At least with ebay you're not spending money until you actually buy the thing you want to buy. Therefore it's a known cost to you and your making bidding decisions based on what you know. Quibids is a little more slight of hand than that.
First of all there is no point in going into business unless you are intending to make some money, pay some employees, and maybe a little social and community wellness. So I know they have this motive before I even start. If course I have no idea what the rules are... just that they are getting some traction on the local news all over the US.
Here is my issue:
- for example: TV retails for $1000
- for example: Quibids buys it in bulk for $250 per TV
- In order to bid you need to buy bids... at $60 per 100 or 0.60 per bid
- Every time you big (a) the bid amount goes up $0.01 and the house gets $0.60
- And if someone bids with less than 10 seconds left the clock resets to 10 seconds
Here's where everything get's a little sticky... look at this picture:
This Apple iPad (sold as new) has a standing bit of $9.67. At $0.60 a click the house has already received more money in the form of click-pays than if they paid retail. For example this iPad sells for $499 retail.
This type of auction benefits one entity. The house. The house depends on the losers in order to meet it's margins.
And here's where things get very squirrely. Many years ago I had an acquaintance who would buy pallets of electronics at auction. Many times he would not actually what was on the pallet but there was some sort of estimated value. If he won he would take his goods home. At that point he would break open the pallet and start selling things off. (back in the days before ebay). The source of these pallet could have been government seizures, foreclosures, bankruptcy etc... Even with some of the useless crap he made money because he paid pennies on the dollar.
So now consider if this iPad, which retails for $499, was purchased in bulk or at auction for $250 (worst case) ... then the house has already made $500. However, as I get to this part of the post the current bid is above $12.40. The house has more than doubled it's money and they have not even shipped the device yet.
I do not know if there is any regulation here... but as far as I know this could be a slot machine. Since the house owns the "bid bank" the house could bid-up until the reserve-like value is reached. Furthermore even their own website call their platform "auction games".
WARNING any news organization that does a puff piece on this type of auction is doing more harm then good. As a matter of community service people should be steered away from this sort of thing.
UPDATE - the iPad is now up to $14.49.... and the clock was down to 00:02... and then there was a flurry of bids and back to 00:10.
** look at that... "100 voucher bid". That's supposed to cost $60. With the bidding at $1.69 the house has already doubled it's money.
... and the iPad is at $15.0. I cannot watch this any more.