The “buy it now” option is becoming very common on penny auctions, over the last 2 years, nearly every top penny auction has adopted this new feature because it would be silly to choose a penny auction site that doesn’t have it. In this article we will explain what this feature does and how it can be used to save you a lot of money. If you need to penny check out our last post on penny auctions.
So what exactly is the “buy it now” option? well, it gives you the ability to buy the item that you are bidding on even if you don’t win with the bids that you used on the auction. So if the item that you are bidding on has a RRP of $200 and you use bids worth $195 then you can choose the buy it now option, pay $5 and get all your bids back.
Here is an example from dealdash
- We feel that the biggest problem with penny auctions is that the bidders who don’t win the auction, lose their bids and leave the auction empty handed.
- On DealDash, bidders that don’t win the auction, can buy an identical item for its normal fixed price using the Buy it Now, and get all the bids they used back for free.
- When you use the Buy it Now on DealDash, you always get all your bids back for free. The pricing is competitive and many times you end up paying less than you would at a typical retail store. Plus, you still have a chance of winning those great deals.
- Having the Buy it Now option makes DealDash the risk-free, fair & honest alternative to penny auction sites!
Whilst many of these penny auction sites will claim that the items are “risk free” this isn’t always the case. Many penny auction sites seem to make up their up own RRP, so a laptop you are bidding on has a RRP of $200 on the penny auction site, but when you check the same laptop at a high street retailer you may see it for just $140.
However, you still get your bids back which makes the buy it now feature very special indeed.
The Introduction of Buy-Now
As of early 2009, many sites appeared to still be grappling with the bidder retention problem despite implementing these features. As a result, many Penny Auction sites implemented the Buy-Now feature by late 2009
(Swoopo, BidHere, RockyBid, BigDeal, BidBlink, Bidazzled, PennyLord, Winno, and JungleCents to name a few). This allows bidders to contribute money they have spent in a lost auction towards the value price of that item, and buy the item for the remaining amount.
The value price of an item on a penny auction site is a price marked up from the retail value of that item. Despite the in ated price, this feature still provides an extra sense of security to the bidder. Eectively, the worst outcome for a bidder is now that they buy the item at a slightly less than optimal price. This limits a bidder’s loss to the dierence between the auction site’s value price of an item and the retail price of that item. The Buy-Now feature approach also cleverly deals with the problem Wang et al.
mention of providing immediate outcome (win or lose) to bidders. Because bidders can now choose to utilize the Buy-Now option, which is an almost neutral option, they never have to lose a lot of money in an auction, and are less likely to get discouraged quickly. Between late 2009 and early 2011, almost 150 penny auction sites shut down inexplicablyor went bankrupt This included such penny auction giants as BigDeal and Swoopo. This is even more surprising when we consider Augenblick’s empirically supported claims that Swoopo was making a prot of almost $24 million over the four years preceding 2009. Notably absent from the bankruptcy list is QuiBids, who has become one of the biggest auctioneers in the penny auction scene since 2009.
The obvious question is then why did QuiBids survive and sites such as Swoopo fail so quickly when both implemented the Buy- Now option. It seems each sites implementation of Buy-Now, the only notable change to many penny auction sites in late 2009, may have played a part in Swoopo’s demise.
We recommend taking a look at that pdf document, its a fantastic read. The truth is… many penny auction sites were going bust before the buy it now feature was implemented because as the document says – many users were leaving when they lost an auction. The buy it now feature was good for both the bidder and the auctioneer so it was win-win situation.
A few comments on the “buy it now feature” -
Josh says -
Not only that, but many of these sites offer a Buy Now option. This means that if a bidder doesn’t win an auction, they can apply the value of the bids they place toward purchasing the item at retail price. This means the worst case scenario is that a bidder pays retail for an item.
I understand the risks of these auctions, and I choose to play in them. I’ve won over $10,000 of merchandise, over the course of three years, with an investment of less than $5,000. Sounds like a good deal to me.
Just want to make sure that the pros and cons of penny auctions are discussed.