Patience - Strategy to win on Penny auction

Penny auction sites are more than just gambling. Winning is very likely in Penny Auctions with the right choice of site and strategy. Penny auction sites generally put up items for auction for zero pound/dollar and every time a bidder bids the price goes up by one penny. So you end up getting things which are above $500 also for few dollars!! A Penny Auction is where an auction item's bid price goes up by one penny each time someone bids. So for example, if a big screen T.V. is up for auction, it starts at $0.00. The first person to bid makes the bid price $0.01. The next person to bid can only raise the price by one cent so it goes up to $0.02, and so on...

So how does this work? How can we really buy items for pennies? Well, if you are aware of Penny auction sites you need to own a bid first to place a bid! That's right...you buy bids and then place bids on the item of your choice. Like any auction penny auctions are also time-bound. But the duration for Penny auction is in minutes unlike the normal auctions. It would generally be five minutes or so. Once a bid is placed the countdown begins and the clock is reset for every new bid. That way the newcomer has a chance to bid. But if none bids then the bid is won at a good deal!!

So now, here comes the strategy. In penny auction if you would like to win instead of placing a bid, waiting is the best strategy is Patience!! Yes, you need to first monitor the items you like. After sometime you will be able to judge the dynamic on the sites. For e.g.: if the site is having less interest on your favourite item then you should bid. Then you have a high chance of winning a great deal. On the contrary if you see more activity then it maybe difficult to win unless you want to end up spending more money.

Strategies to win on Penny Auction

Self help

Penny auction is a new concept which has intrigued me for a while now, I have followed this concept quite closely and I want to be one of the thought leader in this business.

This was my first post I want to think of Penny Auctions akin Stock Trading -

Penny auction is in many ways similar to say trading on stocks:

- You need to take the risks to earn the return - Users who buy more bids have the staying power. They wear out the competitors and win the product. You have to be very lucky to win a product with your first 5-10 bids.

- It pays to adopt a different strategy - You can fairly guess at what points during the day the traffic on the website will be high or which products are more likely to attract more bidders. Not following crowd always helps.

- You should know when to hold and when to fold - Cutting your losses is the key to trading on stocks. Same applies here, if you see that you are being carried away by a strong bidder, you can't let your emotions get in the way. You have to be aware of your exit points. You obviously don't want to spend 100 pounds on bids to secure an ipod worth the same price!

In the next post I will be talking about various Penny auction websites in the UK.

ONLINE AUCTIONS FEED WORLD CUP FEVER

As the countdown to South Africa enters the final 6 months, online auction fans are getting football fever.

David Beckham was hobnobbing with football's fat cats in Cape Town this week to promote England's bid to host the 2018 World Cup. At a media event, a group of children were left wondering why they were being asked to play keepy-ups with a hillbilly, only to realise that it was in fact their beloved Becks, sporting a Brokeback Mountain shirt and his latest in a long line of absurd haircuts. Let's hope he tidied himself up before he met Sepp Blater, the Fifa president.

But while Becks was dressing up as an extra from Grant Theft Auto: The Milan Years, the main order of business was the draw for next summer's tournament. This is when serious football fans really start getting excited about the prospect of a solid month of football. The colour, the passion, the atmosphere, all the best players in the world in the one tournament money can't buy. Add to that a stubborn refusal to acknowledge that World Cups are always a massive disappointment and will never, ever be as good as the one you watched when you were 11 and you have everything you need.

Well, almost everything. How about a Samsung 42" plasma TV to bring the big match atmosphere right into your living room? Or Fifa 10 on the PS3 to show them how it's done afterwards? If you sign up to an online auction website like MadBid now you could win yourself a World Cup cornucopia of goodies (look it up, it means lots) before the big kick-off.

MadBid also auctions off piles of cash, which will help pay for a few afternoons in the pub watching the action and a few evenings in the pub debating endlessly where it all went wrong. Auctions have also been running for a DVD box set containing the complete collection of Lost, which will provide a bit of respite when you're all footballed out. Or how about a brand new car? That's got to beat most pick-me-ups for when the tournament comes to a close.

