Penny auction

from Wikipedia, the free encyclopedia

A penny auction is an online version of the all-pay auction in which every bid is chargeable and all participants pay, including those who cannot purchase an item at all. The procedure corresponds in principle to a game of chance .

Emergence

The term originates from the time of the Great Depression , when farmers threatened to prevent other bidders from bidding beyond the minimum bid of a penny during foreclosures . The first online penny auctions were held in 2005 by the online auction house Telebid, later renamed Swoopo .

Legal

Online cent auctions have been banned in Switzerland.

In Germany, too, a ruling by the Administrative Court of Mannheim (23 May 2013 - Az .: 6 S 88/13) stated: "A countdown auction on the Internet, ..., is a game of chance within the meaning of Section 3 (1) GlüStV nF ". and Paragraph 22: "From an objective point of view, it is characteristic of a game that every player takes a financial risk in the hope that a profit can be achieved at the expense of the other player (van der Hoff / Hoffmann, op. cit., p. 70). These requirements are met here. "

principle

Regardless of the real value of the auction item, the starting price of an auction is € 0.01 or € 0.00 with an assumed duration of a few hours. The participants pay a fee for each bid placed, payable immediately via PayPal , credit card or instant transfer . At the same time, every bid received increases the price of the goods by a small amount, usually one cent , and extends the auction duration by a few seconds. The participant who submitted the last bid wins. All others lose their stakes.

The pages are linked across several countries, all countries bid on the same auction and there is almost no possibility of winning in a small country like Austria or Switzerland with a smaller catchment area.

Examples : An iPhone runs on the swoggi system for up to 220.95 euros. Thus, 22095 bids have been submitted, each of which increased the price by one cent, with each bid costing 50 cents (and extending the running time by 15 seconds). In addition, the system extended the runtime by 10 hours for bids after 11 p.m. in order to prevent the bid from ending during the night. In total, the price for 18 iPhones was paid, but only one of the devices was for sale. The buyer bought the device with a 22.6 percent discount on the specified list price. (The "free" bids, which are not really free, are still not taken into account here).

It is therefore very important for the providers that other examples occur such as an iMac with a list price of 1099.00 euros to 7.57 euros, but on average one of the 19 devices sold (i.e. fewer than two per month) cost between 19. November 2012 and September 2013 111.17 euros, whereby only 6 buyers came, but up to 4 times. Of course, any reference to such a supply side remains problematic; the site selected here allows an evaluation of what should not be understood as advertising.

Time and again, the ultimate buyer makes so many bids that not much is left of a mark on the list price or, as in the example referenced below, the list price is overpaid by 40 percent (the discount is specified in the example with 0.00 euros; that's why because the actual loss is not displayed at all by the system).

With some sellers you have the option to purchase the item at the list price via a purchase option. With this purchase option, the bids used can be offset against the purchase price. This means that you can at least leave the auction without a bargain but also without losing if you were not the last bidder.

Probably the best-selling items on all platforms are the bidding points, which can also be auctioned - with the corresponding risk.

distribution

In the USA, there are two mergers of major penny auction sites - Entertainment Auctions Association (EAA) and Penny Auctions Merchants Association (PAMA), which value the field's total profit in the amount of 3 billion US dollars. In the UK , the largest provider was Swoopo with up to 324,000 monthly hits (in August 2009). In 2013, the brand was still used as a redirect to DealDash in the USA, while the German parent company filed for bankruptcy on March 25, 2011.

Quibids.com, the largest provider on the US market with 1.5 million monthly hits in 2011, offered 10,000 auctions per day and has also been active in Germany since August 2012.

