Maybe it’s just me, but it seems like reverse auctions are picking up in popularity. Unlike eBay and other traditional auction sites, a reverse auction rewards the item to the person who doesn’t put up the highest bid, but rather the person who has the lowest unique bid. In this way, it is very possible that you can pick up a 40-inch plasma or an Apple iPod for 76 cents… before you factor in any sort of surcharges, taxes, and shipping costs. It makes you wonder, though, how do these kinds of sites make money?
From what I can gather, the general rule of thumb is that they charge each and every bidder a small fee in order to participate. Some may charge you for each bid you make online; others may allow you to play by sending text messages on your cell phone, charging some sort of premium for each message sent. After collecting all these fees, the site might even give away free gifts or a cash prize to some lucky winners. It’s like playing a slot machine… intermittent rewards will keep people coming back for more.
In this way, reverse auctions are “auctions” at all. They function the exact same way a lottery or sweepstake would: you “buy” an entry by putting in a bid, and you hope that you have the lowest unique bid. You’re paying for a chance to win. Will reverse auctions continue to pick up steam the same way that the over-the-air ringtone and wallpaper business has grown, or will it fizzle out as people lost interest?
I have no intention of ever participating in these sort of things. Have you?
This post was sponsored by bid4prizes.com.
So what does a unique bid mean…..
BTW if this is the case then everybody will be racing for one cent or so…
It means that the prize is awarded to the person that has the lowest bid that no one else has. For example, let’s say that there are five bids total. Two people bid one cent, one person bids two cents, one person bids three cents, and one final person bids four cents. The prize would be given to the person that bid two cents, because it is the lowest unique bid.
Hrm, sounds a bit fishy to me. I understand the concept behind it, but it would seem to be difficult to get people to participate. And surely there has to be some sort of minimum ‘bids’ before something ‘sells’… nobody is going to ‘sell’ a plasma tv if only, say, 10 ppl bid low amounts.
Interesting….funny too…but then again it would be fun. Maybe I should try it when its a car. But I don’t think that will happen in my life time. For all I know it could be a toy car instead of a real car…But who knows….Right? Maybe I should if its a plasma tv…LOL..