ONLINE AUCTION SITES ARE LIKE DIGITAL SANTAS

How online auction sites like Madbid.com could make your Christmas dreams come true

It is very nearly that time of year again when we all forget how much we earn and how much we already owe. The recession is for wimps. Downturn, upturn or about turn, when it comes to Christmas we'll be spending money like drunken sailors. Lavish gifts for relatives we won't see again for a year, new outfits for each one of the many parties we'll be attending and food fit for a medieval court – Christmas is no time to be frugal.

Of course, there will be some who decide to boycott the festive gluttony, drunkenness and inappropriate dancing. Plenty of people don't celebrate Christmas on religious grounds, while others will be busy working while the rest of us are arguing about the best way to cook the turkey. You also get the odd killjoy who thinks Christmas is too commercial these days – an opinion arrived at shortly after deciding they're too tight to buy presents.

But this year a fair few of us are likely to fall somewhere between the modern-day Mr Scrooge and the office moron who's been wearing a tie made from tinsel since late November. We want to be merry, we want to celebrate, we want to take a break from our worldly woes, but we're also looking for opportunities to save a bit of cash.

One potential means of cutting the cloth this Christmas is to hit the online auction circuit. Sites like Madbid.com give you a chance to get your hands on the kind of Christmas presents that get you a "wow, that's worth much more than I spent on you, just wait until your birthday" instead of a "I hope this smile looks genuine, let's see if mum still thinks he's marriage material after this debacle". What's more, you can pick up these festive nuggets of gold for a fraction of their retail value.

A flatscreen television and home cinema system is just what you need to do justice to Zulu or Escape to Victory. Not a fan of the Queen's speech? Well, you're a traitor and you should be ashamed of yourself, but once her Majesty has said her piece how about 4-player Mario Kart on your new Nintendo Wii? You can even win a pile of cash to blow on whatever manner of festive tat takes your fancy or Tesco vouchers to take the edge of that eye-watering big Christmas shop.

Now, online auctions are not a license to print money. You must be sharp of wit and steely-eyed, with patience, focus, determination and expert timing to boot. But if you have what it takes to succeed on sites like Madbid.com you could have a very merry Christmas and an overdraft free New Year.

ONLINE AUCTIONS – A CURE FOR CHRISTMAS STRESS

Christmas can be a stressful time but online auctions can take the fuss out of the festivities.

Christmas is just a few days away and with snow on the ground and a nice little four-day break coming up, many of us will be full of festive cheer. But Christmas can also be a stressful time of year – and not just for SC and his over-worked midgets. Trekking across the country for family gatherings, elbowing your way through the crowds to buy the last of your gifts, deciding which celebrity chef really knows how to cook the turkey – it's enough to knock the stuffing out of you.

But of course, online auctions have the answer. You can land all manner of festive goodies for a tiny fraction of their retail value. From home entertainment systems to piles of cash, online auctions provide the ideal light relief to the Christmas headache. Here's our top five online auction Yule tide treats:

Tom Tom Go Live 950
Sat-navs are must-haves when it comes to visiting relatives for the big family Christmas. Nobody wants to get lost, especially when it's snowing and there's a massive feast and loads of presents waiting for you at the other end. Win yourself one of these bad boys on an online auction site like MadBid and you need not worry about swallowing your pride and for asking directions or arguing with your co-driver over how to read a map ever again.

iPhone 3Gs 32GB
Christmas stress? There's an app for that. Well, probably. You can find out for yourself if you pick up the best phone on the market for a fraction of its not-so-insignificant price tag. After spending all that money on presents for other people you deserve a treat. Don't leave it to Santa – reindeer sweaters can't find your nearest Indian restaurant or tell you if your shelves are level.

Nintendo Wii Bundle
After two weeks of eating for England, many of us will be looking down at a spare tyre come the start of January. Online auctions can help with that too. Online auction sites like MadBid regularly auction off Nintendo Wiis – the ultimate fitness gadget. Unlike other games consoles, you can't play Nintendo Wii sitting in a bean bag surrounded by food wrappers and empty cans of Red Bull. You've got to get out of your PJs and get moving. By the time you've smashed home a few winning forehands and beaten some cartoon bad guys to death with your bare hands it'll be like all that turkey and cake never happened.

Ultimate photography kit
Digital cameras are the perfect way to remember great Christmases - or at least provide a few laughs if Uncle Ted has too much eggnog. Don't be one of those tiresome cretins who know the pixel quality of their camera phones – do it like the professionals, with an actual camera. If you bid well, you could get one for literally pennies on an online auction site like MadBid.

