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Can you still make money of Penny Auction site?

Discussion in 'BlackHat Lounge' started by SpellZ, Sep 12, 2011.

  1. SpellZ

    SpellZ Regular Member

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    Got an idea for a penny auction website, and was wondering if it still can make money? To my very little knowledge, the only thing I see going hand in hand with penny auctions is "scamming"... websites using bots, etc.. so to go back to my Q, do those sites still make money? Got an idea, want to play around with it...
     
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  2. SpellZ

    SpellZ Regular Member

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    No? No one is into that kind of thing?
     
  3. SpellZ

    SpellZ Regular Member

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    Anyone know then at least where I can go and read about them (besides first page of google)
     
  4. wa1966

    wa1966 Newbie

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    I had a site built and also had a unique selling point but in the end I decided against it. The concept is a sound one and it could be adapted for a few things I am sure but even those sites that are not scams it could be hard to convince people that they are not.
     
  5. SpellZ

    SpellZ Regular Member

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    Any legal terms, general set up, etc.
     
  6. SpellZ

    SpellZ Regular Member

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    wow, even tv.bz doesn't have anything on them lol :S
     
  7. GreatThing

    GreatThing Newbie

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    You can certainly still make money off of penny auction sites. They are still new enought that a lot of potenial users get excited at the prospect of winning high end products at a fraction of the cost & there are dropshippers for just about anything so I don't see product fulfillment as an issue. Also, I see more review sites & strategy sites vs those calling out penny auctions as scams.

    You'll need a good programmer to set up a smart site & build in code to hedge yourself against losing money. That requires a decent budget. Flippa has several auction style sites up, though that may not work if you're trying to set this up around a unique idea.

    I personally think the whole idea of a Penny Auction is brilliant from a marketer/owner's stand point. I'd love to hear you get one set up.
     
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    Last edited: Sep 12, 2011
  8. JessyCavalari

    JessyCavalari Registered Member

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    Hi there,

    I used to run a penny auction and will approach this from 2 perspectives:

    As a penny auction owner:

    Yes, there are communities of people that take penny auction sites very seriously and perticularly target startup sites, you can find many of these and get many members by publishing your site to penny auction forums such as penny auction watch.
    However, aswell as this you'll need a massive budget: People only pay for credits on sites that offer good prizes, and to start off, you'll lose alot of money on payouts due to low competition. Secondly, you'll need thousands every month to spend on advertising ( well unless your an advertising expert, which can be the case on this forum!)

    From the perspective of a penny auction bidder:
    Yes, you can make money by winning prizes and reselling them, however penny auction sites are gambling! The rule of thumb is to be willing to spend around half of the prize's RRP, if you win you can keep it or resell it to make money. However, this rule of thumb is not applied when targeting startup sites. New site's have very low competition meaning that you can get prizes for a steal! (i saw one site that gave holidays as prizes, on their third auction they sold a three thousand dollar holiday for only about 17 bids, which is worth about 10 dollars or so. The site closed about a week after opening) You'll need to do review checks to ensure you're not being scammed, once again i recommend penny auction watch.

    There are literally dozens of these sites springing up each month and obviously some will be run by scammers using bots, however by being properly informed and doing your research, im sure you can still make money in this domain.

    :)
     
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  9. SpellZ

    SpellZ Regular Member

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    Hey guys, thank you so much for all the replies! Very detailed and informative! Yeah, I will work on the idea, and keep you guys updated. If anything, it will be my 2nd or 3rd project (currently working on the first) that I will start after I gain enough income from the first one.

    I believe I have a unique idea and I did massive research for the past week to find something similar and couldn't, and the target market for it is HUGE! (Yeah, its a niche for sure!). So for sure, when I will start it (no "If") I will make a journal and keep you guys updated.

    Thank you so so much!

    Cheers!
     
  10. dizz

    dizz Elite Member

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    You can make money at anything just have to get people to your site end of story....take action.

    Dizz
     
  11. SpellZ

    SpellZ Regular Member

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    Dizz, your right.

    Its just I'm wondering with all the legal issues behind it, and what the customer 'reaction' is to a site like a penny auction site. Because it does operate differently then eBay on a lot of levels.

