $76.00 (1900 of your 2¢ bids plus the same number of 2¢ bids from whoever is foolish enough to bid against you). In fact, you'll probably win, because you have the huge war-chest to discourage rivals.

And if you don't win? You buy the camera for the same price you'd pay on Amazon.

Somebody should try this. I'll wait here.
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Comprehensive Review of Penny Auction Sites

To follow-up on my last post about the importance of picking a credible penny auction site, my next few posts will feature a comprehensive review of all the penny auction sites we know about. If you know of another site, feel free to add it in the comments or send me an email (pennyauctionguy1@gmail.com) and we'll add it to the list. Let me preface this post by saying I was really surprised by the findings of this study. Over the past few months that I have been following penny auctions, I feel there is a new penny auction site popping up every time I turn on my computer. In looking at the data however, the majority of these newcomers have awful user interfaces which appear to come from the same box software package, low site traffic, frustrating practices and polices and many appear as though they could go out of business at any moment.

Here is a timeline of the 24 penny auction sites we were able to get hard data on. Note that we know only the month auctions started significant operations and not the day. Therefore, the placement of sites within a month does not indicate the order in which sites started in that month, but is an arbitrary placement for aesthetic value.






An earlier version of this timeline incorrectly placed Zoozle's start date as June, 2008. We have been informed by the founder that Zoozle actually launched in March, 2009.
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