Penny Auction Sites: Shopping or Entertainment?

entertainmentWith their initial launch around 2005, penny auction sites introduced a new way to purchase items online. In its strictest sense, the method was not gambling, nor traditional shopping, either. It was a new blend: an activity meant to cater for two of the base necessities of modern-day society: consumption and entertainment. The economic setting which witnessed the birth of these sites had all the necessary ingredients: financial crisis, cash shortage, a drop in sales, unemployment; you name it. It was not a coincidence for the idea of penny auctions to be refloated in the midst of such a global crisis.

How are Penny Auction Sites shopping sites?

The underlying concept of these web pages has to do with shopping, that is being able to purchase items at a very low cost. This is what penny auctions are about. In this sense, the main activity carried out would be shopping. Winners of the bidding processes become shoppers when they carry out the transaction by paying the final price. Since credit card operations or electronic money transactions are involved, the activity looks pretty much like shopping. Instead of making a profit by adding the estimated earning to the product’s original price, site owners charge a bidding fee which is used to keep the site operational.

Buy Now Feature

In the early days, penny auction sites did not offer this alternative. If a person failed to place the last bid, they lost both the chance to buy the item, and the bids they had used in the auction, as well. Until users demonstrated their disgust, then things would change. Anger replaced disappointment little by little as reality sank in; some penny auction site users had spent big money on items they never won. Moreover, even those few lucky winners who did manage to purchase items at a very low cost realized that in the end, they had spent much more than if they had bought the items online through traditional methods. In order to straighten things up a bit and restore consumer confidence, the sites started offering the “buy now” option. This way, unused bids could become useful.

How does the “Buy Now” work?

Provided a penny auction site member lost an auction, they are given the chance to buy the item they were bidding on at retail price. Not only that, they are also entitled to use those bids they lost in the auction in order to pay for the item. It is like cashing those bids, somehow. There are certain conditions that should be met in order for the transactions to take place and variations according to each site. This is the reason why users are encouraged to read terms and conditions thoroughly before engaging. Some of the regulations surrounding the use of the “buy now” alternative include time restrictions, like for example: shoppers must buy the item no later than 48 hours after the auction has been closed. Some sites give their members the choice to buy other items in the same category inventory. For instance, suppose you were bidding on an I-pad and lost, with the “buy now” feature you are given the chance to buy another item in the technology category, like a tablet or a mobile.

So, what’s the problem?

So far, so good, the difficulty lies in the fact that it was due to this innovation, that Penny Auction Sites began their downfall. Why is this so? These sites’ major income came from the bidding fees members had to pay in order to have access to the different auctions available online. When most players started “cashing” these bids and using them to actually buy something at standard retail prices, then revenues dropped significantly. This resulted in reversal of fortunes for the sites, majorly because when users actually won something –and some do truly win- these discounts meant huge losses for the companies. This is one of the reasons the “buy now” feature has suffered severe modifications in these past years. Some sites have limited the percentage of bids a person can use to pay for an item; generally 25% only. In addition, some penny auctions sites limit the amount of times a member can use the alternative on a monthly or even yearly basis and finally, some sites have done away with the “buy now” option altogether as a means to survive.

How are “Penny Auction Sites” a means of Entertainment?

Many skeptical viewers blame penny auction sites of toying with illegality. The truth is that even when these sites are legitimate and have been dismissed as gambling sites, they are a borderline form of gambling. The whole idea of expectation and anticipation surrounding each auction is very similar to wagering money on something. In fact, some experts have even gone as far as to say that there have been some cases of addictive behavior as regards people’s wish to spend long hours bidding on end. It must be noted that this addictive behavior is more connected with consumerism than ludopathy. Shopaholics find it really hard to quit the bidding process and fall easy prey of automatic bid recharges, for example. On the brighter side, many lonely, homebound people, like old age pensioners or those with some sort of physical disability, claim that penny auction sites make their day. It is a way to get their minds off worries and a means to feel a part of this society. Some penny auction site mongers have expressed their thankfulness as, due to their constant involvement in these auctions, they have acquired bidding strategies they did not know of before.

Final Words

There is also a sort of playful atmosphere about most penny auction sites, especially when they provide different types of bidding, use fantasy names to call users, bids and prizes. It is all very childlike, even. Finding an opportunity to strike a deal in an entertainment page is very enticing for many people. In the age of solitaire entertainment provided by different technological advances, penny auction sites have come to narrow the gap between what’s fun and what’s useful.