Penny Cave: To Each His Own Gimmick
I have previously posted on Swoopo (Pure Profit: A Look At Swoop) and on the types of auctions they have. And as you can probably tell from the title, they are making a ton of money. Well apparently one Swoopo wasn’t enough so enter PennyCave.
PennyCave operates on the exact same concept as Swoopo. You purchase your bids from PennyCave and then you use the bids on various auctions they have going. But, they can’t outright copy Swoopo so they have their own set of what I call gimmicks to sucker you out of your money. If you don’t have any background on either Swoopo or PennyCave read my post on Swoopo which describes in detail how the sites work.
Gimmick 1: All Penny Auctions This is the most glaring gimmick that PennyCave has. By having each bid raise the price of the auction by only a single cent it makes the total price look very attractive. Consider seeing something worth $100 going for just $11.53. Then remember that that is 1,153 bids each at around $1. Swoopo has this style of auction but not each and every auction.
Verdict on Gimmick 1: Fails to help the customer or be less of a scam.
Gimmick 2: Discount On Bids If you buy bids in bulk you can save money. Since you waste the money anyway I don’t see that as a huge bonus, just a ploy to get you to buy more bids. I am guessing the thinking here is that while it is true that you will pay less for an individual bid, ultimately you will bid more than you would have with a standard cost bid ($1). Therefore, overall you will spend more money because you know your bids were cheaper, but who is going to calculate by how much? This also makes it difficult to see how much you really have into the site in bids because each bid may cost something different if you buy bids at different times.
Verdict on Gimmick 2: Fails to help the customer or be less of a scam.
Gimmick 3: Shipping Included This one is pretty self explanatory. In reality it is just another ploy to get you to think that you are not really spending that much. The real trick here is that in your mind you will look at an auction for $4.20 and think it is not so bad because shipping is included. That would be good logic if it didn’t take (at minimum) $315 in bids to get to that price. And that is using a rate of 75 cents a bid, the lowest possible rate when buying bids and you have to buy $1000 worth of bids to get it.
Verdict on Gimmick 3: Fails to help the customer or be less of a scam.
Gimmick 4: ‘Auctions Live’ Time Frame This is another great example of ‘helping the customer’ meanwhile ‘robbing them blind’. By limiting the time the auction is live from 10 AM to 12 AM what looks a perk to you, the bidder, is really a scam by PennyCave to not let the auction end during an off peak time. By having bidding during a time that ‘you won’t miss the end’, guess what, neither will anybody else. That means that you will get to bid against everybody else and drive up the price and waste your precious bids. Time to celebrate this great customer service.
Verdict on Gimmick 4: Fails to help the customer or be less of a scam.
Gimmick 5: Fewer Live Auctions Clearly this is to minimize risk. Less live auctions means that more people will be bidding/betting on those auctions. On the plus side, you have less things to lose money on.
Verdict on Gimmick 5: Helps the customer control betting but ultimately fails to be less of a scam.
As you can probably tell I am not enamored by this site. It is very easy to get in over your head. Currently it looks like there are actually some good deals in the finished auctions section, but that is because the site is so new. Once more and more people start using the site it is only going to get worse and the deals with it. Just look at eBay and how they are moving from auctions to fixed price. It is not that you can’t get good deals, it is just that it is a lot harder to get the deal for the amount of time you invest.
The bottom line is to stay away from these sites – so called “entertainment shopping” sites – unless you go into it with a set amount of money that you are willing to lose. If you don’t plan ahead like this you are bound to end up over investing in the auction and come out way behind. Just look at this auction where there is over 900 bids (at almost $1 each) and the thing retails for just $280. Not smart.
This has been some Thoughts From The Cake Scraps.
[…] UPDATE: Check out my new post on PennyCave, a Swoopo […]
The better way to describe this is you are paying to “bid†on the product. In a typical and “ethical†auction, the last person to place a bid; wins the auction and pays the amount posted. All other bidders paid nothing.
In this type of auction, you are not actually bidding a price for the product. In fact, you are bidding a “bid†(which immediately charged you when you bid regardless if you “win†or not). The person with the highest number of “bids†gets the product. So the auctioneer is collecting monies from all bidders instead of one which is the SCAM.
This got my curiosity up because the profit is almost exponential for the auctioneer based on the number of concurrent bidders (the more bidders the more profit for them) Here is an example:
Calculations below assume the following:
– Auctioneer Purchased Item for $20 MSRP $80
– A “bid†cost 15 cents ($0.15)
– 7 bidders bid 43 times each on the item for a total of 301 “bids†and are active until the last bid is placed.
301 individual bids translates to a total of 2,086 bids that the auctioneer has collected funds from. Think of it this way, if person “A†places 1 “bidâ€, person “B†places 2 “bidsâ€, person C places 3 “bids†to win the auction (even though person C hasn’t bid, it costs costs them $0.45 (3*15 cents) to make their first bid). All persons (bidders) must pay so the auctioneer for their bids (A + B + C + ETC + ETC).
Breakdown::
Bidders (Persons): A B C D E G H Total
Total bidds 295 296 297 298 299 300 301 2086
Each Bidder paid
this much to bid $44.25 $44.40 $44.55 $44.70 $44.85 $45.00 $45.15 $312.90
(Bidder “H†wins this auction by placing the 301 and last bid)
Price of a bid $0.15
Cost to bidder (301 bids x .15): $45.15
Auction Site collected (2,086 x .15): $312.90
Cost of Item Sold $20.00
MSRP $80
Auctioneer Profit $292.90
Buyer Saved ($) $60.00
Buyer Saved (%) 25%
They buyer does get a good deal; but it is clearly at the expense of all other bidders who paid who didn’t win.
Hope this helps explain the scam.
-k
To expose more scams contact me at “dotclick” “at” “gmail” “dot” “com”
Great breakdown kip. As for the site being a scam, maybe or maybe not. The site is not forcing people to participate in the bids in the first place, the ones participating are maybe thinking more of shopping with a little twist. And I hope people that plans to participate in this kind of bidding system to read first blog/comments like the ones before mine to further understand what they’re in for.
[…] 3 ring circus we have. We’ve previously covered Pennycave and Swoopo on this blog (found here and here) so what better place to cover […]