Panasonic Microwave Oven
Once the big day is over, you'll be left with all manner of food and just a few days to get it eaten before you have to go back to work. From cold turkey to Christmas cake there'll be more grub than fridge space. A brand new microwave oven for a fraction of its retail value is just what you need to take the edge of a stale mince pie or warm up some leftover veg.

HOW TO BEAT ONLINE AUCTIONS – THE DANGERS OF BINGE BIDDING

Online auctions like MadBid.com and Swoopo.com require nerves of steel and a clear head. So be smart, don’t mix bidding and boozing.

There was a time when coming home late from the pub meant a slice of cheese on toast and the last 20 minutes of a black and white horror film. A weekly ritual that had us waking up on the sofa at 4am with ITV’s nightscreen, half a cup of cold tea and a crick in the neck for company.

Nowadays, post pub entertainment is significantly more sophisticated. We can terrorise the neighbours with a quick blast of Guitar Hero or get online and test our Pro Evo skills against a kid in China. Digital TV means no more nightscreen. Even in the wee hours there will be something still showing – and not just a 40-year-old offering starring Christopher Lee.

And of course, there’s the internet. Information, entertainment and stimulation the likes of which our parents could only dream of. There’s something on the worldwide web to cater for every taste. No matter how eclectic you think you are, there is probably already a Facebook group for your chosen passion.

But beware. The internet can be an expensive place when whiskey and beer – not to mention shooters of brightly-coloured goo – are clouding your judgment. Take online auctions for example. To pick up a brand new iPhone, a home entertainment system, a bundle of cash or even a car for a fraction of the ticket price, you need to have your wits about you.

If you were fighting in the trenches, you would have got a shot of rum to calm your nerves before charging a line of machine gun positions armed with a rifle and a big coat. And if you hit the rum before a late night online auction session you too could become cannon fodder – albeit metaphorically rather than literally.

Boozed-up post-pub amateurs are like the lame wildebeests of the online auction world. They thrash about in a haze of liquor-induced bravado, blowing their precious bids and missing out on the biggest savings.

Our lions – the practised, experienced bidders - are biding their time. Calm, collected – and sober – they pick off their drunken rivals, landing the top prizes and laughing all the way to the front page of the MadBid website. Our wildebeests wake up – prizeless and penniless - wishing they had passed out on the sofa.

HOW TO WIN ONLINE AUCTIONS – BID MORE, TALK LESS

Recently, I surfed various online auction forums on the lookout for some top tips from successful players. I was hoping for an insight into what makes the best bidders tick. What are their secrets? What I can learn to improve my chances of winning online auctions and taking home an iPhone or a home cinema system for a fraction of its value?

What I found instead was that online auction regulars prefer a spot of verbal jousting to talking tactics. Players boasted about the number of bids they had stored up and how they were ready to crush the opposition and land the most sought-after items.

"You were doomed from the start," one confident MadBid winner gloated to his unsuccessful peers.

Like Aussie fielders sledging a lone English batsman, the online auction community likes a bit of banter, as players try to fray the nerves of opposing bidders. For some online auction fans, this is no doubt part of the fun.

But others prefer to keep their eyes on the prize. These online auction punters are of the ilk that believes ignoring the digs and focussing on improving your own game hold the key to success. These cooler customers choose to devote their full attention to what really matters - live online auctions – rather than the background noise.

Instead of slamming their opponents with their chat room wit, I recommend online auction fans let their bids do the talking. Building a reputation as a high roller – a player who sticks with the bidding as the price continues to rise – can often be enough to influence the outcome of a popular auction.

Online auction success is about timing and nerve. Some of the most successful players at MadBid, for example, put the huge savings they’ve made on everything from cash to cars down to picking the right moment to bid. To claim the most hotly-contested online auctions, they also need to be bold, and hold their nerve as the price tag goes up. Each bid on a MadBid auction may only increase the selling price by a penny, but it will keep going until a winner emerges.

If you think you’ve got what it takes, leave the banter to the amateurs and get bidding!!

On a separate note I think online auction sites like Swoopo, MadBid and BidandClick should allow its users to interact in a community. Customer churn rate reduces when customers interact at a social level and they are more loyal towards sites. Only MadBid has commentary from customers but most of the information I found was from forums.

