Type of site | Private |
|---|---|
| Founded | February 22, 2009 |
| Headquarters | United States and Finland |
| Area served | United States |
| Founder(s) | William Wolfram |
| CEO | Mark Streich |
| Industry | E-commerce |
| Products | Online bidding-fee auction with "Buy It Now" option |
| Employees | 65 |
| URL | www |
| Users | 8 million |
DealDash is a bidding fee auction website. It was founded in 2009, and is headquartered in Minneapolis, Minnesota, United States. [1] [2] [3]
Users buy "bids", which are credits priced at 13 cents each, which increase the listed price of the item by 1 cent. If no user places a bid after the previous bid, by a time specified (9 seconds as of 2024 [4] ), the last user to bid wins the item and must pay the listed price. [4] [5] The user has already used bids, meaning they have used more money in total in the auction for the item than the listed price, potentially more than the manufacturer's suggested retail price (MSRP). Users that lose the auction lose their bids, unless they choose a "buy it now & save your bids" option, with the buy-it-now price being higher than MSRP. [6]
DealDash, as with other bidding fee auction websites, has faced criticism for misleading advertising and marketing, from consumer organizations such as Consumer Reports and Truth in Advertising. The criticisms state that the prices listed on the DealDash site, and in their advertisements, are the vastly lower-than-market price the successful user pays for the item itself, excluding the amount they paid for bids. In certain cases, even in DealDash's own advertisements, the amount a user has paid for bids placed plus the final price is higher than what would have been paid in a regular retailer. The criticisms state that bidding fee auction websites operate as an unregulated form of gambling. [6] [7] [8]
DealDash's own terms of service formerly told users that they are unlikely to win auctions using the service, and are likely to spend more money using the service than the retail cost for any products they might receive. The terms stated that the "entertainment value" of using the service made the higher prices "fair" compared to shopping at the lowest price retailer. [9] However, the terms were updated in 2016 to no longer include those statements. [10] [11]
DealDash was founded in 2009 by William Wolfram, a 16-year-old Finnish entrepreneur, who had lost $20 bidding unsuccessfully for a MacBook on an earlier penny auction site. Wolfram had generated approximately $500,000 in affiliate sales a year earlier buying popular YouTube videos for $50, borrowed from his mother, then collecting revenue from affiliate marketing links he would add. He used the money he had saved to start DealDash. [12] [13] [14] [15]
The company's business model, as with prior sites, is that customers enter into bidding, where they pay for each bid on an item, regardless of whether they succeed or not. Each bid marginally increases the price of the item until the end of the auction, at which point the item is sold to the final bidder. [8] DealDash differs from predecessors mainly in that losing bidders are given an option to apply money they had spent unsuccessfully bidding on an item towards purchasing the item at a posted retail price. [12] [2]
DealDash obtained early financing from a youth program of Tekes, a Finnish public funding agency. [15] It later raised approximately $1.5 to $2 million in venture financing from the Chief Executive Officers of Rovio Entertainment (publisher of Angry Birds ) and Carbonite. [12] [16] The company grew quickly, quadrupling its revenue yearly for its first three years. As of early 2012 it was earning $1 million profits on $44 million revenue. [12] By 2013 it had 67 employees, yearly revenues approaching $100 million, [17] and was ranked as Finland's second-most visible startup based on attention from media, bloggers, influencers, and users. [18] According to Socialbakers, DealDash was the most talked about brand on Facebook's "People Talking About This" during a period in May 2013, [19] [20] and had the highest engagement rate that September. [21]
In 2013, when Wolfram was still 20 years old, DealDash moved its headquarters from Helsinki, Finland, to Minneapolis, Minnesota. [12] In August of that year, the company also created the site DealDashReviewed.com to house and aggregate reviews and testimonials from their customers. [22] [23]
DealDash, like other auction sites, has been described as a gamified approach to e-commerce. [24] To participate, registered bidders first buy "bids" priced at $0.13 each, that they may spend bidding on auctions. [25] [4] [5] Standard auctions begin with an opening price of $0.00, with every bid placed increasing the price by $0.01 and removing one paid "bid credit" from the user's balance. Bidders may choose to place single bids, by manually clicking the bid button, or through an automatic bidding tool called the "BidBuddy". [5] An auction clock restarts from a maximum of 9 seconds (as of 2024 [4] ), every time a bid is placed. If no new bids are placed before the clock runs out, the last and highest bidder is declared the winner of the auction. [24] [26]
DealDash has been criticized for offering poor value to customers and for making disclosures only in fine print. [2]
Penny auction sites, including DealDash specifically, have often been criticized for failing to disclose or include the cost of bids in what customers actually spend in total to win a product. In a conventional auction, bids are based on prices that participants are willing to pay, with the item sold to the final bidder within a set period that bids the highest price. This usually allocates the item to the person who is willing to pay the most. By contrast, penny auctions award items to parties that are persistent or lucky enough to place the final bid, with money raised primarily from the cost of bidding rather than the final price of the item. In most cases, users spend substantial sums of money without winning anything. DealDash and others have been compared to gambling by consumer groups. [6] [8]
According to Consumer Reports , the "buy it now" prices can be significantly higher than the same products on Amazon.com. [6] Unsuccessful bidders not using the option lose the value of the bids placed. A company spokesperson says DealDash generates significant business from bidders who choose to buy items after losing, with hundreds of orders processed daily. [27]
Consumer Reports also reported that many "luxury" brands touted on DealDash are non-existent beyond the website and their trademarks are registered by the owner of DealDash, through another company that he is associated with, namely Galton Voysey. [28]
Consumer organization Truth in Advertising reported that a DealDash television commercial shows "Roseanna" winning a $349 KitchenAid stand mixer for "less than $25". Small print explains she bid 761 times on that mixer, which cost her over $456, plus the $25 "price" she won it for. This means she paid closer to $481 – well over the stated $349 retail price. [7] Both Truth in Advertising and Consumer Reports noted that DealDash's own terms of service tell users that they are likely to spend more than the retail cost for products and are unlikely to save money using the site [6] [7] (the terms of service were updated in 2016 to no longer include that statement [9] [10] ).
