Last week, Ms. Ronan introduced me to Bidray.com, a penny auction site where you can win brand new electronics for a fraction of retail price. A Nintendo Wii for $18.89? Too good to be true?
Here’s what I’ve found out about Bidray.com in my attempt to see if it is a scam or not.
Like eBay:
- It appears that auction winners stand a very good chance of actually receiving the product they won.
Unlike eBay:
- Each bid placed costs $1.
- Each bid increases the auction price by $0.01.
- Each bid resets the auction clock.
These three factors make Bidray.com at once an incredible business model but a potentially dangerous landscape for auction-buyers. Let’s revisit that $18.89 Wii … 1,889 $0.01 bids at $1 apiece = $1889 in revenue for Bidray. Even if they paid the full $250 retail price for the Wii, that is an amazing gross profit margin!
On the surface it’s a great deal for customers too. But buyer beware. How many $1 bids did the Wii-winner have to place before he wore out the competition? I wonder what his “total” price was. By not letting customers bid their “best price,” and by resetting the auction clock with each bid, Bidray maximizes their potential income. If a customer thought $25.00 was an attractive price for a big-screen TV, would they really not bid $25.02 if they had to? And then $25.04, and on and on, each time their “investment” really increases by $1.01 because of the pay-to-play set-up. And with more and more invested, the harder it is to quit. It’s genius.
Bidray is an incredible business because of it’s simplicity. I’ve read that they don’t even touch the inventory — everything is drop-shipped from Amazon, Best Buy, or other stores. They have full disclosure on their site, and even have a section on “Responsible Bidding.” Plus, they donate the full sales price of each item to charity! Such nice guys. I love it.
My conclusion is that Bidray.com is not a scam, just a wonderfully creative business where you can potentially score some great deals.
**Disclosure: I do not know anyone at Bidray, and acknowledge that it would be incredibly easy for them to create a small army of internal auto-bidders that kept the auctions alive until they reached an appropriate level of profitability. Based on their list of recently sold items, which includes some items sold at a loss, I’m going to assume that is not happening.
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Tags: business
Article on penny auctions from The Economist:
http://www.economist.com/busin.....d=14214837
I have won and received abour a dozen items at Bidray. You’re gambling, basically, plus you have to watch the auctions and know who NOT to bid against. But sometimes you get lucky and snag a real deal. I won a $250 exercise bike for 1 bid about a month ago. Now this is absolutely the exception to the rule, but it can happen. The only site that I’ve seen which shows the actual cost to the winner is bidrodeo, where I have yet to win.