“That model is a license to print money.” Here
is what is happening to a similar 'Penny Auction' site in Europe!
One of Europe’s fastest
growing “pay-to-bid” auction sites has secured £4 million in funding.
Launched in 2008, this
company is one of a number of pay-to-bid auction sites which have appeared in the last couple of years around the world!
The company is claiming 1 million users since launch and says customers are attracted by brand products with the possibility
of saving of 80% on the RRP of an item. That drives people to bid of course and so the site makes its money off the customers
who are not successful, not unlike a casino.
In fact some gambling experts have called “penny auctions”
similar to lotteries and called for similar regulation. However The Gambling Commission has not ruled on the matter and insists
that penny auctions are a “game of skill”.
How does it work? The sites auction new items, often for a fraction
of their retail price, and bidders pay up to £1.50 for each bid. Unlike eBay, where you can bid for free, users have
to pay between 40 pence and £1.50 to place a bid. Bids automatically rise by 1p at a time, and some people make repeated
bids. The last person to bid gets the item, for however much it is worth after what can be hours of monitoring.
model is a license to print money.”
This company says it generated over £2.5million in the first year of
operation and it’s sold over £5million worth of products and 80,000 auctions have been won. Turnover is projected
to reach over £20 million by the end of 2012.
Niklas Zennström, best known as a cofounder of Skype, says
Penny Auctions “allows the most skillful to get amazing bargains” and it had gained a lot of traction “in
a short period of time.”
The site has 22 employees and is based in the UK.
We believe that "Bid's that Give" Penny Auctions has
the potential to be the world's No.1 Penny Auctions site benefiting homeless children around the world!