PENNY TRADES AND ONLINE AUCTIONS: IT’S ALL ABOUT TACTICS

Timothy Sykes Timothy Sykes is someone I have been watching for a little while now.

Timothy trades stocks, but not any that you've heard of. He trades Penny Stocks to the tune of triple-digit returns.

Penny Stocks have traditionally been considered a risky investment because their low, low price means they’re prone to sharp swings in value. That’s “risky” before credit default swaps, collatorised debt obligations and mortgage backed securities gave new meaning to the word. While the world’s bankers have been licking their wounds, Timothy has been using Penny Stocks, his razor sharp wits and his Bar Mitzvah money to make himself a millionaire.

The concentration, attention to detail and guile required to make money from Penny Stocks should not be underestimated. Prices move fast and if you don’t know what you’re doing you can lose your stake quicker than you can say “taxpayer-funded stimulus package”. Timothy, though, does know what he’s doing - having turned $12,000 into a whopping $2,000,000 before he’d even graduated from university.

This kind of savvy reminds us of successful online auction punters like those over at MadBid who were so good the site’s boss had to introduce limits on the amount of times users could win: they were too good for the market.

Fortunately for Timothy, there are no limits to what he can make, and since November 2007 he is up 475 per cent. We’re yet to find our first online auction millionaire, but some of the more skilful players have picked up must-have gadgets, cars and cash for a fraction of their retail value.

Briefly, Timothy ran his own hedge fund, and from that experience he wrote a tell-all book – An American Hedge Fund - about the world of fast-paced trading. In it he has a cutting message for the financial establishment: "I would like to thank the thousands of inept corporate management teams … pump-and-dumpers, market manipulators...for your endless scheming and undying greed, without which my fortune would never have been possible."

So, what can online auction fans learn from Timothy, the Penny Stocks Millionaire? I think it’s to keep your eyes on the prize and to perfect your tactics. Who knows, perhaps you’ll be the next online auction aficionado to get a call from MadBid’s boss wanting to know your secret - it's happened before.

Times - Got it wrong - Again!!

A quick note on how 'The Times Newspaper' has made a habit of getting it wrong. It didn't expose the MP's fraud that has marred the UK politics recently and it has always got it wrong about Penny auction concept.

A times article - Save Thousands on Auction Sites talks about new breed of sites where one can save up to 90%. It sent hundreds and thousands of unsuspecting customers to a game strategy site www.MadBid.com. I am sure many customers loved the concept (ones who were quick learners) but many were disappointed.
MadBid even though got a great coverage couldn't have benefited much because of high customer attrition rate, as most people who went to the website failed to win a bargain.

After BBC coverage on Penny Auction sites I thought 'The Times' would keep away from writing about Penny Auction concept and will leave this to bloggers and smart press. But NO ... like Brittney 'they did it again'. They wrote another article Ten Best Auction Websites and I quote an excerpt "MadBid may be better known, but at just 50p per bid Swoopo is more than twice as cheap." They got it wrong again!!

Funny enough Swoopo has at least 10 times* more customers than MadBid, mainly through Swoopo's mega online PR reach. MadBid is David in the David and Goliath battle for supremacy in the Penny auction arena. It’s not MadBid but Swoopo that is better known.

As for 50p one of my very learned German lawyer friends informed me the Swoopo is forced to keep the price at 50p because they are a German company and by law in Germany you cannot have a bid priced more than 50p in games which involve bidding or participation.

Also because of the liquidity on Swoopo it is very difficult to win on Swoopo. With millions of customers and thousands of them bidding at any one time on the 8-10 auctions running on Swoopo at anytime it’s very difficult to win. So I would say the 50p which seems so cheap in real terms is very costly when compared to the ease with which one can win auction on MadBid.

Note - Since I have no access to Swoopo and MadBid data I used Alexa ranking for MadBid.com and compared it with Alexa ranking for Swoopo.com, Swoopo.de, Swoopo.co.uk etc.

The players

Penny auction or its hybrid models have been there for a while but credit crunch has made them an interesting proposition. So far I have seen these models in Germany, UK, Finland, Sweden, US, Korea, Israel, Spain and Austria but I am sure we will see many more of these cropping around all over the world.

Two things that are happening – few legit models and few get rich quick models. In this blog I will not mention any models which I believe are not legitimate.

