How To Find Legitimate Online Penny Auction Sites

I wrote a hub (article) a while ago on the topic of online bidding sites. More specifically, it was a series of tips and tricks to get an upper hand in snagging the listed items. The title is 'Tips and Tricks to Winning Online Penny Auction Sites' and you can read about it clicking it as I have direct linked it.

I received some great feedback and questions regarding actual bidding sites so I thought I would address them in my next hub. Originally I did not expect this coming as I thought it was sufficient to answer any questions replying in the comments section. However, it got more and more interesting as I did my own research to provide the best answers and this is quite an interesting area of study. Therefore, I found it quite relevant to dedicate an entire hub to finding the bidding sites that actually payout or worthwhile, in other words.

In this hub, I will detail my research method. Why? This is to get a better sense of how I reached my conclusions. You can also see how my results could possibly be skewed and you can account for that when choosing a bidding site of your choice. All the videos used in this hub are my own so I hope that spending this time to consider all aspects really pay off. Also, I encourage feedback, especially any flaws in my research. This will help me better improve my methods and procedures in future informal self-studies. Nevertheless, I have tried to account for all bias and possible discrepancies that may skew the results.

I first got interested in online penny auction and bidding sites after reading an article about the anonymity that surrounds these sites. In other words, there was a theory that these online bidding sites only tracked the bid amount. There was no bid verification as to see who placed that bit. Because of this, the bidding site themselves can act as a counter party to your bids, which is a conflict of interest especially for the bidders.

Unlike in many other references, the counter party is not one that takes the other side of the position. In this case, the counter simply acts as another bidding. This way, bidders will feel like they are competing with another persistent bidder that simply won’t let go of the item. As the two compete, the real bidder will be obligated to continue bidding with each additional bid they place. Because they have sunk so much money into it, it just doesn’t make sense to back out now. As the real bidder places a bid, the potentially ‘bot’ counter-party that represents the company will place a bid. Although the increments are driven up $0.01 (one cent) at a time, the majority of the revenues come from cost per bid that bidders have to pay. I have seen these bidding costs vary, but they generally stand at about $0.60 per bid. Do bidding bots, or counter-parties, exist? There is absolutely no way to tell unless you are working for that company. Chances are, even if you are working for that company, you still wouldn’t know as the counter-party algorithm is probably handled by their senior technician.

Then how can we combat this issue? I approach my research from a non-employee point of view. I place myself in the position of the bidder’s shoes and essentially monitor the site’s activities.

I mentioned earlier that I would basically be monitoring the sites’ activities. What exactly are these activities? I look for several characteristics hinting at a possible counter-party bidding script usage. I’ll give you a quick spoiler. My site monitoring did produced what looks like a case of script bidding. I will touch more upon this later. Back on track to the activities I was looking out for. The first is the countdown timer. The company can target our weakness with these scripts, but we can also target their weakness with these scripts as well. Poorly coded scripts will focus on simplicity. A simple block of code can increase the current price by one cent at the same time as changing the username of the last bid once there is one second left on the countdown timer. I like to use the term ‘reset’ as essentially bidding restarts at this new price level and new count down time. Poorly written scripts will not have a dynamic time management control. What do I mean by this? This just means that the price will ‘reset’ when the timer displays one second remaining. If we take the time to monitor this, this can be a huge tip in our favor. On the other hand, dynamically managed time is much harder to detect. For example, a site might reset the bidding when there is one second left on the timer and then reset the bidding again when there is three seconds left. By having a different reset time, it will seem like there are different bidders entering.

While the dynamic time management approach is much harder to detect, it surely isn’t impossible. This has to do with the site activity. Although third party traffic monitoring tools aren’t 100% accurate, we can aggregate the data from several sources to produce a slightly better outcome. If a site is consistently display a large number of users bidding on items that are about to end, this would mean that we should be able to see a reflection in the site traffic statistics. If it turns out that the site is ranked in the millions for Google Analytics, Quantcast, Statshow, Alexa, and Trends, then we can suspect that the site is creating artificial bidding names. Because this internet activity is near impossible to regulate, it isn’t very difficult for these bidding sites to falsely represent multiple bidders.

