Penny20 is a new auction site that is already taking huge steps towards increased popularity. It isn't a penny auction site, but it is does fall under the "Entertainment Shopping" category. This means you can expect to get some really good discounts at a far lower loss and risk. Here is how the auction model works:
Penny20 is a Hidden Limit Auction
The first thing to remember in the Penny20 review process is that it is a Hidden Limit Auction. This is neither like a traditional eBay auction nor like a penny auction such as Quibids. The way it works is this: Every item has a fixed price and people start bidding on it. You will not know how much has been bid up to now. If you happen to be the last bidder to reach the predefined fixed price, you are the winner.
There are a couple of features you should know to win:
- If you bid up to 5% of the item's price, you can get a 'Reveal' feature wherein you will know about the bid amounts of all the bidders on the auction. This is priceless information in a Hidden Limit Auction! You can then decide your bidding strategy.
- You can buy all the remaining bids at any point of time and therefore win the product. No one can outbid you in this case. If you have already used the above 'Reveal' feature, you know exactly how much you will end up saving.
Now lets review Penny20 from the point of view of how it differs from traditional auctions like eBay. As mentioned earlier, Penny20 falls in the category of 'Entertainment Auctions'. Thus it is not the plain vanilla type where everyone bids an amount and the highest bidder wins. In a way, a hidden limit auction is a bidding-fee auction model in which every bid needs to be paid for. This is unlike a place like eBay where bidding is free. The upside of course is that since the bids are paid, you can get a significant discount on the item you want to buy.
Penny20 is Not a Penny Auction
Now lets see a Penny20 review compared to penny auctions. Penny20 being a hidden limit auction is quite unlike a penny auction. The most important difference is that penny auctions end by the clock whereas hidden limit auctions end by the total amount collected. Thus there will be no auction where the auctioneer makes a killing, as commonly happens with penny auctions like Quibids (read my post on how much Quibids made on selling a Honda Civic car) At the same time, the auctioneer will also not make a loss.
Penny20 reduces Risk Compared to Penny Auctions
Penny20 falls in the entertainment shopping niche of auctions, but it greatly limits the risk and loss associated with these auctions. The first thing to remember is that the final price is fixed, therefore the auction cannot keep increasing in price (though it can go on for a long time - time doesn't affect the price, unlike in penny auctions). Any loss is therefore limited. In addition, there is a good feature of Reveal that tells you about the money invested by other bidders when you bid 5% of the final price.
A simple winning strategy is therefore this: Bid up to 5% on an ongoing auction. You will know what others have bid. If you are lucky, others have bid a lot in the auction and you can buy up all the remaining bids and emerge the winner. If not, you can wait and hope that no one else buys up all the bids. If at least 15% of the amount is covered through bids and you have invested 5% of this amount, you will emerge at a profit (beware though that the auction end price may be higher than the market price, in which case you will have to go over 15% before you decide to buy up all the remaining bids).
In this scenario, the maximum you can lose is 5% of the auction end price (if someone else buys up all the bids before you and wins) but you can win at any price (if you see that the pot is 70% full, you buy up all the remaining bids and end up paying 30+5=35% of the final price).
Penny20 Might not give you 99% Discounts
This is a tough one to decide: I don't think there is any realistic way in which you might get these huge discounts. This is because in all probability, there will be someone who knows exactly how much has been bid (by investing 5% of the auction end price) and when he sees the bids reaching close to the auction end price, he will buy up all the remaining bids and therefore win. It is highly unlikely that you might "accidentally" bid once and that reaches the auction end price and you win.
That being said, this is certainly possible. I see this scenario as a realistic one if there are some small ticket items and everyone just bids as soon as it is live. The auction may last for a minute or two and perhaps no one really knows the details on how much others bid. It is possible but not likely. This of course is determined by the scale - how many bidders are online and how aggressive they are with their bidding.
This is a scenario that I'll have to revisit after 6 months or 1 year but as of now, I don't see it being very likely.
Penny20 is New and Legit: Doesn't mean Discounts
This is not necessarily good for you as a bidder. If it were a penny auction and you were 100% certain that the site was legit, you can get heavy discounts because there are not enough bidders. On Penny20, it is the other way: since the auction end price is fixed, if there are more bidders, you can hope to get better discounts.
That being said, you can always decide to buy up the remaining bids and get some discount. It makes sense to join the site and get a feel for it in any case.
Penny20 lets you be a Seller
Penny auctions don't allow you to sell products on their website. All products are sold by the site themselves. At Penny20, anyone can sell anything, so in a way it is more like eBay. However, eBay charges a fees from the sellers to list their items. Penny20 doesn't charge anything from the sellers. It is thus a more open marketplace where you can buy and sell.
Penny20 Founders are Trusted
This may not sound like it is important but you would be surprised by the number of scams or number of sites that close shop after a few days/weeks/months. Penny20 founder and CEO is also the founder of Subjex, a publicly traded 11 year old company, so he sure knows his way around business. Personally for me, this is an important aspect.
I hope you found my Penny20 review useful. You can join Penny20 and look forward to a huge and vibrant community of bidders. Andrew Hyder, the founder of Penny20 has a goal of 1 million happy members in a matter of months, so let's see if he can reach that goal! You should read my Interview with Andrew Hyder of Penny20 as well.
Good luck bidding!