I like the way Allen worded it:
Written by Allan P. (Level 0)
This site is not an auction: every bid costs a credit, which is money: who has ever seen an auction where the bidder has to pay for each bid increment?
This site is closer to a lottery, but not quite the same, since you need to buy several “tickets” for one raffle.
This site is really about gambling, since you have to increase your bid in order to stay in the race until it closes.
But it is twisted gambling, and of course in the site’s favor.
First twist: at poker, or in any gambling game, the gambler knows the odds. Here, the gambler does not: unknown and uncontrollable pool of bidders, unknown and uncontrollable gains (since you won’t know the cost of purchase until the end). At Quibids, the house manipulates the odds, as they do anything they can to build the biggest possible gambler pool (the larger the pool, the less chance to win) with their interest at heart (maximising bidding) and not the bidders’ interest (understanding the odds of winning). Their system only pays lip service to informing the gambler, who basically makes betting decisions blind-folded (the site gives Motherhood and Applepie advice like wait the last 10 seconds to bid…yeaah, right, but does not show stats about when to bid, by category of product, for instance).
Second twist: it is a resource-exhausting gambling system. To win, you simply have to exhaust competition, and any bet you placed early is lost as long as it is not followed by another bet. In most gambling games, like roulette, every bet creates a chance to win, whether it is a small or a big bet, and the House cannot disqualify a gambler just because of lesser resources. Here, at Quibids, if you want to see the outcome of your bid, you just have to keep bidding… and paying.
In fact, the QuiBits system is banking on irrational behavior in order to make money. The best auction scenario for QuiBits is one that attracts a lot of bidders for a trendy product and lots and lots of bidding happening in very small increments. In such a scenario, there are lots of fools, but the biggest fools are the ones bidding early. But they contribute to traffic and bidding, thank you very much. Clearly, BIDDING EARLY IS NOT A RATIONAL DECISION. Then, why would a bidder want to bid early and exhaust credit resources for impossible odds? Bad instincts, fueled by gambling fever and dreams of affordable luxury. But also, poor information made available by the site. QuiBids does not help the bidder strategize: But of course, this would not be in their interest, as it would discourage early bidding, which of course would be the kiss of death for the site.
In the QuiBids environment, late bidders are not much better off: as bid increments remain small, the gambler’s pool size is not likely to get smaller until people fall off the cliff and get resource-exhausted. QuiBids could have chosen a system fairer to the gamblers, like increasing the bid increment as the auction progresses: increasing the bid increment would create higher stakes for late bidders, thus reducing the bidders’ pool and increasing the odds of winning (which would partially compensate late bidders for investing more money on the auction). Instead, they maintain or even reduce the bid increment (I actually saw QuiBits reduce bid increments in the later stage of an auction for a $1300 MacBook Pro, from 15c down to 5c: I thought this was so unfair to bidders…): it is all about pushing traffic and bidding…
At the end of the day, to determine if a gambling system is fair, the test is simple: it is about how much money it returns to the gamblers. In Vegas, if you play the machines, the machine returns 90% or 95% or even 97% of the money. In the Quibids system, I would not be surprised if they return no more than about a third of the money. Plus they apply additional fees (“transaction fees”), plus when the site is popular, they will leverage the traffic and make money out of advertising revenue… The beauty of all of this is that they don’t even need to buy the merchandise until it is sold through an auction: there is zero risk for them! they sell first, and then they buy the stuff before shipping it to the “winner”. I betcha, soon, they will auction coupons for automobiles: you win the coupon and you go directly to the dealer, QuiBids will not even have to bother shipping you the car, you’ll do the legwork for them. What a system! Maybe I shall imitate them and build up my own QuiBids website…
The bottom-line? Definitely a very smart fool’s trap. No doubt about it!
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