Some of you may search online auctions and good deals daily, I know I am one of those. Well I found the biggest of ripoffs and if people would do their research before it would save them some money.
I was researching iPads because of the convenience of them and how they would work at the trade shows my hubby and I go to. So I entered into a search engine something like "best iPad auction" and it came up with these weird auction sites I had never heard of.
Quibids and Arrow Outlet. Anyone else hear of them, you may have seen them on ABC, MSNBC.... yada yada yada. Well it just goes to show you that the media does not know a thing about saving money. Sure you can probably get a good deal but at what expense.
Here is how it works, I watched one auction go on forever and added up what the cost was. RIDICULOUS!!
I was looking at the iPad on arrow outlet and the starting bid was $0.00. Each time you bid it raises the price by .01. You have to pay for each bid ahead of time and you can purchase them in what are called "bid packs". For instance I would first purchase 100 bids at $49.95 and then they give you a bonus of 5 more, each time you place a bid now you are paying .48 cents for each bid and each bid only raises that auction by one penny?!?!
So back to the iPad (32GB with Wifi, to be specific), if you go to their ENDED auctions to see a real time price one just recently closed for $122.57 on 1/24/11 @ 11:00 p.m.
This auction again went up in .01 cent increments that you paid .50 cents each for. Right now with just the bids that I figuratively bought (105), just by myself I could get the amount up to $1.05. WHAT?!?! This item sold for $122.57, that means that there were 12,257 bids placed and each bid was paid to them at .50 cents a piece. Arrow Outlet just made $6128.50 in bid fees alone and say they only "sold" it for $122.57 (but they do include free shipping, hardee har har).
Let's do the math:
So let's just say there were 20 people who bid on the iPad mentioned above:
12,257 / 20 (people) = 612.85 (amount of bids needed to try to win per person)
each bid cost .50 cents
$.50 x 612.85 (bids needed to win) = $306.43 (Unless you bought their bid pack of 1000 bids + 75 for free for $499.95 and only paid .47 cents per bid)
OK so $306.43 to buy the bids, then you win the item for $122.57 (but the shipping is free), your total is $429.00. You only saved $201.00 and your eyes are now bloodshot from staying up late constantly raising the price up penny by penny.
If you would have bought the 1075 bid pack at $499.95 + $122.57 = $622.52 (you only saved $7.48) I am going to assume people are buying lowest packs because at first it may not seem like you would need that many to bid. Which means if you did you lost money now instead of saving it. (You can buy the same iPad on Best buy for $599.99 and be guaranteed the item and not have to look like a zombie at work the next day)
Now granted there are way more people bidding on this one item but you can see how it can add up really quick.
The other scam they have going on is the bid packs you can win by bidding on them, again one penny at a time. You can win a 100 bid pack and pay $8.53 for it. Again:
853 bids placed to get it to $8.53.
You pay .50 per bid and it only raises this auction by one penny at a time.
Again 853 / 12 (people) = 71.09
71.09 bids each person may have had to make to try to win
So each person spent $35.55 and only one person won. (they still give you the option to put the bids you made though towards buying it at retail cost.) You are bidding to win bids to bid again.
Say you bought the 40 bids at $19.95 and you try to win the 15 bid pack to get more bids. The last auction went off for $1.30 (130 bids to get this, they made $65.00 off your bids and did not have to provide you an item that you can physically touch, just more bids. (Again if you won, if not you are out the bids and now have the "option" to buy more)
The auctions have this never ending process as well. The clock can get down to 1 second and someone can out bid you over and over. The clock turns red on the final 15 second count down, in that 15 seconds someone can out bid you over and over again. So an auction that says it end in 1 hour (let's say 1 hour starts at 12:00 p.m.), this "last 15 seconds" can go on until someone gives up, runs out of bids or money and go well on into 3 a.m. the next day.
Now granted they do provide the product at a discounted price if you win and you can win some good deals. I think if people stepped back and averaged out what they won compared to what they spent they would be shocked.