Finally, I sought to look for bid ending characteristics. This can be further broken down into two more strands. The first is to analyze the discount rate. The formula I will be using is the dividing the bid end price by the fair retail market value. This figure will be multiplied by 100 to produce a percentage figure. Since we expect the bid end price to be lower than the fair market value, the result should be less than 1 before the applying the percentage adjustment. This number gives a fraction of the retail price paid. Now if we see extremely small numbers for relatively high fair retail market value, then there is something wrong. Let’s look at this with an example. If say the website MasterBidder.me (completely made up, does not reflect the actual domain if it were to exist) generates about 100 million users per month, then we can expect quite a bit of bidding activity. Yes, we do have to take into consideration that they could be spamming internet users. A quick Google search will detail the list of complaints if any. Assuming there are no complaints on message boards and forums, we will assume that the bidding activity is quite high. Let’s say that Mac Book Airs are consistently being sold to the highest bidder for around $10, then this is a bit problematic. A Mac Book Air costs upwards over $1,000. The discount rate is 99% so naturally this discrepancy doesn’t make too much sense. We can attempt to explain this phenomenon with the bidding site potentially faking bid history.

The second strand of focus is to analyze the rate at which auctions are closed out and the winners. I originally did not consider looking into this aspect until I analyzed my research. One of the sites I took a look at seemed to close out its auctions really fast. They were either sold after very few bidding or not sold at all. This is rather strange as the items listed do have quite a bit of value yet no bidders were willing to initiate a bid. Because of this, the auction time ended and the item was marked as unsold. This can be a marketing attempt to get visitors to sign up because they will realize that they could have snagged that item for a mere one cent. All the site really needs to do is change the display listings after you buy bidding packages (the right to place bids).

This concludes the list of characteristics I looked out for when doing my research on bidding sites. You will find that I have a few site specific comments and they will be made once I touch upon each individual site.

This section will outline what I did exactly to obtain the results that I did. This section also serves as a template as to how you can do your own research, especially if you are interested in a bidding site that I did not get around to analyzing. Without further ado, let’s get started!

I made a collection of raw uncut videos showing these online bidding sites in action. The screen recorder software I used was BB Flashback Express by Blueberry Software UK. This software is 100% free and it isn't even advertisement supported. Do I recommend it? It works great for basic screen recording, but you might want to invest a bit of money in the 'Pro' version if you are interested in video editing.

I used this screen recording utility so I can just leave my computer running while I attend to other business. This sure beats sitting in front of the computer watching several auctions at once. As far as I know of, BB Flashback Express only works in Windows.

If you are using Linux, I recommend using RecordMyDesktop. As a LinuxMint and Ubuntu user as well, the code to install RecordMyDesktop is:

sudo apt-get install RecordMyDesktop

Simply enter the above code in your console and let it do the rest. I have experience with RecordMyDesktop, but I did not use it with this research.

I happened to catch ZBiddy on a bad day. They just happened to have no available auctions at that time. This is very problematic and an instant avoid. You might ask why? More importantly, you might wonder why not just wait until they list an auction?

Keep in mind that these online bidding sites do not operate on a credit basis. This means that you will have to deposit money into their account either as cash or as bids. If there are no auctions, you will have to wait it out. Chances are so will other bidders. Once an item gets listed, you will have to compete with many more people, which is something I mentioned about in my previous hub.

Also, this is a first sign of an inventory management problem. If you are reading three or four months later, you will probably encounter a dead site. The site will either be a re-direct to another bidding site or a domain hosting company. If they can't supply a consistent stream of items to list for bidding, then there is definitely something with operations. When was the last time you went into a Walmart or Target and have a store full of empty shelves? Exactly my point.

You may have seen this advertisement on television. This is because QuiBids is huge! Statshow reports reaching up to almost 100,000 visitors per day. Page views are hitting over 200,000 per day. Yet, this is actually one of the bidding sites I would recommend joining and here's why:

The graph above was obtained from Google Trends. It shows that the popularity of Quibids is dying down. However, because of the page views and visitors generated, it does have quite a bit of popularity. This is a great opportunity for you because people are losing interest in Quibids so naturally this would mean less competition. However, the popularity isn't so low that Quibids is operating at a loss. They are generating sufficient revenue to cover operations which means they also have a reason to stay in business.

