Sunday, April 10, 2011

7thBid Review

This is my 7thBid Review.

7thBid is a new penny auction site that has several features that older penny auctions like Quibids lack. I wouldn't say all of them are good for the bidders, but they are certainly worth checking out.

So you know the background stuff - 7thBid is a penny auction with most auctions incrementing in price by 1 cent. The timer is incremented each time a bid is placed by 15 seconds, which is usual and convenient, as opposed to a few new penny auctions that increment it by 30 seconds. The 7thBid review below assumes you already know how penny auctions like Quibids work.

The Lucky 7: Free Bids
As the name suggests, 7thBid likes to do things different at 7. The first offer you get is that every 7th bid placed on the site is free! This effectively reduces the cost of a bid by 1/7 or about 14%. If you are bidding more, you might as well take the bid pack and reduce its value by 14% to know your true price of bids.

The second promotion that 7thBid runs is that 7thBid gives every 7th Bid Pack sold on the site for free! Of course you would never really know if you were this lucky 7th bidder beforehand. However, it is a nice addition if you like the excitement of penny auctions to combine with an unexpected freebie! One way to look at it would be to motivate some of the bidders to be more active by giving them free bids. It is also a nice addition to the excitement that is already present in a penny auction model.

Beginners are Welcome: Tackling Power Bidders
I'd have to give a thumbs up in this aspect of my 7thBid review because it understands the problem of power bidders and tries to tackle it. If you are not aware, this is a serious problem especially on new penny auctions.

For those who do not know, power bidders are those that invest a lot of money in the bids and keep bidding on auctions till they win. This means that ordinary folk seldom have a chance to win auctions in which power bidders are participating. This naturally discourages people and they drop off the site, which really stunts the growth of a new penny auctions.

So how does 7thBid tackle this issue? It defines anyone with less than 7 wins as a beginner (yea, the lucky 7 again!) and ensures that 33% of the auctions are beginner auctions. This is a good way to tackle power bidders without penalizing genuinely good bidders (Defined as those who read my series on penny auction strategies ;) ).

I would have also liked to see something special for the very new bidders - auctions that only those with 0 wins can participate in. This is simply to motivate the newbies and make them feel welcome! Sites like Quibids do this and I think it works well.

Win Limits

At 7thBid, win limits are really generous. Quibids, with thousands of auctions every day, limits users to 12 wins per month. 7thBid limits it to 18 per month. In addition, there is a limit of 2 wins/day and 8 wins/week. Then you have only 1 item over $200 per month and a total limit of $500 per month. All this does make it a little more complex than it should ideally be. And not to mention the problems when a single item is over $500 in cost.

I think Quibids win limits are very good: 12/month and 3/day. This is simple, neat and effective.

Premium Auctions
Some auctions are dubbed premium when the cost of the item is high. In these cases, the increment is doubled or tripled, which means one bid placed will increase the price by 2 or 3 cents.

Frankly, I do not think that high-cost items should go for a higher cost increment. In a penny auction, the final price isn't the one that determines the profit of the company but the bids placed. In fact, the very reason the price is incremented by 1 cent in usual penny auctions is that it gives the illusion of a low cost and encourages more bids. By making it a 2cent increment auction, the auctioneer, the penny auction site, doesn't end up making more money because many potential bidders would never have placed their bids had the price increment been 1 cent.

I think Quibids is a fine example in case. For old Quibids users, they would remember that there were many auctions that were incremented by 2 cents, 5 cents and even 10 cents. I remember bidding on 10 cent auctions a long time ago at Quibids. These are exceedingly rare now, which is not hard to imagine why - 1 cent auctions usually attract more number of bids. I would guess that Quibids, owing to its huge size, just experimented with these different increments and then stuck with 1 cent increments because it gave them maximum profit.

Bottom line is that for bidders, a 2/3 cent increment auction doesn't really make matters worse.

Limiting Loss ... to the House
7thBid is sensible in that it limits the loss it can incur on high value items. I don't think this will last for a long time - as the site grows, this would probably not be needed. However, as a blogger who keeps tabs on the industry, I know that many new penny auctions just fold because they take huge losses in the initial days they are not prepared for.

So the way 7thBid ensures limited risk is by setting a minimum auction reserve price on special Reserve Auctions. This is set at a maximum of 5% of the retail price, which is still high in terms of giving the house a profit. This is a rare occurrence as of now on the site and bidders bidding on smaller items and gift cards should never really be worried.

If this reserve is not met, then all the bids placed are refunded (only fair) to the bidders and the winner of the auction gets 7 extra bids (yea, the 7 again!)

However, I would really like to see this practice being limited. It is not at all pretty if someone wins an auction only to realize that the reserve was not met. Part of the appeal of penny auctions is the high of winning, and if the site takes this away, it is quite disappointing. I wouldn't be surprised if the winner is really unhappy with just the 7 free bids - after all winning a penny auction needs taking a lot of risk that is not compensated by free bids. That being said, I am not totally against the concept of reserve price, which is better than the penny auction disappearing overnight in any case.

Free Bidding Auctions
Free bidding auctions are becoming popular with new penny auctions and many old ones are also beginning to offer this. Quibids, by the way, doesn't have it. So the way this works is that bidding is free - just like eBay! You don't spend bids on these auctions. However, you still pay the final auction price. This isn't too bad but the final price is closer to retail, so don't expect a 90% discount in these auctions.

In conclusion, I hope this 7thBid review will help you make the choice of whether you want to join or not. I would say that it is easy to contact the people behind 7thBid, which is a certain plus.

Check out 7thBid

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