I don't consider now or in future any site doing ghost bidding, reserve price, running sites across many countries but hiding from their customer the fact or any site that is not transparent.

The Incumbent – www.Swoopo.de also previously known as Telebid took this idea and brought it to the customers in Germany. It was founded in Germany in 2005, Swoopo launched their UK website in December 2007, followed by Spain in May 2008 and the US and Austria in September 2008.

Interesting point about Swoopo is that it runs across the globe same products and hence it’s quite difficult to win products on this platform unless one has a very good strategy and lots of patience. Though Swoopo provides a large variety of products it limits itself to most electronics consumer goods and a portfolio of products which heavily caters to the needs of online gamers.

The Follower – www.MadBid.com started this site in the UK serving only the UK citizens. They copied Swoopo but have tried to differentiate by offering a wide variety of products and high value of products. They are quite small when compared to Swoopo and they only cater to the British people hence its easier to win. It is still to be seen if they grow big enough and how they will be able to manage the growth.

What I like about this site is that they are very transparent and open. I haven’t seen any other site with customer service phone number. Also they are trying to innovate all the time, be it website or products. I love the Ducati that will be under hammer in April.

The Imposter - www.fiksuhuuto.com – It’s a Finnish site and claims to be number one but I think it is not by far (refer Alexa ranking). It has very few visitors. Though it runs auctions in a few countries they don’t seem to be transparent. They do not reveal themselves to the Customers. But its Finland’s biggest and is run on a model also copied from Swoopo.

I am sure there will be many sites to follow as this space is quite big, but there will have to manage between too few customers and too many and how avoid the temptation of self bidding.

Step back – What is Penny/cent Auction?

Let us take a step back … in my eagerness to discuss the strategies on winning in a Penny Auctions I ignored the most important question, what is a Penny Auction?

Penny auction is not a ‘reverse auction’!! And if it is not that then what is it? Is it an auction?

Let me start with talking about different auction styles and highlight the difference before we dig more about Penny auction.

Reverse auction vs. Traditional auction

In traditional auctions you have one seller and many buyers. Buyers compete against each other and raise the bid price and hence generate high value for the seller.

Reverse auction you have one buyer and many sellers. Buyer quotes the maximum price he is ready to pay and then sellers compete against each other bringing down the price of product and hence generate value for buyer. Example priceline.com

Penny auction is a concept which is an evolution of traditional auction. Here both seller and buyers take risk and compete. Seller start the sale of process at a price mostly zero. So in the start the risk is for seller to sell the product at a loss. Buyers take risk by subsidising the cost of product they may not win in the end.

Every time a buyer places a bid on the product, the price of the product goes up by 1 unit (penny or cent) and for that they pay certain price to the seller. Each bid has a cost akin to an admission fee to participate in the auction.

Once the proceeds from the bid costs goes beyond the cost price of the product seller starts making profit. At this point sellers still can make large bargains as they still can win the product by placing a bid in the end.

Example:

Product – Laptop computer

RRP – £1000

Each bid costs £1

Auction starts at 0 pounds

Retailer profit depends on following equation =>

Participation bids*Participation bid + auction price of product = Cost of product

If X is number of bids then we can write the above equation as

• x*£1+x/100=1000

• 101x=1000*100

• x=990 bids

Seller will need 990 bids to make money

Buyer on the other hand has to buy the product below £1000 to make it worth while buying in a penny auction

X*£1+X/100<1000

Buyer and seller have same equation but with only difference being buyer has to bid less than 990 times.

Considering that their will be multiple buyers the buy side risk is shared by multiple users and buyers end up with.

But if it is so simple then why is called "eBay's (more) evil twin"?

Too make this model work there should be enough buyers and they should be drawn into competition to bid on the product. To make it interesting any company offering this auction has to create an auction cycle which is short enough and creates a sense of urgency.

This model cannot work with slow cycles as auctions will go for very long time and it becomes boring and time waste for participants. The urgency draws in people who may end-up spending a lot and hence its name the “Evil twin”

In my opinion it is another form of auction which uses a form of economic model where buyer and seller both share risk and can reap rewards if participate in a responsible and planned manner. Every market where one is looking for high returns will face risk, be it penny auction, stock market or even bond markets.

I have no intention of equating stock market to negligent size penny auction market, but believe me this market will be flooded with companies with similar or variants of this concept. And we will see few IPO's in this sector too.