Friday, April 6, 2012

True Auction Style Penny Auction

A new Penny Auction, nebids is in pre-launch. This penny auction aims to be a true auction style penny auction in that it has not just buyers (bidders) but also sellers. This means it is going to really be an eBay styled penny auction where sellers will set up their products to be bid on penny auction style and buyers will bid on the products they want, penny auction style.

This concept isn't entirely new. Several large penny auctions had tried it in the past (not Quibids though as far as I know) including BidRivals. However, the program didn't get a very good response for a variety of reasons (e.g. read the SuperBidRivals review from an actual user of the program when it was active). There are plenty of details that need to be sorted out for such an ambitious program to work. I am sure the founders are thinking about those though.

There are several challenges that will need to be addressed. For instance, you want a good mix of buyers and sellers on your site for the model to work. Also, it is important for a critical mass of bidders to form for the idea to be profitable, more than regular penny auctions will need. Until then, the site will need heavy promotions and hope to attract both bidders and sellers.

The site is being started by Larry, Scott and Marcus from Florida. All of them have previous entrepreneurial experience but not in penny auctions. I hope they understand the challenges of the industry and are ready. The regular features hold, e.g. providing a robust feedback system so that sellers will have an incentive to be honest instead of cheating (again, need a critical mass). nebids also has dispute resolution in place, as it should, especially when it is starting out. After all, it isn't eBay!

A good point that Larry raised was that since this is going to be different in being a marketplace of both buyers and sellers, the problem of shill bidding is eliminated. This should provide a good level of trust and honesty that new penny auctions find hard to attract.

The launch is still far away, about a couple of months ago for beta. It would be interesting if the trio can pull this off and be successful in the saturated and competitive world of penny auctions. They have a nebids blog that you can check out for updates.

There are also some giveaways for interested bidders. During the giveaway they have 2 grand prizes, 1 new iPad and 1 $500 Amazon gift card. They will also be holding dummy auctions where people can win $5 and $10 gift cards as well as equivalent value bids. There's multiple ways to gain entry into the contest, by entering their email address on the landing page, by liking our facebook page, etc.

It will be an interesting endeavor to follow. With their previous entrepreneurial experience, hopefully, they can build something great.