My next argument is the Quibids algorithm is quite unique. Quibids is by far the most unique in this feature, which puts them at an advantage against other online bidding sites.

This is a raw footage of my visit to QuiBids. There are two important times you have notice. If you scroll 3:05, you'll notice that the first item up for auction becomes locked. After doing some research over on QuiBids, a locked item basically means no new bidders are allowed to join in. This gives existing bidders a better opportunity to compete. This becomes a waiting game until bidders drop out one by one. In fact, if you scroll a bit further to 4:15, the item actually ends! This is just slightly over a minute, which could significantly work in your favor.

I previously mentioned that QuiBids is losing popularity, but it seems like they are doing a good job at making a profit of their own. I took the liberty to read more into the 'locked item' feature. There is no standard measurement as to when an item becomes locked. It's actually a combination of features including item value, number of bidders, bidders remaining funds, and bidding activity. Of course, this doesn't mean that QuiBids isn't working an angle of its own. If I were QuiBids, I wouldn't mind helping out the bidders after I broke even. If I successfully earned my costs back, it would only make sense to lock the bidding then. You might wonder why? I could potentially just let the item stay open and then let the bids run. Keep in mind that greed isn't always good. If I can make a smaller profit, but also make a bidder happy, wouldn't I be able to bring in more bidders? The happy bidder that took advantage of this feature will most likely bid again and refer more bidders because they have realized how much easier this feature makes bidding for items. By raking in a smaller profit, it encourages long term sustainability.

I was very specific when choosing this image. This image shows the attractiveness of DealDash at a first glance. Two things that immediately stand out are the 'No New Bidders' feature just like with QuiBids, but also holiday promotional bid discounts. I hope you will not be persuaded by the 13 cents per bid offer. I stressed this in my other hub that the cost per bid should not be a reason to sign up to a bidding site. I used this example once, but I will use it again in case you are not interested in reading my other hub.

If Site A's cost per bid is $1.50 and Site B's cost per bid is $0.13, which site would you sign up to? Chances are you chose Site B because human rationality dictates that $0.13 is more advantageous than $1.50 when it comes to the number of bids you can place. However, I prefer to go with human irrationality is actually most rational. If I were to ask this question to 100 people, chances are the majority will choose Site B. Now I ask you, if the majority of the people are swarming to Site B, which site has less competition? You probably chose Site A so I ask why not go with a site that has significantly less competition? I hope this will clarify the importance of NOT using the cost per bid as a reason to sign up to a bidding site.

Now, you're probably wondering about the 'No New Bidders' feature and how I will argue that. I already supported its usage with QuiBids, but I will counter it with DealDash.

When I landed on DealDash's page, I already saw items sold. However, I did not witness this with my own eyes so DealDash could have just placed an artificial auction history. I introduced this topic with the lack of auction verification and this is one of those cases. I watched this video several times actually before realizing that DealDash's auction end rates are much much lower.

Not only that, there count down timer is extremely suspicious. If you take a really close look at all the listed items at once, you will notice that the timer always resets once there is 1 second remaining. Doesn't this seem like what a poorly thought out script would do? There are very few exceptions where the timer reset before it 1 second remaining. I can only speculate that this is due to the presence of a legitimate bidder. In general, the bidding timer reset just looks too awfully suspicious, which hints that DealDash is placing artificial bids to keep the auctions open longer.

The second thing you'll notice is that the timers actually go in sync with one another. You can see two items side by side with 7, then 6, 5, 4, and so on seconds left. If you keep watching it, you can notice that they will eventually go out of sync. What does this mean? It means that DealDash is delaying the timer reset by a milliseconds. By doing so, this is a sly tactic to extend the auction time without drawing too much attention. Why would it draw any attention? After all, nobody looks at the time in terms of milliseconds. So how did I notice this? This has to do with the relative price. If I were to focus on the reset timer of only one item, I would have disregarded the possibility of the millisecond delay tactic. Any slight delays would probably be considered as latency or lag between what the server sends and what I see. However, it is not possible to lag one item and not another. If we were to lag, then all the item timers should continuously stay in sync because all of the item prices and times should lag in sync! Because of this discrepancy, we can disregard this bidding site all together ignoring traffic and keyword popularity completely.

