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Friday, March 9, 2012

Interview with Penny Auction Watch: In depth view

Dear readers!
We present an interview with one of the most influential bloggers on the penny auction scene Amanda Lee, founder of Penny Auction Watch. Amanda shares her thoughts on the industry and what direction can we expect sites, developers and the PA culture to follow in the near future.


1) Not every one might be familiar with your work so please tell us a little bit about yourself, your site and why you started it?

Hi! Well, first of all I want to thank you for giving me this opportunity to be interviewed and to introduce your readers to my site, Thank You!

Time sure does fly by... I first found out about penny auctions back in March of 2009. My mom found an ad for a penny auction site (the now defunct YottaBid.com), they were giving out a lot of daily free bids during their grand opening.

I still remember the afternoon when she told me about the site, she was all excited, told me I had to sign up. The site had loading issues, and the whole very-alien shopping concept that made astounding claims to the ability to win items for "pennies" had me a bit skeptical. Needless to say I tried it out and I really like bidding after I started winning.

The first penny auction I ever won was a brand new Nintendo Wii, I won it with the free promo bids. I stayed up until past 3 am bidding on it! I bid there on an almost daily basis for the 3 or so months that they remained opened. I then found more penny auctions, the next one I found was called CheapoBids and they were offering a brand new Honda. Since I could win on the first site I right away purchased over $100 in bids to try it out. It didn't take long until I had a feeling that something was not right. I began to look into who developed the site's software (Repute Infosystems) and found that they offered site owners with a bidding bot "shill" option. More on this on my blog, but basically I strongly believe they were shill bidding with bots against me, it seemed very obvious.

At the time there wasn't a forum or blog with information on penny auctions and I was really upset to see how easy a penny auction site could steal bidder's money and not be held accountable, so I decided to launch Penny Auction Watch®, a penny auction blog and forum that I have been running since May of 2009.

Since you asked what the main purpose of Penny Auction Watch is, I'd like to sum it up by saying it's a place to learn and talk about the good, the bad and the ugly in penny auctions.

The main purpose for starting the site was to help others who like myself, really enjoy winning penny auctions, by informing, providing a place for collaboration of ideas, posting of experiences to hold the sites accountable and to expose the shady operators. Since 2009 many of them have been exposed in both my blog by myself and by members of the forum. More on this can be found by going to the Hall of Shame section and Legit or Not? And also the Red Flags section of the forum. I also will from time to time feature interviews with site owners, write articles on penny auction tips and strategy advice and anything that I think is interesting.

There have been many challenges that have come with running Penny Auction Watch. It's been a victim of 3 DDoS attacks, I've received implied death threats, have been hacked, libeled and defamed by now penny auction blog/forum "competitors", and penny auction sites that my site has exposed have retaliated against me by trying to destroy my reputation with a slew of lies posted all over the Internet. It's all made me a much stronger person, and with the tribulations there have also been triumphs. I've been interviewed and mentioned by Wired.com, Consumer Reports TV/print, on TV networks such as CBS, FOX, ABC, Time Magazine, The Wall Street Journal, The Denver Post, Reuters, AOL's WalletPop, MInt.com and others, too. The most rewarding thing I've gained from the entire experience have been the gracious words of thanks from penny auction bidders who have thanked me for informing them of the good and the bad in penny auctions and providing them with a place to learn more, and discuss the sites with other bidders. They are what have kept me going and kept me blogging and running the forum for almost 3 years now.

2) Do you think that over the years you managed to make an impact on users and site owners’ awareness towards each other?

Yes, I do. Penny Auction Watch was the first ever penny auction forum for an industry, and has been a breath of fresh air for many bidders and site owners looking to gain more knowledge about penny auctions. However, most important is the fact that without my site so many penny auctions that once swindled thousands by way of shady tactics like shill bidding and not shipping, blatantly stealing from consumers, would still be around.

Social media is a very powerful tool. Social media helps hold companies accountable. The feedback that is posted in the forum is very valuable for penny auction owners.

3) Have you ever thought about opening your own PA site?

