I've recently encountered QuiBid, a penny online auction web site promoting the latest 42-inch HDTV for $55 or an iPod for $24, a price unheard of since the discount shelf at Apple has not been known to be stacked.
So, how does an obscure web site sell top of the line computers, flat screen televisions and cameras for literally 75 percent of their retail prices?
The Oklahoma-based company incorporates a business model seemingly different than the standard eBay setup. Visitors may bid on whatever one or two cent item they find tempting and if they're familiar with the online auction game, perhaps they'll be lucky enough and score a brand new MacBook Pro for $300.
Ready for the catch?
With every bid, the company collects a $0.60 fee from prospective buyers, which may seem insignificant if you're bidding on a new entertainment system for bargain Canal St. prices. But every auction receives hundreds or thousands of bids and with the small fee that bidders are gambling to pay, QuiBid rakes in more than enough funds to happily let go of their prized products.
When someone bids on an item, the price increases by, typically, 5 cents. So an item that sells for $300, like a MacBook Pro, most likely acquired 6,000 bids before it was "SOLD TO THE LUCKY WINNER." Let's say the buyer bids 200 times before she won her new computer - that's $120 (200 * $0.60); ultimately, she pays a total of $420. Not a bad deal for the new winner, but for the unlucky ones, the company has collected a whopping $3480 (3600-120) from the simple act of repeatedly clicking "bid now."
From what I've gathered, Quibid is not a scam, but it is certainly a gamble to take since there are financial winners and losers - unlike eBay where if you lose an item, you may merely suffer from depression, but it takes no toll on your wallet.
But QuiBids has also developed another concept that sets it apart from the other online auction web sites: the "Buy it Now" feature allows you to buy the item you lost out on AND apply the fee cost that you spent on bidding for the auction item towards your retail-priced purchased item.
I say the business model is very clever - incorporate outrageously cheap prices with top of the line products, mention a minuscule fee of $0.60 per bid and no one even flinches. It seems like a pretty good bet to take on, except we forget how rare it is to be the one who wins versus the one who loses. BUT...here comes the best part yet...with all the money you did lose, come hither and buy the item for regular price and apply the money you lost towards an item you most likely didn't even need in the first place.
The entire concept makes prospective buyers feel rational and smart, but it's only a deal if you needed the item and if you, yes, win. In the discounted world of Quibid, for one winner there must be many losers.