Q. I am interested in penny auction system, but my partner thinks that the business model does not correspond to our company policy. What should I say to him?
A. First of all, please ask from your partner what exactly he doesn’t like in PA business model. If the answer will be - too many unhappy customers, then there is a solution for this kind of issue.
1) Also in classical auction there is only one winner, other participants doesn't get anything.
2) The difference between classical and penny auction is in “Pay-per-Bid” model - every bid costs, so unsuccessful bidders lose a portion of money.
3) To be fully ethical give them their money BACK. 100%.
4) By offering “Buy now with discount” option, where every used bid give a discount for purchase this particular product, what was on auction. If such discount is equal to the bid price, even from the biggest bid package (the cheapest price), you may declare that your customers have a 100% discount.
5) As a result at your auction will be the following situation - one customer (winner) will get the product with very big discount, all other participants may have it for its retail price.
No unhappy customers at all.
6) But where is our profit? - your partner may ask. We can say, that several big PA auctions, for example Quibids, work by this business model. We will discuss their profit sources in our next blog post on Friday 07 of September. Stay on line.