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Dealdash Strategy

dealdash-strategyAs we mentioned in our review, Dealdash is our favorite penny auction site. We have used Dealdash more then we have of any other penny auction site for reasons we mentioned in our review. Because of this, we thought about sharing some tips and strategies that we use to win.

Because having a strategy in place is very important when it comes to penny auction sites. Nearly 90% of all users will just go into an auction blindly and bid randomly, this isn’t a very good strategy as we will explain later.

From our dealdash review:

Ask any bidder what the most important aspect of a penny auction site is and he will tell you “The ease of winning items”. Dealdash has introduced new features such as the “No jumper feature” which make winning items much easier then before. Not only that but their cost of bids is by far the lowest in the industry which is certainly the main attraction towards the site.

Dealdash has some exclusive features which when used correctly can really give you the edge over the competition, including the “No jumpers feature” which is a real game changer and is one of the main reasons we recommended dealdash. In this post we will discuss different strategies that you can use which will suit you the most, whether your an aggressive bidder or a conservative one, each strategy has proven to work and will often depend on what your budget is.

So lets get started, there are several types of bidders on penny auction sites, each type of bidding is a viable option, of course some will work better then others for example an aggressive bidder will usually win more items then other bidders but make not make as much savings. Here are some of the following types of bidders you will see on Dealdash:

Andy the Aggressive loves to scare his opponents off by outbidding everyone right after they have placed a bid. He loves to intimidate other bidders and make them think that he has a never ending supply of bids. He wants to appear very determined to win the auction, and convey the message that he is going to win and that it is just a question of time when the others will simply have to give up.

Cindy the Conservative targets only items she really wants and is prepared to use “Buy it Now”. This way, she’ll never leave empty handed as she’ll just bid until she either wins or buys the item at retail and gets all her bids back for free.

Erin the Early-Bird has noted that many deals end at an early stage. While some mistakenly believe that bidding in the early phases of an auction is a waste of bids, Erin knows this is one of the biggest DealDash myths and scores unbelievable bargains while others can’t believe that that High Def TV did just sell for only a few bids. Nick the Newbie targets low profile items after purchasing his first, small Bid Pack. With his limited budget he goes after the smaller items to get comfortable with the bidding.

Will the Well-Informed concentrates his bidding on the least busy bidding hours and picks the auctions he takes part in with care. In fact, he spends a lot of time going through the Winners page trying to find that extra edge, an easy-to-grab item or the best time to unleash his bids! Will also studies carefully the bidding patterns of the bidders.

Source – http://www.dealdash.com/tactics-and-tips

All of these method work quite well, but when you combine them, you will start to form a better strategy then your fellow bidders. The aggressive method has worth very well for us in the past. However this can be risky so make sure you consider all your options before you consider bidding like this. Basically as soon as you start bidding on a item outbid everyone you see, constantly outbid them to make them think you are not going away.

You would surprised at how well this works, because other bidders can see the ‘history’ of the auction, so any new bidder that comes in will see that you have been outbidding everyone so they won’t even bother.

The conservative option also works very well, you will need to know how the buy it now option works before you choose this method. Contrary to the name there is also a risk in this strategy because ideally you don’t want to end up using the buy it now option, because if you have used 200 bids and you haven’t won then your savings aren’t going to be that great.

As far as the other methods go, bidding early works well on occasions, if you look at the winning auctions you will see that many items went for a very low price, this is usually the case on the less in demand items such as gift cards etc.

Choosing the right time to bid is also important and we have mentioned this time and time again on this site, there are “peak hours” on penny auction sites, you want to avoid bidding during these times simply because there are more users bidding against you.

Once you combine these, you can adopt a pretty good strategy, an example could be: as soon as the auction starts  at 2AM you bid like crazy to let everyone know that you are not going away from this auction.

Bidder with Most Bids Often Does Not Win

Since the winner of a penny auction is the bidder who bids last, the bidder with the most bids in a penny auction often does not win the auction. The winnerís total number of bids is strictly smaller than that of at least one losing bidder in 40.9% of the 77,944 regular auctions with two bidders or more, and is equal to the maximum number of bids by any losing bidder in 12.9% of the auctions. Hence, the winner has the (strictly) largest number of bids in less than half of the regular auctions.

In fact, in 3,302 auctions, the total number of bids placed by the last bidder is less than 10% of that by another bidder. In 154 auctions, the total number of bids placed by the last bidder is less than 1%of that by another bidder. The winners of such auctions often are ëjumpersíin that they used the strategy of jumping in: starting to bid in an auction only after a large number of bids have already been placed in the auction

Source – http://www.economics.neu.edu/zwang/Penny%20auction.pdf

This document makes some great points, it’s a good read if you are into statistics.

Some more statistics:

Impact of the BIN Option on Auction Outcome

The BIN option does not affect our arguments on bidder learning across aucions, but it does complicate our estimation of bidder profit or loss. In this subsection, we present evidence that a bidders total cost of bids 22 in an auction should not exceed the posted retail price of the product if the BIN option is available, and the BIN option has the effect of reducing profit margin and attracting more bidders. If a bidders total cost of bids in an auction reaches the posted retail price of the product being auctioned, she can exercise the BIN option and obtain a product that is the same as the one being auctioned for free. Thus any rational bidder does not want to bid more than the posted retail price when the BIN option is available. Consider Figure 7, which shows the maximum number of bids by any bidder for all the auctions featuring the iPad 64GB 3G. This product was auctioned at BigDeal from May 1, 2010, to March 11, 2011, and the BIN option was not available until November 13, 2010. Before the BIN option became available, the maximum number of bids by any bidder exceeded
1,500 in a considerable number of auctions and exceeded 2,000 in Öve auctions.

Source – http://www.rff.org/RFF/Documents/RFF-DP-13-15.pdf

The introduction of the buy it now option has completely changed the way people will bid, many will now bid knowing that they can use the bids at the end of the auction to pay for the item at the RRP.

As we mentioned above, the “No jumpers feature” on dealdash is a new type of auction and we always recommend bidding on these auctions. This feature really favors aggressive bidders because usually after $5.00 (sometimes less) no more people can enter the auction, this is fantastic for someone that has been outbidding everyone because all the people that are left in the auction know you have been around for a while so it puts much more doubt in their mind.

Do Users Learn? Experience and Profits

The empirical results above demonstrate that, regardless of the reason, players in aggre- gate are bidding in a way that consistently leads them to make (reasonably large) negative
expected payo§s. One might assume that, over time, users will learn to either stop bidding or  learn to bid in a way that leads to consistent profits, leading the auctioneers  profits to drop to the theoretically predicted level of zero. In this section, I will show that while both types of learning occur, Swoopo is still able to make large profits. First, while the majority of players quickly learn to stop playing the game (75% of bidders make less than 50 bids before leaving the site), these users contribute high expected per-bid profits($0.60 of each $0.75 bid cost) before leaving. Second, while experienced players learn strategies that lead to (very slight) expected profits, the learning process is slow and players lose large amounts of money in the process. In fact, the highest 11% of bidders in terms of experience contribute more than 50% of swoopos profit.
Read more – http://faculty.haas.berkeley.edu/ned/Penny_Auction.pdf

Another document that has a strong emphasis on stats, obviously swoopo is now out of business but the principle still applies, you can use this to determine when is the best time to bid, not only Dealdash but nearly every other penny auction site too!

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