Penny Auctions Under Siege

Last night BidRodeo informed us hackers were attacking their site. This is the second time in about a week BidRodeo has experienced a cyber attack according to BidRodeo's Weronika Cybulska. Apparently there have been no interruptions to bidding this time, however during the last attack on September 8th, the site experienced delays. During that outage Bidrodeo honored all ended auctions and also refunded all bids to losing bidders, Cybulska said.

Penny Auction Watch also reported that Rocky Bid was under attack about a week ago. All of the attacks appear to be denial-of-service (DOS) attacks where hackers flood a target's servers with so many requests for information that most or all of the server's bandwidth is consumed. During a DOS attack legitimate users either cannot access the target site or experience a dramatically slower connection. If anyone tried to read the Michael Jackson death story on the LA Times or New York Times websites in the first 30 minutes after the news broke, you know what it feels like to try to access content on a site that is overloaded with requests for data. The good news is that these penny auction site hackers are not trying to steal personal information, just temporarily disrupt access to the site.

DOS attacks are fairly common and Google, Facebook and Twitter have all recently been attacked. Twitter, which is notoriously cheap on bandwidth, was down for hours after the attack while Google experienced only minor interruptions.

Cybulska said she didn't know why BidRodeo was being attacked, but suspected it might be a user who is trying to eliminate the competition in order to win an item on the cheap. It might also be a competing site trying to get users to defect.

Penny Auction Insider will continue to report on DOS attacks to penny auction sites and provide updates when sites are under attack.

Steven Seagal was unavailable for comment on this article.
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Penny Auction Traffic Data for August

Compete.com's monthly traffic scores for August are out. Below is a graph of the top 39 penny auction sites by unique monthly traffic. We see that Swoopo and Bidcactus are far ahead of the competition and that the distribution of sites follows a long tail pattern. So does this fit the Chris Anderson "selling less of more" philosophy of ecommerce 2.0? No, not really, more of a coincidence I think.

One of my friends made an interesting point when I showed him this chart. What if Swoopo owns Bidcactus, he asked. While we have absolutely no reason to believe this is true, it does make for interesting dinner table conversation. What if, in order to dominate the market Swoopo opened a second site, which happens to have a very similar color scheme and aesthetic, and funded that site from their own operations. Bidcactus does spend a huge amount of money on AdWords, after all.

Either way, I think I'm going to start calling Swoopo "Coke" and Bidcactus "Pepsi." The Dr. Pepper Snapple Group of the group has yet to be decided but there are a few strong contenders including BidRodeo and Rocky Bid as well as newcomers For10Cents.com and Winners24. This is actually the first time I've visited Winners24 and their site looks pretty clean.


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Updated: Swoopo Auctions Mini Cooper

Update 8:08 pm EST:

We are watching this Swoopo auction for the Mini Cooper very carefully, as I am sure Swoopo executives are, and wanted to let everyone know what the magic number is. Assuming everyone paid full price for their bids and Swoopo paid full price for the car, the selling price of the car needs to be $4091 for Swoopo to break even. If 24% of users are bidding with FreeBids or bids subsidized through winning bidpacks, etc., the car needs to sell for $5168. Anything over that is pure profit for the company, and we do expect the car to go for well over $5168. However, this auction for the Mini Cooper introduces one dynamic not seen in auctions for less expensive products: the winner needs to be able to pay for the item. Most Americans do not buy new cars in cash, instead they finance or lease and most often trade in an old car. I speculate that most people bidding on Swoopo don't have $24,550 to buy a car with, or even $20,000 or $15,000, this will limit the number of people who are competing for the car. Of course, the winner could borrow money from the in-laws, but that complicates things.

My prediction is that this is going to be be a wildly successful auction for Swoopo and also that someone is going to get a great deal on the car - not a $1.24 great deal like at Rocky Bid - more like an $18,000 good deal.

End of update, original post follows



Today Swoopo put a red Mini Cooper convertible up for auction. The auction lasts 24 hours and each bid raises the auction price by 12 cents. As of 4:46 EST the price was $6.60. This is the first time Swoopo has offered such an expensive item, valued at $24,550, and the second time (to our knowledge) a penny auction site has auctioned a car. The first was Rocky Bid which sold a Honda Insight for $1.24 back in June. Rocky Bid lost some serious money on their auction, but tried to use the event to generate strong PR for the site. How Swoopo's Mini Cooper auction goes is anyone's guess, but they have much stronger site traffic than Rocky Bid did in June - that site said there were just two bidders when the Honda Insight auction closed for $1.24.

We will watch this auction closely and update the blog accordingly.
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Bidcactus is back after "internal improvements" and prepares to offer fresh product line-up

Many users, including me, noticed that BidCactus did not come back online Friday night as they said they were going to earlier Friday after going down for "improvements," according to a notice posted on the Bidcactus homepage and re-posted here on Penny Auction Insider. However, the site is now back up and appears to be running fine. I was hoping for some cool new updates, but couldn't see any difference in the appearance or operation of the site when I perused this afternoon. I contacted Bidcactus's Marjorie Almansi to ask about what was new that I wasn't seeing. Almansi said in an email message the the site had undergone internal improvements and that they would start featuring a variety of new items, but declined to ruin the surprise. I didn't see anything new this afternoon but Almansi assured me we can look forward to a "variety of cool new things that will be displayed every day on the site."

Looking forward to it!

In other news, PennyAuctionWatch had a cool story about how Rocky Bid auctioned off a signed baseball photograph, which the article points out can't be found on any other penny auction sites.

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Something for nothing, nothing for something

Like my co-blogger, I'm a big fan of Penny Auction Watch, and like him, I was amused by the win of a Honda Insight for $1.24. Amused but a little dismayed.

The truth is, a penny-auction site makes money so long as the average product goes for 2% of the the purchase price (given the usual arrangement of a 50¢ bid and a 1¢ increment). That is not a very high bar and it's bad for everybody (except the winner) when a site can't maintain even that standard. First of all, it sets up unrealistic expectation in unsophisticated users, and a more-realistic skepticism in the sophisticated ones.

Second, if a site gets itself into financial jeopardy (as the aptly named Rocky Bid seems likely to do), its investors might very well pull the plug. When that plug gets pulled, what do you think the people who have bought big bid-packs will get? Let's not always see the same hands. That's right, Bobby: nothing. Bupkis, zip, nada, niente. And that's bad for all penny auctions and all penny-auction bidders.

And I wonder what's going to happen in with this auction of Michael Jackson tickets. I'm guessing that the King of Ped-- oops, I mean the King of Pop, I'm guessing that the King of Pop is not going appear, so: does the winner get his bids back? Do all the other participants get their bids back? What about people who bought bid-packs just so they could participate?

Probably, the bidder who paid $8.59 for a pair of tickets worth $12,000 is not going just accept his money back. If I were him, I would be all about, "Give me the $12,000 refund that the auction house is getting from the promoter!"

Otherwise, some lawyers are going to be getting rich.
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