Websites Gambling Re-invented is not the usual auction website as you may know it. The best practice for auction websites (err for instance) would allow you to set a price you would be ready to pay for this item. If the item becomes to expensive for you, you can nicely drop off. Cost of the operation: ZERO!

On you can in theory buy normally expensive items at very low price (playstation 3, iPod touch etc.) as every auctions start at 0€, the maximum raise is 10cts and every auction has a limited lifetime. However there is a trick:

  1. Everytime you bid on an item, it costs you 50cts (however you do it, per phone or online)
  2. Everytime a bid is placed in the last 20 second of the auction, the time is reset to 20 seconds (it can actually go up to 2min depending on the number of users bidding at this very moment)

Let’s take an example to understand this better:

After 3 days, a Playstation 3 has reached the price of 100EUR. This means that 1000 bids of 10cts were made, each of them costing 50cts. So before the item is actually sold, users have already given out 500EUR (and the auction is not over). But as time is running and reaches 20 seconds before the auction ends, users start rushing and this is were the fun starts… I believe until the price of the auctions gets close to / or matches actual retail price, users will keep on bidding. For the sake of the example, we’ll pretend the auction ended at 350EUR (50EUR less than what offers it) and make some simple calculations:

Price sold: 350EUR
Number of bids: 350EUR/0.10cts= 3500 bids
Amount paid by bidders on the auction: 3500 bids*0.50cts=1750EUR
Total: 350EUR+1750EUR=2100EUR

Take a look at this auction to get a graphic explaination:

The business concept is very clever. While I think this might get some momentum at first and one might actually get a good deal with a bit of luck, I don’t think it will attract and retain users like more conventional bidding sites do. Or if it does, it will be a different type of user: the gambling one.

Ebay bidders will agree that it is rather satisfying to bid on an item and win the auction (this is actually one of the USP eBay is basing its marketing on). With telebid’s system, chances of winning the auction are very low (and cost money). So out of the 100s of bidders, there will be a lucky winner, and the rest can start all over again. What’s in for the user? You figure that one out yourself… I for one haven’t found anything!

I would compare Telebid as a new form of online gambling, which has been ruled illegal in Germany on January 1st 2008. I’m curious to see how this is going to evolve…

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