Perhaps you have seen banner ADs from QuiBids showing the absolutely amazing deals like those found in the advertisement to the right.
Wow! 67% to 90% off Apple products. If it sounds too good to be true, it probably is.
I decided to dive into this "Penny Auction" service to learn more about how it works. My summation of the whole experience is that it is a frenzy driven LottoAuction with a gambling twist. In addition there appears to be clear deception in QuiBids advertising and representation of product value as well.
Lets look at a real auction that I watched over the weekend to see what we can learn. Click on the Apple iPads 16GB Wi-Fi auction below to see the full view of this screen capture.
There are several note worthy items to glean from this screen capture and what the data implies.
The advertised value of the 16GB Wi-Fi iPad listed in this auction is $699. However,
Apple lists the advertised price as of the 16GB Wi-Fi iPad for just $499. This is blatant fraud or misrepresentation at best.
The caption below the picture of the iPad says that this item was "Recently sold for $0.94". I went back through the history of iPad's sold and the lowest auction close price that I found from the data that was available online was $47.83. $47.83 is quite a bit off from $.94. Again, fraud or just misrepresenting what is "Recent". See spreadsheet below that lists all if the iPad auctions available through QuiBit's search feature.
Note from the spreadsheet as well that the amount that you pay for the auctioned item is the Auction Closing price PLUS your bid amount. For example, the very best deal from this spreadsheet was where the Auction Closed for $48.83. However, the winner had to pay that price, plus the sum of his bids which was $25.80 Add into that the $15.99 shipping and the grand total cost to the winner is $89.62. That is certainly a great deal for an iPad.
If you didn't win the auction, you can use the "Buy it Now" feature which gives you the opportunity to preserve your bid investment by paying the difference between what you bid and the retail price of the iPad. In this case, you would pay something less than $699 which is $200 more than the actual retail value of the product as listed by the manufacture. Also, you have to buy bids up front at a cost of $0.60 per bid to participate in the auctions.
If you bid on the product but elected not to buy the product now, you forfeit all bids invested into the auction. If no one used the "Buy it Now" option for the data that I collected, then the average amount forfeited by bidders per auction for the data that I collected was approximately $5,918.28. That is a pretty good profit margin for selling a $499 iPad.
This begs the question, what is the "break-even" Auction Close amount required to meet the cost of the $699 iPad? The answer is simple. Take the cost of the item and divide it by the bid price divided by 100. This gives a rough break-even Auction Close amount of $699/$0.60/100 =~ $12.
While researching this topic, I saw several suspicions of QuiBit using bots to artificially stimulate the bidding process in order to drive up the bidding. While watching a a few bids, I could neither confirm or deny this. One thing was clear though, there is often a frenzy of bids near the end of the auction.
One last item to be warned about is that none of the iPads that I saw could be returned if there was any issues. It is up to you to verify that the iPad functions properly before the shipper leaves your home.
The key takeaway from this article is that while you may be able to get a good buy through
QuiBids, it is also very possible that you could loose a lot of money in the process of getting that great deal. So, bidder beware.
If you would like to learn more about penny auctions, check out
http://www.pennyauctionwatch.com.
