Izzy Green

Unbelievable Business Strategy That Will Blow Your Socks Off

QB-ClockThe web is full of questions on how certain companies (mainly tech companies) make money. The answer in most cases is very simple and straight forward, they either make their money on advertisements, sponsors, and in some cases collecting anticlerical data from users and selling it.

But here is something that blew my mind. There is a website called quibids.com, this website is in a way similar to ebay.com. There is only 1 main difference, which makes all the difference. ebay.com makes their money from the seller, and qubids.com makes their money from the users.

The way quibids.com works is as follows: The starting price for every item being auctioned is $0.00, and you can only bid a penny at a time, every time you bid on an item you pay 60 cents ($0.60). Another interesting feature they have is, every time somebody bids on an item, the time remaining for the auction go’s back up to 10 seconds. (kinda like a real auction, going once, going twice and sold!).

Overall it seems very simple and straight forward, but once you start running the number your socks will blow off.

For argument sake, lets take the following item as an example: The Apple iPad w/ Retina Display Wi-Fi 128GB – Black. The original price for this product is $799.99. If this would be sold on quibids.com for lets say $300, how much money do you think was spent on this product in total? the answer is $18,300 (yes, you heard me, eighteen thousand and three hundred dollars).

The math is very simple, if an item is sold for $300, that means their were a total of 30,000 bids (a penny a bid, 100 pennies in a dollar). Every-time someone bids they pay 60 cents.

30,000 times $0.60 = $18,000 + $300 for the purchased price equals to $18,300.

The one thing that i haven’t figured out yet is, who is making all that money.

Keep in mind that I’m not saying its good deal for the users, but it’s definitely a good deal for whoever is making all that money (quibids.com, the sellers or both). Like one of my salesman always says: A deal is always a good deal, sometimes for the seller and sometimes for the buyer. The idea is, you have a bunch of people paying $0.60 a bid, for an item that only one person ends up getting.

I’ve heard some people say that it’s a scam, I think it’s more like a gamble. If you think it’s a scam I’d love to hear why.

One last thing, before you run and sign up, keep in mind that quibids.com is gonna charge you a sign up fee of $60 (something that I wasn’t aware of when I signed up).

21 Responses

  1. Alan Falk
    Alan Falk April 10, 2013 at 6:58 pm |

    Love your blog Izzy, keep up the good work!

    Alan

  2. Ben Glancz
    Ben Glancz April 10, 2013 at 8:08 pm |

    What’s more interesting is, that they charge you $60 to sign up.

    If you snoop their site a bit, you get the feel like your in Vegas, hitting the Casino. It’s a multi of lil bets you take, that quickly add up. You see, that’s why there is no charge to enter the Casino, never mind that you get free drinks (and smokes in some states).

    Why would QuiBids have a Door-Fee?

    1. Mark Eisenberg
      Mark Eisenberg April 10, 2013 at 10:34 pm |

      Izzy, incredible blog. Ben, I think the reason they charge the door fee is cuz if not, members may not have the paitience to bid (pay the bid fee) & buy. It can be time & money consuming. Once the member pays the door fee he feels he has to get his money’s worth so he bids & bids &… Yeah pays more.

  3. Mark eisenberg
    Mark eisenberg April 10, 2013 at 10:59 pm |

    Here Is my take. If ppl can become sellers there, than its real. If not I believe its a scam, they don’t even have to have the items. Every1 thinks some1 else wins.

  4. Sol Eisenberg
    Sol Eisenberg April 11, 2013 at 1:46 am |

    I would say it would be stupid for them to cheat the users. The users are those who pay them a few hundred percent on each product that they sell. Why should they risk loosing even 1 user? Besides if you look at the numbers, the product cost is so low compare to the profits that it generates. So my opinion is that they definitely sell real products and that they don’t have any outside sellers. Because me and you see this idea, and we praise it. But a seller that sells on that site and earns a 30 to 50 percent markup on his product, while these guys are taking in millions, will at one point decide that it’s been enough and imitate this site!!!

  5. Ben G
    Ben G April 11, 2013 at 1:57 am |

    Very strong point Mark.

  6. Menachem Meisner
    Menachem Meisner April 11, 2013 at 3:12 am |

    Izzy,

    First off, thanks for sharing. Great blog and so far great content!

    Second, regarding the post, the numbers you are listing are higher then what they actually go for on Quibids. The example of the iPad you listed that would normally go for around $25. So the site would make $1*2500 + $25 = $2525 on an item that normally costs around $700. (assuming they don’t use artificial bidders to drive up the auction price on the better items). Still a 360 percent markup, not a percentage rate to brush off… But the real money? Good ol’ brick and water casinos.

