We recently wrote about stealth startup Project Fair Bid, which aimed to reinvent and legitimize a controversial bidding model pioneered by Swoopo. Today, Project Fair Bid is emerging from its cocoon as BigDeal.com, an auction-based e-commerce site which takes a different twist on the questionable paid bidding model.
Similar to Swoopo, BigDeal lets users purchase virtual bids $0.75 each which can then be used to bid on goods ranging from video games to high-end televisions. Whenever you bid on an item, its price increases by $0.15 and an extra 30 seconds are tacked on to the duration of the auction. With this model, items end up selling substantially below their market value. But one of the main criticisms of Swoopo was the risk of losing your money spent on bids (regardless of whether you win or not) when the auction concludes. BigDeal takes a couple of steps to mitigate this risk.
With BigDeal’s model, any users who get outbid get a full credit of the money uses for bids to buy the item via a “Buy Item Now” option (which Swoopo also has, called “Swoop-it-now”). So if you spent $10 on bids, your Buy It Now price will be dropped by $10. Of course, the Buy It Now price will frequently be higher than the price of item sold for in the auction but at least users aren’t necessarily losing money all together. And the Buy It Now price is set at the same price that Amazon lists for the same product.
That’s not all. BigDeal provides an added incentive for bids by letting all users trade in the money they spent on bids for gift cards. All users get $1 gift card discount for every $1 spent on bids. So if you buy $25 in bids, BigDeal will give you a $100 gift card for $75. Gift cards that can be bought are from prominent retailers such as Amazon, Gap, Walmart, Foot Locker and more. It all sounds too good to be true, right? Well, Big Deal admits that they are taking a cut when it comes to the gift card bonus, but the incentive is designed to build loyalty around the site and draw a viral following. Big Deal monetizes by taking a percentage off of the sale price.
Big Deal’s co-founder, Nicolas Darveau-Garneau tells me that the site aims to insert transparency in every step of the bidding and buying process. For example, on a given item’s page, you’ll see a list of the other bidders who have submitted bids on the item, their time spent on bidding on the item, number of bids, and the time since each users last bid. Interestingly, Bid Deal also features the previous auctions that have taken place around an item, which gives you the bid history and the exact price the same item was sold for in past auctions. The site, which claims to only feature the top-of the line products, has also added high-quality pictures of all items and quirky (yet informative) descriptions of products. For example, part of the description for the Nintendo Wii includes a poem, “Ode To The Nintendo Wii.”
For now Big Deal, which is open to the U.S. only, is concentrating on consumer electronics but hopes to expand to additional verticals in the near future. Big Deal’s founders all have significant experience in both the auction and e-commerce space, with alums from eBay, Yahoo Shopping, Walmart, and more. from The startup raised $4.5 million in funding from from the Mayfield Fund, First Round Capital, and Foundation Capital, with Raj Kapoor, Charles Moldow and Josh Kopelman on the the board of directors.
There is evidence that Big Deal could takeoff. While Swoopo’s model was controversial, the startup was able gain a loyal following since launching in late 2008, with the site counting nearly 2 million members in Canada, Germany, the U.S., Austria, and Switzerland and recently raising a $10 million funding round led by August Capital.
It seems that Big Deal has taken the best elements of Swoopo’s model and added several features which make it more of a win-win for consumers. Plus, it adds information, like bidding history, to the process to make the auction more fair. And the very least, you can leave the site with a gift card, so the money you spend on bids isn’t completely lost.
While the site will face competition from Swoopo, and even eBay to a certain degree, it is compelling. After demoing the product, I’m actually a fan and am looking forward to trying it out to perhaps check some items off of my holiday shopping list. Like any auction model, Big Deal requires more of a time investment than a direct buy retail site but it’s actually fun to compete for a product. I’m just waiting for the site to start selling designer handbags.
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Wow, this is one highly complex business proposition. Bid, bid now, bid on the ability to bid lower, price goes higher…
Maybe I’m just a little surly today — and guys like Josh Kopelman don’t make silly moves — but, at the very least, this biz concept lacks clarity.
I agree.
They have made a concept that is not simple to understand.
All I can see is that you can top your account with cash, and each bid comes down to $0.75 all the way down to $0.15 to help you bid a bit more. And, what you’ve already wasted on the company you can obtain back if you spend more (either a product, or these “gift cards”).
It’s nothing but an attempt to add a couple of features that Swoopo can clear in a couple of minutes. This site is a walking risk, because Swoopo can implent a feature and kill this competition faster than they can get a valuable customer.
Unless he can prove people wrong about his concept being original, he’s going to need some proper value on how the concept can help people obtain bargains, not how they can end up spending more money for a good item.
Regardless of such, I wish him good luck to his site.
This seems like a no-brainer to me. If I win the auction I get a great deal and if I don’t I get my money back…. I wonder how they will make money but I’ll be bidding in the meantime!
You won’t get your money back but they’re trying to make you feel as if. That’s exactly the point…
This seems like a no-brainer to me. If I win the auction I get a great deal and if I don’t I get my money back…. I wonder how they will make money but I’ll be bidding in the meantim
Yet another company burning cash in order to solve a problem that doesn’t exist.
Wow. I’ve used Swoopo in the past, but this seems like a way to get the upside benefit while collaring my downside. Pretty cool idea. I’ll definitely head over there to check it out…
Apple.com just called, they want their top nav bar back.
Other website BidRivals.com with similar model with each bid for 60 cents and price goes up by 0.01 cent only for 15 seconds. They also have the option to buy the product getting the full credit of your unsuccessful bids.