DealDash faced a false-advertising class-action lawsuit in 2017, with plaintiffs alleging that consumers were deceived into thinking they could purchase items for less than their retail value but in reality having little chance of winning items or saving money. Plaintiffs also argued the allegedly premium products on offer were generic items manufactured by companies with links to Wolfram. [29] [30] [7] [31] Eight months later, the lawsuit was dismissed. [7]
A shill, also called a plant or a stooge, is a person who publicly helps or gives credibility to a person or organization without disclosing that they have a close relationship with said person or organization. Shills can carry out their operations in the areas of media, journalism, marketing, politics, sports, confidence games, cryptocurrency, or other business areas. A shill may also act to discredit opponents or critics of the person or organization in which they have a vested interest.
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory.
Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.
An online auction is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with different bidding and selling rules.
Shop at Bid was a British television shopping channel that ran daily auctions and later fixed price demonstrations. It was the world's first channel of its kind. It launched as Bid-Up.tv. The channel was owned by Bid Shopping.
Trade Me is New Zealand's largest online auction and classifieds website. Managed by Trade Me Ltd., the site was founded in 1999 by New Zealand entrepreneur Sam Morgan, who sold it to Fairfax in 2006 for NZ$700 million. Trade Me was publicly listed as a separate entity on 13 December 2011 under the ticker "TME". In May 2019, Trade Me was acquired by private equity firm Apax Partners for NZ$2.56 billion. Trade Me Ltd also operates several sister websites including FindSomeone and Holiday Houses.
A bidding fee auction, also called a penny auction, is a type of all-pay auction in which all participants must pay a non-refundable fee to place each small incremental bid. The auction is extended each time a new bid is placed, typically by 10 to 20 seconds. Once time expires without a new bid being placed, the last bidder wins the auction and pays the amount of that bid. The auctioneer profits from both the fees charged to place bids and the payment for the winning bid; these combined revenues frequently total more than the value of the item being sold. Empirical evidence suggests that revenues from these auctions exceeds theoretical predictions for rational agents. This has been credited to the sunk cost fallacy. Such auctions are typically held over the Internet, rather than in person.
Auction sniping is the practice, in a timed online auction, of placing a bid likely to exceed the current highest bid as late as possible—usually seconds before the end of the auction—giving other bidders no time to outbid the sniper. This can be done either manually or by software on the bidder's computer, or by an online sniping service.
Bidding is an offer to set a price tag by an individual or business for a product or service or a demand that something be done. Bidding is used to determine the cost or value of something.
In Internet marketing, search advertising is a method of placing online advertisements on web pages that show results from search engine queries. Through the same search-engine advertising services, ads can also be placed on Web pages with other published content.
The term online travel auction is a system of buying and selling travel products and services online by offering them up for auction and then awarding the item to the highest bidder. The need for travel auctions emanated principally due to the high cost of travel. This high cost is also what led to the growth in popularity of low-cost carriers, a concept initially pioneered by Southwest Airlines, and later mimicked by Ryanair.
Swoopo was a bidding fee auction site where purchased credits were used to make bids. Prior to changing its name to Swoopo in 2008, the website was called Telebid. In March 2011, Swoopo's website became inaccessible, and a notice page claimed that Swoopo was experiencing "technical issues." In February 2012, DealDash obtained the domain name for Swoopo.com. The penny auction was invented by Lloyd Liske and William Buckell when the site was first created and known as telebid.com. At that time the site received bids by phone and charged to transfer their bids to the internet site. This is where the format of paying to place a bid started.
Customer to customer markets provide a way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or service. In customer to customer markets, the business facilitates an environment where customers can sell goods or services to each other. Other types of markets include business to business (B2B) and business to customer (B2C).
Pricefalls, LLC was an American Internet company that managed Pricefalls.com, an on-line retail marketplace, and PFTech, a leading marketplace platform developer. In 2019, Pricefalls, LLC was acquired by Loblaw, Canada's largest retailer.
A reverse auction is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential sellers. In an ordinary auction also known as a forward auction, buyers compete to obtain goods or services by offering increasingly higher prices. In contrast, in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other.
MadBid was a Gamified eCommerce and online auction website registered under Marcandi Ltd. in the United Kingdom. It was founded in 2008 by Juha Koski, Madhur Srivastava and Daniel Rovira. The company operates in ten European countries including the UK, Ireland, Spain, France, and Australia. However, in August 2018, Madbid closed down and ended all sales.
QuiBids.com is an American online retailer headquartered in Oklahoma City, Oklahoma, United States. It is a retail website that operates as a bidding fee auction, also known as a penny auction. The company has been sued under allegations that it is a form of illegal gambling and that its advertising is misleading. It advertises the price products are auctioned at in QuiBids cash and compares them to US dollars without disclosing the different currencies being used.
PropertyRoom.com is a live online auction website that sells confiscated police goods and approved third party merchant merchandise to the highest winning bidder. PropertyRoom.com is the largest online police auction website in the United States.
Beezid was a Canadian online retailer and penny auction website located in Montreal, Quebec.
Header bidding is a programmatic advertising strategy where publishers offer their ad inventory to multiple ad exchanges simultaneously before making calls to their ad servers. This process contrasts with the traditional waterfall method, where inventory is offered to one ad exchange at a time.
