Monday, April 9, 2012

Quibids Can Lose Money Too: Quibids Losses

Penny auction bidders usually think that the sites make a killing with all their bids. Although that is true in many cases, it isn't in others. There is a huge risk involved from the website by hosting penny auctions. After all, theoretically, they can lose almost all the money they paid for the product, although it is rare.

It is not just the new penny auctions that lose money on auctions. Even established penny auctions like Quibids can sometimes lose money on certain auctions. This is becoming increasingly the case as people seem to be saturated bidding on penny auctions and the industry as a whole has slowed down. This means, more and more individual auctions on Quibids might actually lose money for the company. On the whole, averaged out, Quibids probably still makes a killing, but it is interesting to note how the site can lose money too.

The big-ticket items that retail for excess of $2000 or so are the ones that are usually risky for a site like Quibids, although they can also be highly lucrative. Remember how they sold a car and make a cool 30 grand profit? Most of the times, in featured auctions of the week, Quibids prefers Apple products. However, of late, Quibids has been more adventurous and this is good for the bidders. By providing niche products, there will not be as many people interested in the product and there will be reduced competition. Of course any reduced competition is bad for Quibids.

Here is a recent auction.
This product is valued at $2076 by Quibids. Let us say this is actually the case and consider this for our example. Now, looking at the final price, we know that 1339 bids were placed in all. This means the total revenue for Quibids for this auction was 1339 X $0.60 = $803.40. The total loss therefore was $1272.60. This could actually be an underestimate of the loss because a lot of the bids could be virtual. However, overall, it seems that Quibids makes more money on virtual bid vouchers than real bids, so I wouldn't consider that too much.

This example is just to show that there are auctions where Quibids loses too. It is a risky game, after all. For all the new penny auctions out there - remember that the going can be tough at times. If the industry leader Quibids has trouble finding enough bidders, chances are, you might too. Be prepared for losses irrespective of how large your bidding base is. 

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