    If I do it... It'll easily cost me $20,000+
    The design I can do by myself, coding... I need to outsource it, then I need GOOD security, then I need to make sure that you can't hack it easily. Then I need to buy the products.

    I think if I do it, I'll make it LIVE without any products and be like, "FIRST PRODUCT GOES LIVE IN 3 WEEKS" and have people put their email, and contact them closer to the date.

    Give discounts to the first 1000+ people or so.

    Get them hooked.

    I still can't find an eBook or anything in regards towards penny auctions.. weird
     
  12. shelterman

    shelterman Junior Member

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    I know this thread is a little dated, but if anyone is interested in receiving 500 free bids to a top rated, legitimate penny auction site. I'm offering them to BHW members...limited supply...first come, first serve.
     
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  13. aStroke

    aStroke Regular Member

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    If the site is legit, I'm down for some bids.
     
  14. shelterman

    shelterman Junior Member

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    aStroke, the name of the penny auction is Zeekler, highly rated at PennyBurners.com and other penny auction rating sites. I sent you a PM. Let me know your username when you sign up and I'll load your account with 500 bids. That should keep you entertained for a while...Have Fun!!

    BTW, they have a killer affiliate program. I've dropped everything to concentrate on it.
     
  15. yubrew

    yubrew Junior Member

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    From a penny auction site perspective, it is a lot of hassles.

    Here's a heads up, just so you know what you're getting yourself into:
    1. Credit card processing is a bitch. I know many people that had to switch processors every couple months. You may find that Paypal, First Data, Cardflex, and even offshore processing will have problems with the penny auction model. In addition to finding stable processing, you need to make sure your chargebacks maintain under the compliance threshold. Imagine one person buys 100 different bidpacks, then loses, gets pissed off and files a chargeback on all bidpacks. Of course in a casino, if you lose money gambling you're done. Online, you can chargeback whenever you feel like for whatever reason, and whether you win the claim or not it counts against your processing chargeback threshold.
    2. Marketing is not easy. Even if your users buy an initial bidpack, you're probably not really profiting until they buy additional bidpacks. You need some serious bankroll, or a good free traffic strategy to get a bunch of people to understand the concept of penny auctions, trust that your site is legit, and get hooked enough to keep going without asking for a return or chargeback.
    3. Dealing with angry people sucks. In the traditional penny auction model, there are a lot of losers and only 1 winner. That makes for a ton of angry people. And what do angry people do? They wear down your customer service people, phone lines, and scream bloody murder to whoever will listen to them (AG, FTC, etc).
    4. Look at the big guys. Swoopo declared bankruptcy. BigDeal and other sites have class action suits and personal suits against them. They may eventually be considered as online gambling and thus illegal in the US.

    There are seriously 1,000 other ways of making easier and less risky money than starting a penny auction.
     
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  16. aStroke

    aStroke Regular Member

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    Got the 500 bids that shelterman promised. Thanks!
     
  17. shelterman

    shelterman Junior Member

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    You're welcome aStroke.

    I'm showing at least 11 people from this forum that took me up on this offer and only one thanks...this surprises me a bit. I'm sure those that took advantage of this offer are finding out as I type that these bids truly are an outstanding value with a top-notch penny auction company.

    Maybe they're just busy winning items at up to 95% off...
     
    Last edited: Oct 29, 2011
  18. GiftGuru

    GiftGuru Supreme Member

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    keep us updated spellz
     
  19. blackpa

    blackpa Junior Member

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    Hi shelterman, do you still have 500 free bids to Zeekler available?
     
  20. shelterman

    shelterman Junior Member

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    Yes I do Blackpa. I've received a new supply of bids and ready to give them away. Remember, if you purchased them yourself directly from the auction they would cost you .65 each...do the math...$325! This is the reason that Zeekler is the fastest growning penny auction on the planet. Being an affiliate for Zeekler is the easiest sell I've ever experienced. Strangely, the hardest part is that people don't believe you...kinda like seeing a '11 Mercedes on Ebay with a "Buy It Now" price of $10,000. PM me and let me know the username you'll be signing under and I'll watch for you.
     
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    Last edited: Nov 13, 2011