In Germany there are or were a number of providers, such as:

  • justcents.de
  • auktis.com
  • centgebote.de
  • de.swoggi.com
  • quibids.com (since 2014 only for users from the USA)
  • snipster.de
  • mysnapshot.de
  • de.madbid.com

The former pioneer swoopo.de disappeared from the market in 2011 and bidfun.de has not had any offers online since August 2013.

criticism

Penny auction sites use individual aspects of game theory to bind participants to the respective auction. So with every bid placed, the perceived investment increases and at the same time the willingness to make further bids in order not to lose the invested capital. This can be counteracted by offering automatic bidding agents who submit a predetermined number of bids for the customers in a predetermined interval. Sources see the principle as a hidden game of chance or lottery rather than an auction. On the other hand, those responsible and operators emphasize that timing, strategy and skill are necessary in order to win a penny auction. However, it must again be taken into account that only the items available for selection can be bought, and the selection is often very limited.

Another point of criticism is suspected to be the use of bots ("bidding" by a computer program that works automatically without any further action from an employee and takes part in the auction) to drive up the auction price and to encourage participants to make additional bids or not having to deliver the auctioned product through a bot bid and being able to auction it again.

Consumer organizations such as Stiftung Warentest and K-Tipp warn against cent auctions such as Bidfun.

One of the deceptions is the mentioned extension in the night after 11 p.m., but the foreign sites in Brazil and the USA - if they are available overseas at swoggi - offer the same articles, so there is no night's sleep. Another point of mistrust is the postponement of the offer to new pages; swoggi speaks of experience with "auktionclick.de" without knowing anything about the whereabouts of the former site. Changing providers doesn't really help in terms of trustworthiness.

Individual evidence

  1. ↑ a b c d Bidding boom on the penny auction sites ( Memento June 29, 2011 in the Internet Archive ) Article by Laura Whateley, TimesOnline
  2. ↑ American agriculture: a brief history by R. Douglas Hurt, accessed on August 26, 2011 ( online in the Google book search)
  3. ↑ SoftAU GmbH: What is it, an experience auction ? We are now bringing light into the darkness. . Retrieved May 26, 2011.
  4. ↑ sentenced operators of online auctions , ktipp.ch
  5. ↑ Countdown auction is a game of chance
  6. ↑ Example of an offer - after its end with evaluation
  7. ↑ Example of a happy buyer - after his end with evaluation
  8. ↑ Example of a purchase 40 percent above the list price
  9. ↑ AGB auktis.com ( Memento of the original from October 7, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , Point 8 purchase option. @1@ 2Template: Webachiv / IABot / de.auktis.com
  10. ↑ a b c [1] Article by Mark Gimein, July 12, 2009, Washington Post , accessed August 29, 2011
  11. ↑ http://www.gruenderszene.de/news/swoopo-insolvenz
  12. ↑ [2] Traffic directory of all penny auction sites with offers in the US, accessed on August 29, 2011
  13. ^ [3] Article by Ann Zimmermann in The Wall Street Journal Digital Network , accessed August 29, 2011
  14. ↑ QuiBids enters the German and French markets
  15. ↑ Terms & Conditions. In: quibids.com. QuiBids, accessed January 2, 2017 .
  16. ↑ Joel Kaczmarek: Swoopo goes into bankruptcy - The Penny Auctions provider gives up after some back and forth , www.gruenderszene.de, March 25, 2011, accessed online on June 27, 2012
  17. ↑ http://techcrunch.com/2011/03/27/goodnight-swoopo-the-pay-per-bid-auction-site-is-dead/
  18. ^ A b Philipp N. Herrmann, Dennis O. Kundisch, Mohammad S. Rahman: Beating Irrationality: Does Delegating to IT Alleviate the Sunk Cost Effect? In: Management Science . tape 61 , no. 4 , September 30, 2014, ISSN  0025-1909 , p. 831–850 , doi : 10.1287 / mnsc.2014.1955 ( informs.org [accessed January 2, 2020]).
  19. ↑ a b Archived copy ( memento of the original from August 20, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Federal Trade Commission quote on Commercial Appeal, accessed August 30, 2011 @1@ 2Template: Webachiv / IABot / www.commercialappeal.com
  20. ^ [4] Washington State Office Press Release, accessed August 30, 2011
  21. ↑ Cent auctions: Too good to be true , test.de
  22. ↑ No fun with Bidfun , ktipp.ch
  23. ↑ Always new offer pages from the same company
  24. ^ ORF report on one of the disappeared sites