An Empirical Analysis of QuiBids’ Penny Auctions

Abstract

AbstractGiven the string of bankruptcies of penny auction websites over the past two years, we use empirical data to investigate whether QuiBids remains profitable. Although profitable on an auction-by-auction basis, penny auction sites have problems retaining users. In order to alleviate this problem, QuiBids has implemented a Buy-Now system, in which losing bidders can contribute money they already lost in the auction towards the purchase of the item at a slightly inflated price. We find that QuiBids makes only limited profit after accounting for Buy-Now, but is able to remain profitable due voucher bid pack auctions. We also show that a large proportion of QuiBids’ revenues come from experienced bidders, suggesting that rules designed to promote consumer retention may be working as intended.KeywordsProfit MarginRetail PriceRevolving DoorWinning BidderPrice MarkupThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.