I was online for less than half an hour and saw six auctions end. This shouldn't cloud your judgement and encourage you to sign up. Beezid does have its own ways of kicking out bidders, but I wouldn't say it is unethical like with DealDash. Sure, they do have a slight delay when closing out auctions, but it seems to be consistent.

Their traffic stats vary quite a bit. It was a bit difficult to generate an accurate picture, but it looks like the consensus is that Beezid is sitting at 900,000 unique visitors per month. However, let's take a look at the video first if you notice anything.

Found anything in particular? Well, after watching my own recording several times, I noticed two things of interest which could work in your favor or not in your favor.

Beezid's bidding cost is much higher compared to some of the other sites. It starts at $0.99 per bid and moves down to $0.60 as you increase your bid pack quantity. This is one of their promotional tactics to get you to buy the bigger bid package, but this shouldn't come off as a surprise. I will not grill Beezid too much on this because just about all bidding sites deploy similar technique to encourage users to buy more.

However, there is a second aspect to the bidding costs. This has to do with the number of bids required. I mentioned the concept of high value targets and low value targets in my previous hub and the video I have uploaded demonstrates a great example of this. High value targets require more bids while the lower value targets require less bids. I just went onto Beezid just now and a Sony Vaio requires three bids, Samsung 40 inch TV requires two bids, and a $15 Amazon.com gift certificate requires one bid. Naturally, this shows how Beezid is earning more with high value targets. Keep in mind that more people are bidding for high value targets than low value targets and so by jacking up the price by a few bids will dramatically increase Beezid's revenues. Let's not forget to mention that this also means that bidders will drop out faster. Using this knowledge, you can start getting in on the action while other bidders are running low on bids. We will get to how we can identify this when we take a look at why I think Beezid is probably least likely to cause any conflict of interest with their bidders.

If you more or less watched the whole video, what do you notice? You see that there are a few bidders making a casual bid and then two or three very aggressive bidders. Do the names 'toy42' and 'imger8' look familiar? Take a look at the video again and what do you see? These are the two most active and aggressive bidders! Now you're probably wondering how could this be. This site is generating 900,000 unique visitors a month and yet only two uniquely active bidders?

Like the title said, the time of day matters. I took this video at about 3:30 AM in the morning when the rest of North America were sometime in their sleep cycle. I will not reveal to you my timezone, but I encourage you to experiment. Log onto Beezid at different times and look at the bid activity. If you have some sort of day job or unwilling to sacrifice sleep to monitor a bidding site, then what you can do is use a screen recorder. Capture about 48 hours worth of raw footage then play it back and fast forward on your own time. Do not skimp out on the research especially when you are trying to buy items worth thousands of dollars for only a few dollars!

Although it may seem like I am promoting Beezid awfully much, but I am actually in no way affiliated with any of these bidding sites. One way I'm trying to demonstrate this is with the lack of affiliate linking. None of these bidding sites have hyperlinks attached to them and so I cannot embed affiliate links into them. Hopefully, this shows I am really just a neutral party on this subject. Let's proceed.

The bid history is a great step forward to ensure transparency. You know exactly who is bidding and how much. Monitor it long enough, you can even calculate the bidding fees they've paid. If it seems that they paid more in bidding fees than the actual item's worth, you can assume that the site is using some kind of bot or script to place false bids to artificially keep the auction running.

If you take a look at the 'Snipers' section, you can see that Beezid limits bidders to a certain number of usage. This helps prevent the fatter wallets from bullying the thinner wallets. Although not mentioned in this diagram, but AutoBeezid, which is really just auto-bidding, is limited to 100 bids. This prevents manual bidders having to put up with an automated bidding script. Because there is a number of automated bids, manual bidders can always wait out the automation. This gets extra interesting when you have two or more automated bidding setups going on trying to out do each other.

The thing about HappyBidDay is that I've never actually witnessed an ending auction. I got timed-out before witnessing a successful close-out. HappyBidDay would not let me spectate after an hour's worth of bidding.

