I’ve noticed a recent onslaught of radio commercials, and website pop-ups adverstising online penny auction sites lately. They say that their sites can save you 90%, 95%, maybe even 99% off the retail price of their bid items. While I’m not currently in the market for anything specific, I’m always looking for good deals on just about anything. Normally I don’t lend pop-ups much credit, but when I saw a local company that opened in the Metro Detroit area was being covered by the Detroit News and many local radio stations, I figured why not give it a look.
I was reading the news online last week, as I often do, and I saw an advertisement for Bid Dogz. They are a local company in Pontiac, Michigan, not far from where I live. I’m a fan of anything Michigan, and I try to support our local economy first and foremost. Upon arriving at the site I quickly signed up for my free membership. They give you a sign-up bonus that equals 10 free bids on items. Yes, this is how they make their money, when you buy bids. They only have a handful of items to bid on at any given time, and as they are sold off, they are replaced with more items. Immediately I was shocked to see an iPad being auctioned off at $0.03, with only an hour left! I also saw a Coach handbag for $0.10, and a 25 bid package for only $0.01. They conveniently list the retail prices and bid history for each item. Unless you buy in extreme bulk (300 or more), bids are $0.75 each, so a package of 25 will cost you $18.75.
So let’s get down to my first penny auction experience. I used my first free bid on the iPad, and I was outbid several times and lost, the final price was a mere $.50. Can you believe that??? I know you’re thinking, “hey, I can just bid in the last couple seconds and eventually I’ll win.” Unfortunately, it’s not that easy. When you place your bid within the last 10 seconds, the clock then adds an additional 10 seconds on. So essentially you will never get lucky enough to bid in that last second before the buzzer goes off. Instead, you place your bid in the final 10 seconds, and hope that everyone else eventually gives up, or they wait too long to click on the bid button and miss out on their chance. Well I realized that if I wanted a chance at a hot ticket item I was going to need more bids. So I clicked over to the bid package item next. I noticed the previous auction on a 25 bid package fetched $.52, so I didn’t want to prematurely throw my hat in the ring. I waited until it hit $.32 and began my clicking. The end result, I blew through my remaining 9 bids, lost the auction, and the final price ended at $1.05…slightly further off my earlier estimation. That’s 105 total bids ($78.75) on an item the company values at $18.75. What’s even more amazing is that the winning bidder had to bid on the item 21 times. That’s not to say that losing bidders didn’t place even more, one member bid over 25 times. Essentially, the winner bid 21 times for a 25 bid package, and then paid an extra $1.05 for the winning auction price. That’s a total price of $16.80 on an $18.75 item. Sure he saved himself almost $2, but he just as easily could’ve lost, like the other less unfortunate bidders.
Stay the $#%$% away from these sites!!! Yes, there are deals to be had, just as there is money to be won inside the casino. These sites are little more than a legalized form of online gambling. The business model is almost genius, low overhead, high demand, and the addiction and thrill that comes with the bidding process. However, this is not for the financially prudent consumer. It won’t do you any harm to go and sign up for the 10 free bids and see if you can turn them into a great deal. However, before you throw your money away on purchasing a bid package, donate it to charity, you will have done something good with it and receive a tax write-off to boot. I knew nothing good came from pop-up advertisements!