Well, we thought an overly dramatic heading would catch your attention. Did it work?
Over the past year, we’d seen a number of large and small penny auctions come and go. The penny auction industry has been around for a long time and when veteran auction website go out of business, we notice. Here’s a quick rundown of what we know.
Penny Auctions Out Of Business
Beezid
Most recently and most shockingly, Beezid dropped out of the race this year. The chatter online indicates that they did so while owing bidders quite a bit in terms of won auctions. I guess only time will tell as litigation continues. Read more about Beezid:
MadBid
MadBid used to be a fairly well-established penny auction outside of the USA and inside the USA. They quickly closed they doors to US traffic recently but messaging on their website indicates a possible re-opening. Read more about Madbid.
BidCactus
Bidcactus was another penny auction which seemed to leave quite a bit on the table. Less than 2 years ago they decided to shut down and sell their traffic to Beezid (so it seemed). If you were a bidder on BidCacatus and stuck around for the Beezid days, it may have been a rough ride. Learn more about Bidcactus.
Why Do Penny Auctions Go Out Of Business?
Great question. To the layman, the penny auction business seems like a sure thing. After all, the penny auctions are raking it in collecting money for your bids when on a percentage basis, very few people win auctions. So how in the World do they go out of business?
- Scale: Penny auctions can only stay in business if they reach scale. They have the challenge of offering enough auctions to keep bidders interested while also getting enough bidders to bid at the same time. Otherwise, it’s pretty each to loose money, especially on big ticket items.
- Legal Issues: Penny auctions are completely legal games of skill (in the USA). Over the years though, there have been accusations (typically on the smaller, non-established websites) of bot bidding and other illegal activities. For this reason, we’ve always recommended sticking with the better established penny auction websites which have a record of ethical practices.
- Other Reasons: Business from all industries suffer from the same economic and market-related changes so as consumer preferences change, so does demand.
What’s a bidder to do? If you like penny auction bidding, have at it! We always recommend sticking to the penny auction best practices and staying with established brands who have stood the test of time.
Scale and legal issues are only a part of the problem. At existing penny auction websites the bidders often buy or win ‘products’ they don’t really need. If so, they often try to sell the product. Unfortunately often getting a lesser price than the value of the item obtained at the penny auction. Also the buy now option is not enough as a ‘guarantee’ anymore. It’s time for change and that is what’s happening now.