Quibids: Can you buy electronics for a penny? (No.)
Quibids, a popular online auction site, advertises prices starting at $0.01 for many items – but you buy your bids. Do these bid costs and shipping fees erase the apparent discounts?
(Page 2 of 2)
The sunk cost fallacy is at play all over the place here. Quibids (and other sites like it) are just an e-commerce shop at their core with an interesting “auction/game” mechanism on top of them. The vast majority of bidders in an auction will not win that auction.Skip to next paragraph
The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.
Subscribe Today to the Monitor
The reason people keep bidding, though, is the idea that they need to recoup some value from what they’ve already sunk into that auction. “I’ve already invested 20 bids and thirty minutes into this auction, so I need to get something out of it,” they think, so they keep bidding. I saw a lot of people jump into an auction, bid until they apparently reached the point where it was more cost-effective to just “buy it now,” and then drop out. In fact, the site seems to have a lockout mechanism at some point where it informs you that you’re better off just buying it now.
Thus, the only reason to use the site is if you’re willing to pay face value for an item that you actually want or can actually really use. If that’s the case – and you don’t mind paying the standard retail price for an item – then you might actually get some benefit out of sites like Quibids, because, in the end, the auctions there are akin to a lottery, where you have some fairly small chance of getting a steep discount on an item. If you don’t hit that chance, then you’ll be paying MSRP for the item.
For me, though, I’d rather just shop around for a better deal on the item. If I can find a particular item for 20% off with fifteen minutes of searching, I’d far rather take the guaranteed 20% discount than a small chance at some uncertain level of discount.
Of course, the real winner here is Quibids. They’re basically able to sell a lot of merchandise at the normal retail price online. They also get to pick and choose what items they’re selling, which means they’re likely choosing the ones where they know the difference between their wholesale price and the retail price is low.
This model, of course, only works if there are a lot of users on the site. If you only have one user who is able to win items for $0.01 consistently, then the site model doesn’t work. From what I’ve seen, they have a pretty solid user base, likely thanks to their strong promotional work.
The more users using Quibids, the better the equation shifts in their direction and the worse it gets for you, the end user. Your chance at a big discount on a specific item becomes very small indeed.
My recommendation, in the end, is to just shop around for items you want instead of gambling – and likely paying retail price – at Quibids.
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.