I really haven't had any desire to launch my own penny auction site, well, beyond the totally free demo/practice penny auction site that I launched in 2010. Shillo.com. The bids were free and bots were rampant, with purpose. I even shipped a few items out (totally free) to bidders. It was using a script that at the time was sold with bots and has since been held accountable by the Office of Fair Trading in the UK and can no longer sell the site with the bot feature available on live sites. Shillo didn't last long because I was actually scammed by the person who sold me the script. Long story there (http://www.pennyauctionwatch.com/2010/12/shillo-closes-its-doors/), but this info can be found in the forum too!

4) What do you think plays the biggest role when it comes to engaging users on a PA site? Is it the amount of auction types like “lowest unique bid” or “no auto bid” auctions? Or is it interesting concepts along with solid business and technical platforms do all the heavy lifting?

Well, I don't really think there is any one thing that takes center stage when it comes to engaging users. I do, however, think that there are a few very important components: Social engagement, facebook/twitter/becoming an active member and getting feedback from bidders in the PAW forum. Gamnification: I think it's very important for sites to really find a way to reward their bidders. Especially important for engagement is anything that adds stability and sustainability to the model. Buy-it-now is something that I think really meets this need and engages consumers, because when too many bidders end up losing with one person being the winner, those users that a site worked hard to obtain may just walk away. Some bidders really like auto bid features (bid butler, bid buddy, etc.) while others wish that a site didn't allow them, it really has to do with preference; I have seen sites be successful whether or not they offered this. To learn more about gamnification and how it can enhance and engage customers there was a webinar on March 6th by Badgeville.comhttp://blog.badgeville.com/2012/03/02/webinar-elizabeth-shaw-of-forrester-research-on-gamification/?utm_medium=facebook&utm_source=twitterfeed

So be sure to watch a recording when it’s made public.

5) Do you think that PA sites are due for a change in the traditional paradigm of “every man for himself”? Do you think we should expect more socially integrated concepts like SharetheSpoils.com?

SharetheSpoils really is innovative, and I do think that if more creative-entrepreneurs venture into penny auctions we will see more socially integrated concepts for sure. At least I hope so!

6) I’ve noticed that you have a special topic on your forum for “daily deal” site users. How do you see the relationship between PA sites and daily deal sites? Are they rivals in some extent or on the other hand we might see hybrid forms of the two in the future.

Nice observation! I started the daily deal section just because I really enjoy daily deals and bargains and since I like penny auctions thought that penny auction bidders would too, however, that part of the forum hasn't been too active.

There actually was a daily deal / penny auction hybrid that launched. CityCents.com, it was like a mesh between Groupon and a penny auction site with localized deals, they mainly focused on DC and Boston, offered auctions for deals/gift cards and products. Unfortunately the site couldn't sustain itself and changed from offering penny auctions to "seat auctions" before they finally shut down.

7) Do you think bidders have a right to know what’s going on the back-end of a bidding site? What would you suggest to make it more transparent?

Definitely. But I think that bidders not only have the right, I think there should not even be an option for a site to cheat consumers. Not only do I blame the script developers who are making the fake bidding software so readily available, I blame the dishonest thieving site operators who are deploying them. It's just too easy for a site to cheat if the site owners think they can get away with it. While there are concerns with Facebook and collusion, I have seen sites (BigDeal.com was a great example of this) that linked user's accounts with their Facebook accounts, this is one option and it did help me to them more.

8) You probably know that a lot of new PA sites often don’t have time or resources to program their own platforms so they buy pre-made scripts from developers. Some PA developers openly offer future site owners shill bidding bots and other questionable administration options. Do you think that users have a right to know how the PA site is powered, or at least gather some info on other PA sites reputation, that where developed using the same platform before deciding to bid?

Yes, I do think users have a right to know how the site is powered. I, as well as my members, have written about the script companies that power the sites and whether or not they openly offered bot shill scripts. Since many use the "out of the box" solutions, many bidders can tell which script is being used and they use this information to decide whether or not they want to bid on a particular penny auction site.

9) Would you make any predictions on innovations that PA sites might introduce to bidders in 2012? Can changes like QuiBids gaming center make an impact to other PA sites game plan? Or will changes in online gambling laws have a far bigger impact?

I definitely think that there is room for improvement and innovation in penny auctions and it will be interesting to see what's in store.

