I have no doubt that live auction sites such as Smokoo and ViaZiz have been all over the Internet for years. But they’re a pretty new phenomenon in South Africa – to their benefit, because they are making a killing.
In a nutshell, here’s how these auction sites work: You sign up for free and then purchase “bids” separately, which can cost anywhere from R3.50 to R7,50 each, depending on the size of the bundle of bids you decide to get.
Auctions are live on the site and have a countdown timer. Every time somebody makes a bid, the clock time jumps back 10 seconds and the “auction price” goes up 1c. Needless to say, fierce bidding action happens in when the last 10 seconds of an auction come about because everybody ties to outbid the rest in the dying seconds, only to see the auction prolonged by an additional 10 seconds every time.
So, an in its dying seconds can still be prolonged for hours at a time.
But that’s only half the story. Every time you click to bid, while the “auction price” of the item you’re bidding on only goes up 1c, you’re essentially paying between R3,50 and R7,50 for every click – and this is where Smokoo and ViaZiz are making a killing.
You see, the items on their sites are highly coveted. iPads, MacBooks, LCD TVs, cameras, iPhones….all the stuff that people lust over but can’t afford. When you see an iPhone 4 on auction and the auction price is R56.79, looks like a pretty good deal…and it would be if that was the price you pay.
You see, in order to get to R56.79, bidders would have had to place 5,679 bids, which, at the lowest bid cost of R3.50, has netted the auction site a cool R19,876.50 even before the item is sold. That’s a handsome profit considering the iPhone itself only costs around R8,000.
Here’s another example where an iPad “sold”for just over R1,000 but Smokoo actually made over R107,000 from the auction.
Bid rigging, price inflation and fake auctions seem to be a big problem with these types of sites as well, because ViaZiz seems pretty vocal about the fact that it does not do this and that all auctions are “fair”. But that’s not to say that other similar sites online don’t do this to make more money.
And herein lies the danger – people think they’re getting a good deal online when they are having to pay way more than the price they see, and also the ingenious business model that is making the owners of these auction sites so flippin’ rich very quickly.
The flipside, of course, is that you could be the lucky person who puts the winning bid down on an auction for the cost of one or very few bids and end up paying the bargain price for the prize (and the not-so-bargain price of R600 delivery in some cases!).
I see that certain auctions on ViaZiz also offer a bids-back guarantee that if you win the auction, you get all your bids refunded, so it really comes down to who has the most bid at their disposal and the endurance to sit in front of a computer until the other bidders give up and the clock eventually runs out.
Either way, lots of money is being made and by the look of activity on the sites, people are lapping it up. It may not even be about winning the item..it may be the same thrill that you get from gambling, which these auction sites essentially are – casinos.
Wish I thought of this business model.
But the question is, how long will the novelty last before people realise they’re gambling their money away faster than they realise? And, how long will it be until the National Gambling Board steps in and puts these sites out of business?
I, for one, am staying clear of these sites because as the old adage goes: “If it looks too good to be true, it probably is”…and in the case of Smokoo and ViaZiz…it totally is.