I came across this interesting website:
It’s an auction site that seems more like a lottery. You are allowed to bid upto a max. of 10% of the listed price. You pay a certain amount per bid. The highest unique bid between $0.01 and 10% of the listed price wins the auction.
Has anyone had any experience with this website ?
Has anyone done any analysis on the risk vs. reward benefit ?
Is there any possible strategy to consider while bidding ?
Take the case of the first auction listed:
2.8 Ghz Sony Vaio Laptop
(Sony VAIO PCG-GRT170 Notebook)
Listed Price: $2,099.87
Maximum Bid Allowed: $20.99
Maximum number of bids: 319
Bid Fee: $10.00/bid
So, ideally, you should win the Vaio at your bid price plus the bid fee, at a max. of US$30.99, while the company makes a cool US$3190.00 plus the winning bid price.
Win-win for both parties, in an ideal scenario.
However, I have my reservations.
Let’s start out with the assumption that the probability of your bid winning is extremely low. Now let’s devise a strategy to improve that probability.
In the above auction which allows a max. of 319 bids, if you bid 160 times (there’s no limit to the number of times you can bid, you just get charged per bid) you end up paying US$1600 and decide to place your bids on the 160 highest values (i.e. US$20.99, US$20.98, US$20.97, and so on till all your 160 bids are placed)… it leaves 159 bids left to be placed by others. Regardless of their bids, you have already guaranteed that one of your 160 bids will be of a higher value (uniquely) than any of the remaining 159 bids.
So, you end up winning the Vaio for US$1600 plus the bid price. The lowest price for the same model that I could find online was US$1850. So it’s still a good deal cheaper.
Is there a flaw in this strategy ? Is there a catch in the system that I may be unaware of ? Is there any reason why I should, or should not, bid on this website ? And would you ?
I have never come across this model of auctions before, and I found it interesting. Thanks for your responses.