Like QuiBids, I have seen more penny auction sites introduce game centers and rewards programs. One site that was really unique was Bidzilla.com, now gone, but the entire platform had more of a game feel too it, they incorporated chat and avatars, and even had a leaderboard for high bidders, the entire application was unique from that of the standard penny auction interface. I really think they were on the right track with user engagement, but they went offline and said they'd return but haven't yet and it's been over a year since they closed. This week PennyGrab introduced a game that allows bidders to win credits, but both QuiBids and PennyGrab require game play or tokens to be won via bidding in auctions first to play games to win credits. Just recently RagingBid with their social shopping rewards site BluKos announced that for every dollar spent at big box/popular retailers, i.e. Target, users will get free bids on their site.

As for gambling laws and whether or not penny auctions can be equated to gambling that really is up in the air. Penny auctions have not been deemed to be gambling. The BBC asked the question, but I do know that South Africa was looking into the possibility of this (http://www.pennyauctionwatch.com/2011/02/penny-auctions-illegal-south-africa-regulations/). Italy did however ban lowest unique auctions. The Justice Department issued an opinion last last year that reversed a long-standing position that the 1961 Wire Act ruling that states can legalize many forms of "wagering" Online except for sports betting.

Just a few months ago the FTC issued a consumer advisory warning on penny auctions, but other than that there hasn't been a governing body in the US that has spoken on them - at least to my knowledge.

http://www.pennyauctionwatch.com/2011/08/penny-auctions-gambling-laws-united-kingdom-uk-gambling-commission/

Struggling against an onslaught of Internet gambling operated legally from other countries, the Justice Department issued an opinion in late December reversing a long-standing position that the 1961 federal Wire Act prohibited most betting over the Internet.

10) Is there anything you’d like to say to future penny auction owners dreaming of making it big?

I tell future penny auction owners with hopes to make it big in penny auctions to, above all, put customers first, admit to mistakes, i.e. mistakes in software/programming, lags, glitches etc., make sure to not don't get in over your head by offering more items than they can afford to lose.

It has become much more difficult for penny auctions to secure payment processing, so make sure that your terms and your site is very clear to consumers or you could just lose processing if your bidders initiate chargebacks for any reason.

Don't mislead bidders by engaging in false advertising. If you choose to market your site with affiliate marketing (this can prove to be very successful) make sure you watch what your affiliates are doing and be sure that the marketing they do for you is FTC complaint or else you could get into a lot of trouble.

Ship items out quickly, as soon as you can, and within 30 days.

Make honesty your policy. Don't get too friendly with bidders, but also always maintain a high level of professionalism when communicating with them. Too many people that enter into the penny auction industry haven't had prior business experience and lack in professionalism. Be sure to keep your customer's information private. Make sure your site is encrypted to protect private/sensitive information like addresses and credit card information. Be very careful if a third party approaches you wanting to "verify" your site.

Be careful who you trust, too. There have been a few individuals that entered the penny auction space, posing as experts and offering help to site owners and verification services only to turn around and use their memberbase to their own advantage.

Find creative ways to reward and engage bidders. I think all penny auction owners should take advice from Tony Hsieh, CEO of Zappos.com. “I had decided to stop chasing the money, and start chasing the passion." - Tony Hsieh. In order to succeed at anything in life I truly believe that one must be passionate about what it is they are doing.

If you decide to launch a penny auction it will most likely take up much of your time, make sure you enjoy the concept and the culture.

Engage with your customers. Use social media to your advantage.

Keep evolving and seek to innovate. Listen to feedback from your customers and add features and items that your customers will actually like to bid on.

Unique packaging and handwritten notes can go a long way. When LabelDoll.com was a penny auction site they really impressed me with that.

Find creative ways to advertise. You can do more beyond newspaper, radio, TV, Internet, affiliates. Advertising is imperative. You need to get the word out there or you won't have many bidders and your site won't last very long.

Make sure you do have win limits or your site could really suffer by the hands of a few bidders.

Also, check out my post on Guidelines for Penny Auction Owners http://www.pennyauctionwatch.com/2010/10/how-to-run-penny-auction-site-owners-guidelines/


Thank you again for interviewing me!

I'd like to invite anyone interested in penny auctions whether you are currently involved in running a penny auction site, seek to start one, or are a bidder looking to learn more about a lesser known way to shop online be sure to join my forum http://PennyAuctionWatch.com/forum and subscribe to the blog http://PennyAuctionWatch.com

Membership is free and open to all!

Thank you!

-Amanda

PennyAuctionWatch Founder

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