If you look at the price of the items, they actually hit the hundred dollar mark. The iPad sits at $139 in the beginning of the video. Let's do a little bit of math here.

$1 = 100 cents (pennies)

$2 = 200 cents (pennies)

.

..

Therefore:

$139 = 13,900 cents (pennies)

This would mean that over 13,900 bids were placed. The cost per bid starts at $0.31 per bid and lowers to $0.15 when you buy 1,300 bids for $195. Assuming the lowest cost per bid, HappyBidDay would've made:

( 13,900 - 1 ) * $0.15 = $2084.85 and counting!

*If you're wondering where the '-1' came from, it is because we have to subtract one bid because we started counting bids at $0.00 instead of $0.01.

HappyBidDay is definitely a much harder bidding site win on. It's starting bid cost is already half as low as the lowest bid cost on Beezid. HappyBidDay is generating about 300,000 visits per month and the video shows quite a bit of activity.

However, the high value targets' auction end prices seem realistic. We did not see an Apple iPad worth four or five hundred dollars get sold for fifteen bucks. If we did see such a low auction end price for such a high value item, then there is something wrong. As a result, you probably won't save much on the items and rack up quite a bidding cost.

Remember when I asked you to choose between two online bidding sites - Site A and Site B? Naturally, your first answer was probably Site B because of the lower cost per bid. This is exactly the real life application with HappyBidDay and Beezid.

HappyBidDay's starting bid price is $0.30 and lowers to $0.15 while Beezid's start at $0.99 and lowers to $0.60. Because HappyBidDay is posting a much lower cost per bid, it is much harder to close out an auction as compared to Beezid. Want the proof? I already gave it to you in the videos. We did not witness an auction close-out with HappyBidDay, but several with Beezid. I hope this will convince you that cheaper isn't always better.

ibid2SAVE is what I like to classify as an 'at risk' site. It is still unclear as to whether there is a lack of activity or if they are fabricating unique web pages for each specific visitor. In either case, ibid2SAVE will be the final bidding site I analyze and my reasons for why they should be avoided.

This 33 minute recording is quite insane! We see an endless stream of auctions ending without a single bid being placed. This is awfully suspicious for a couple of reasons.

1. A Sign of Lack of Activity

Keep in mind that inactivity isn't good for both parties. If a bidding site has trouble attracting bidders, they are essentially losing money acquiring inventory as well as paying for hosting costs. If you try to get in on this, you may risk spending money on bid packages you may never use as the site could just randomly shut down one day.

2. Discrepancy Because Bidders Do Exist

Notice how some of the auctions end without a single bid while other auctions are still going strong. Some items seem to generate a stream of bidders while other items have no bidders at all. Keep in mind that bidders see exactly what you and I see so they are also witnessing these items closing out without a bid. If they are seeing this, then why aren't they taking advantage of this? This discrepancy may be explained in the next potential reason.

3. Fabricating A Unique Website For Each Unique Visitor

The idea here is that each visitor is not seeing the exact same website. Instead, each visitor is seeing a set of different listings entirely. For all we know, ibid2SAVE could have made a hundreds of fake auction close-outs. Then all they have to do is mix and match them for each visitor. On one side, members on the site will not see these rapid auction close-outs, but visitors will. By fabricating and changing up the listings, it is one way this site tries to entice you to sign up only to realize that someone is countering your every bid.

A very simple solution is to bid hop. This means that you are not looking for anything in particular, but rather try to grab any deals you can get your hands on. To test whether you are a victim of the rapid auction close-out rate, all you need to do is place single bids and see how the site will react. If you place ten single bids on ten different times and all ten got countered, there is a conflict of interest here. This means that you are up against other legitimate bidders, artificial scripts resetting the bid timer, or a misleading case of website fabrication.

Although I recommend avoiding this site all together, but whether you do so or not is completely up to you. If you insist on trying your luck on this bidding site, then bid hop otherwise you are being played by the system. Just like a casino, the house always wins!

I hope this in-depth look helped you in some way. When it comes to playing a game without a referee, you don't want to be the one with the bottom hand. Hopefully, armed with this knowledge, you will now be able to choose all future online bidding sites wisely. Not only that, but a careful analysis should be applied to everything we do.