How many people would like to buy brand name items at a great discount? I think we would all fall into that category. Perhaps that is why penny auction websites have become more and more popular. Users flock to these websites hoping to win items at extremely discounted prices. But do they really have good value for the consumer? This article will discuss how Beezid, one of the most popular auction websites, works and whether it is something the online community should embrace or avoid.
Penny auction websites, like the much-hyped Beezid, work much like a casino. Users must purchase bids (just like casino chips) in order to participate in auctions. Each time a bid is placed, the item’s auction price goes up by $0.01. The time expiration clock is also raised from five to fifteen seconds to continue the auction and allow for more bids. When finally no bids have been placed for about twenty to thirty seconds, the auction will end and the item will be awarded to the highest bidder at the final auction price. So, for example, if the final price of a won item is $20.00, that means that two thousand bids were used during that auction. Beezid sells the deals to users for between 60 cents and $1. That means they make an average of about $1,500 on an auction of that price, minus what they had to spend on the item being auctioned. That’s a tremendous markup per auction for the hosting auction website.
Meanwhile, what has happened to the consumer during this auction? One person is happy: the user who won the auction. They probably spent a reasonable amount of money on deals and got a great deal on the item. But what about the dozens of other bidders who won nothing? Now they have spent and lost all the money they used for the deals. Beezid has things in place, like bid refunds in certain cases, along with exclusive auctions for people who haven’t won an auction yet, but things are always in Beezid’s favor.
It is good for the company to make money. We don’t expect big companies like Amazon.com to go without profit. However, they make a profit by offering good value to consumers. There has to be a certain balance there. Is the balance between the value of the consumer and the benefit of the company present in Beezid? I think the profit model is too in favor of the company. That’s why I don’t think penny auction sites like this will last very long. Consumers will find that they are only valuable for entertainment.