How It Works

REVERSE AUCTIONS AND LOW BID AUCTIONS: UNDERSTANDING THE NEW BREED OF ONLINE AUCTIONS

In traditional online auctions, eBay for example, bid increments increase as members furiously battle it out for the highest bid. But reverse auctions and low bid or penny auctions are a bit more creative and clever than the standard fare. They resemble a game more than auctions as you and I think of them. They require strategy, loads of skill, patience, reserve, and timing and pure luck.

Reverse Auctions

Just as the tag “reverse auction” implies, this type of auction sees bid increments that decline rather than increase. Sites like bidster.com, thenextbid.com, auctionair.co.uk, and bidandclick.com are reverse auctions also known as unique low bid auctions. Unique low bid auctions have become very popular as they have quickly gained notoriety as a means of scoring bargain deals on television sets, iPods, cars, Rolex watches, Nintendo Wii systems, computers and cameras.

A unique low bid auction gives customers an opportunity to purchase what are typically high priced products at an incredibly low price. The winner of this reverse auction is the bidder that manages to place the bid closest to 1 pence (£ 0.01) that is totally unique to them; meaning the winner not only has the lowest bid but has also placed a unique bid that no other member has matched.

For example, say you bid £ 0.01 for a brand new external hard drive and receive notification that you are the lowest unique bid. If someone else comes along a few minutes later and bids £ 0.01, your bid is no longer a unique bid. Meanwhile, a bidder that placed a bid for £ 0.09, five minutes before you, may end up replacing you as the lowest unique bid until you or another member matches that particular bid.

A lowest unique bid auction can become highly addictive. It’s important to remember that there are fees for each bid placed. Not to mention SMS text messaging fees that will be applied to your mobile phone bill. Bid fees vary from one auction site to the other but are typically in the range of £ 0.50 to £ 2.

You can also place multiple bids within a set price range. Just remember, when setting a range of bidding, you are still paying for each individual bid. And, keep in mind that for every person that lands a bargain on a new iPod or Nintendo Wii, there are many others that have walked away empty handed; essentially throwing money away by placing bids that weren’t the lowest unique bid. Set a limit on what you’re willing to lose before you step foot in the world of reverse auctions.

Low Bid or Penny Auctions

Low bid or penny auctions are the new online auction phenomenon sweeping through Europe. Everywhere you turn there are headlines discussing a low bid or penny auction winner that has scored a brand new car for £ 6.50 or a brand name laptop computer for £ 24.50.

Sites like madbid.com and swoopo.com hold auctions with a lottery-like feel. Bidding starts at zero and increase in increments of 1 pence for madbid.com, a true penny auction, or 10 pence for swoopo.com. A timer clock clicks down and is automatically reset each time a new bid is placed. The winner is whoever holds the winning bid when the timer finally hits 0:00.

So, when an iPod Nano goes for £1.50 on madbid.com, this means that 150 bids were placed on that item. Keep in mind, this doesn’t mean there were 150 people bidding. Online bidders are encouraged to buy bulk bid packages. Those who don’t buy bulk packages are usually placing single bids using SMS text messaging on their mobile phones. It’s very possible that those 150 bids were mainly comprised of five or six people – all of whom spent a considerable amount of money to walk away with nothing. But this gamble is the nature of the beast as the pay-for-bidding process ultimately enables the winners to pay practically nothing for some incredibly cool items.

I hope that we’ve introduced you a little to the world of reverse auctions, specifically unique low bid auctions, and low bid or penny auctions. Just be warned that this world can bring about some very compulsive behavior. It takes not only skill but also tremendous willpower to succeed in this new class of online auctions.

Our helpful hint. Take advantage of whatever free bids you get when joining and use them to win bulk free bids. You could potentially win 400 bids, with your 4 initial freebies, allowing you the opportunity to test the waters of reverse and low bid auctions without spending a fortune.