    I am quoting an excerpt from an article on Celebritynetworth.com which I found really funny and is true:

    The “scam” question is a really tough one to answer because while their commercials portray a world that probably does not exist, their fine print is actually pretty clear. I drink a lot of beer and I have never been ambushed by a group of gorgeous bikini clad women from thin air after opening a can. So does that make Bud Light a scam? The penny auction sites aren’t necessarily being dishonest, but they are being “selectively honest” on what happens in reality for the average person (based on our experience and our research). Most people will never experience what the commercial portrays (aka you will NOT get an iPad/MacBook/iPhone for 95% off).
    As with anything in life, if something sounds too good to be true, it probably is. In our opinion, Quibids is not scam, but we also don’t believe you will have the experience they portray in their commercials. But if you’re curious, do some research and try one out for yourself. After all, we are still waiting for that gaggle of bikini clad women to appear from thin air when we open a beer!

    They claim that they are grossing over 13MM annually, but until they go public we will never know…

  7. QuiBids
    QuiBids April 11, 2013 at 3:19 pm |

    Thank you for your post. We apologize for any confusion or inconvenience you have experienced involving QuiBids. To begin, it’s important to clarify that you are never charged on QuiBids without consent. After you have completed the free registration, you have the option to complete a purchase for the Beginner Bid Pack, however this is not a requirement. It is correct that every real bid is valued at $0.60 each, though the example calculation provided is not accurate. One main reason is because of the presence of voucher bids on QuiBids. These bids are usually obtained for a fraction of the price compared to real bids, or many times for free with promotional offers. These bids may be used exactly the same way as real bids, but they do not retain the $0.60 per bid value. Next, every auction on QuiBids has the Buy Now feature available. This feature exists solely for our customers. So, in case you don’t win an auction, your bid investment in an auction can be subtracted from the Value Price of an item so you can pay the difference to receive the product you desire. In this instance, you end up paying the total Value Price of the product. So, if you win an auction, you have the opportunity to save up to 90% off retail! If you don’t win, you never have to go home empty handed by utilizing the Buy Now feature. By making this feature available, the customer never has to lose any investment. Hopefully this helps provide some clarification!

  8. Menachem Meisner
    Menachem Meisner April 11, 2013 at 6:08 pm |

    If you think strategically, you will understand why Quibids (and similar penny auction sites) are a no-win game, and best avoided…
    First of all, QuiBids.com and other penny auction sites require people to pay for the option to bid, but don’t allow them to bid in increments of their choosing. This means that QuiBids is forcing the price up and profiting all the while. On eBay, the seller and buyer have the auction monitored by the website, which is the trusted third party. On QuiBids.com, there is no trusted third party. QuiBids is the seller and the auctioneer. It works in their favor – and their favor only – to drive the price up in these small 1 or 2 cent increments.

    QuiBids attempts to redeem themselves by offering you the “By It Now” option, which is when you can take the total amount of your failed bids and apply that toward the retail price of the item you were bidding on. Say you bid $80 total on an iPod Nano that cost $150. For the remaining $70, Quibids will sell you a Nano. Well, $70 plus tax, fees, and shipping and handling. With the added “fees,” tax, and S&H, that Nano will cost you more than it would at Apple, and usually much more than it would at a discounted retailer like Amazon.com or Target. In addition, QuiBids is not an approved retailer of Apple – or any major brand name – products. This means that if you get the item from them, the manufacturer warranty is void – if it breaks within the first 60 days, you will not be able to get it repaired or exchanged. If you have a problem within the first 30 days, QuiBids will refund the final auction price you paid, but not a single dime of the bids it took to win the auction.

    In a game where you have to pay $0.60 per penny bid, but can always buy the item at full retail price, the optimal strategy is to enter an auction being prepared to last as long as it takes and keep bidding until you either: a) win the item, or b) buy it at retail price. That way you “can’t lose” (you were prepared to buy the item anyway) and might win the item at a discount. The problem is, the optimal strategy for you is also the optimal strategy for someone else- those bidding against you. So the net result is that you will likely end up buying the item at the “buy it now” price, which as you’ve heard, is higher than the fair market price you could have bought it for somewhere else.

    They are trying to position this kind of bidding as “entertainment”. After all, if you are having fun, you might not notice that you are playing a no-win game.

    It’s much better to stick to legitimate auction sites like eBay, instead of spending lots of frustrating time and effort on penny auction websites like QuiBids.com.

    1. Mark Eisen
      Mark Eisen April 11, 2013 at 6:21 pm |

      Menachem, solid!

      1. Menachem Meisner
        Menachem Meisner April 11, 2013 at 10:03 pm |

        Thanks, Mark.

  9. Ben
    Ben April 11, 2013 at 10:09 pm |

    Well said Mnachem.

    QuiBids is all 3 parties, Seller seller, auctioneer, and bidder, all paid for by the 4th party, you.

    Waste.

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