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The following article was published in our article directory on April 12, 2012.
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Article Category: Lifestyle
Author Name: Kelsie
A penny auction is a type of all-pay auction that requires individuals interested in winning a particular item that's offered to not only outbid one another but also pay a fee to be able to participate in the bidding process. To be able to really be familiar with what this type of auction is all about, let's look at the many points that set it apart from a traditional online auction. These are as follows:
Different business model - A penny auction makes use of the pay-to-bid business model the mechanics of which have been described in the previous paragraph. This is unlike a traditional online auction where members can bid on an item of their choosing for free.
Higher risk - You can lose money with penny auctions if you are not the winning bidder. This is because as said in the previous point you need to shell out a certain amount to be able to place bids on an item. If you lose, you lose the money you spent to purchase a bid package, too.
Lower item cost - Penny auctions became popular because they give those with limited funds a chance to own items that are otherwise beyond their means. This is because items offered up for bidding in a penny auction are often sold at very low prices - usually just a fraction of what they cost in a store.
One seller - In traditional auction sites found online members are able to buy and sell items using the auction format. With penny auctions, though, members are only allowed to bid on items they want and should they win, they can purchase these for the price that's indicated when the time allotted for the bidding expired. The only seller in this case is the owner of the auction site.
One point of contact - Still in line with the previous point, with penny auctions all your queries about the items up for grabs can be addressed to the owner/s of the auction site. This means that if you are the winning bidder for a particular item, any discussion about how it will be delivered to you will be between you and the site owner. On the other hand, with a traditional auction site you need to coordinate with the member who put the item you won up for bidding regarding its delivery.
Payment - In penny auctions you are required to shell out money twice: first to purchase bids, second to pay for the item itself. In traditional online auction sites you only need to pay for the final amount you bid if you win the item.
As can be gleaned from the points enumerated above, it's obvious that bidding in a penny auction has both pros and cons . When it comes to the former, if you win and subsequently purchase the item you were placing bids on you stand to save a lot of money. However, if you fail to get the item you also lose the money you spent for the bids you placed. As such, before you opt for this method of acquiring items you need to look at its pros and cons first and see if you are comfortable with this type of auction.
Keywords: Penny Auction
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