Seems pretty smart.
amazingly confusing experience for average consumers (watch their about video and have your brain fry)
Sorry to burst the bubble but I had a look at Swoopo a couple of weeks back and they have already implemented the exact same ‘Buy-it-now’ facility you talk about above. BigDeal.com are just a Swoopo clone, A wolf that their PR machine has tried to dress in Sheep’s clothing. Can’t believe you’re crediting them with having some sort of moral high ground.
That being said, I don’t have a problem with this type of site. If people want to bid in these auctions, let them.
+1
A dodgy model that’s basically gambling — with big VC help it is magically “all good” now.
+1
BigDeal == Swoopo clone…
Nice attempt from Leena in trying to make them look any different.
Home shopping channel 2.0! I give them full credit for a creative business model. I’m wondering if people are over bidding for stuff?
If I bid on items, and never won, I’d walk away. Maybe eBay soured me on bid fraud.
+1 on Apple nav bar
Funny. I remember bigdeal.com when it was a skateboard ecommerce site. Probably want be the last time we see bigdeal.com reincarnated as something else.
Or, funnily enough it could have been sold, expired, or given to a new person, who creativily enough managed to obtain a lot of VC funding.
Who said a domains history is defective?
Techcrunch why is even this Article here… it made sense to read about Swoopo cuz they really invented penny auctions. But now there is like 10 auctions site popping up everyday some just to shill you and take your money and disappear… What is so special about bigdeal? Swoopo also invented buy it now and was using it back in summer…
Just another swoopo clone that you can buy in web just google swoopo clone. And $4.5 million for funding??? you can buy a clone for few hundred bucks.
Penny Auctions is not sustainable business model because the generate large pool of losers and frustrated people who never win or got suck into ripp off buy it now prices. I wonder what is the customer satisfaction on these sites maybe like 10% ? You cant run a business that generates losers over long period of time.
Lets move on and see what is the next evil genius ripp of idea to suck money out from stupid consumers!
Did they really need an investment of 4.5M for this?
Sounds like an interesting business model. Why don’t they just place an insider and drive the bids up internally like Snapnames supposedly did?
they don’t place an insider because they are an honest company, why risk their business doing something dishonest like you would propose? remind me not to ever do business with bill hartzer!
he was kidding about snapnames you nut.
there is clearly shill bidding going on on this website. scam.
I’ve been playing this site and I want my money back it looks like they have bots shilling
It looks like you won 2 imacs on this site TheConqueror. How did that go for you?
Maybe they don’t have bots, but there are some heavy bidders! Swoopo on Steroids?
Pretty sure most of the bots are right here, posting how they’re ZOMG SO EXCITED about this site. Introduce yourself to your peers.
I just thought there would be less people on the first day, at least they have the loyalty bucks, not a bad deal there.
Go away, shill. You’re incredibly transparent.
Stay Away!
Okay, so I just tried the service and noticed something strange, I bid on a few items and almost instantaneously I was outbid, I thought it may be because others had bid at the exact same time near the 1 or 2 second mark, so I tried bidding at random times, for example 24 seconds, or 22 seconds, again, instantly I was out bid, I made a video screen capture of it, clearly there is some sort of automated bidding going on, not sure how, but there is no way a person could have bid that quickly.
here was their reply:
Thanks for your email.
I completely understand that it’s frustrating not to have won the auction and that it sometimes feels that there are a lot of bidders in an auction. I can absolutely guarantee you that we have no “bots” in any of our auctions at any time. We do not use any technology or automated software routines to bid on items.
All of our users are users who have signed up independently.
Please do let us know if you have any other concerns.
We hope you’ll continue to use the site.
Best regards,
George
” I can absolutely guarantee you that we have no “bots” in any of our auctions at any time. We do not use any technology or automated software routines to bid on items.”
I was not implying they were doing it, but how can they guarantee that a user is not using a bot to automatically, either way, I tried it and will not use it again.
I absolutely guarantee that i do not cheat my wife NEVER!!!
Ok my real point is that there is no regulation for those sites whatsoever because of the way the business model works penny auctions should be regulated by Gambling commission and their software should independently audited.
TC people did you ever happened to ask from swoopo and it’s clones? Instead throwing some poor article that looks more like well paid PR, nice journalism indeed …
This kind of reminds me our financial system that regulates and supervises itself and we all know how well that works…
Do they have any employees named Halvarez ?
shill bidders like i said. techcrunch, want to call them out on this?
Ah, such beautiful inconsistency on TechCrunch.
One side rages about scammy ads that are taking advantage of users on social networking sites.
The other side gives glowing reviews to a copied scammy business model with a little added web2.0 PR. Legitimized indeed!
+1, no these guys are “bros” and they are “cleaning up” the business model.
lol
And here is the catch (according to their video):
The money you spend on unsuccessful bids can be applied to the buy-it-now-price OF THIS ITEM. So you better concentrate your bids on one product only and plan to buy it if you do not get the magical 90% off. Otherwise the money is still lost. I wonder if this credit is accumulated over multiple actions. If not it’s just a scam with a feel good feature.
Bigdeal is $0.75/bid. Swoopo is less only $0.60/bid. I wonder why Bigdeal is more expensive?
Great, we needed another Swoopo wannabee. Feeling better now.
What’s to stop Swoopo from copying all the features..?!
This is nothing more than a clever way to rip off consumers in a gambling fashion. Their margins are huge and they will be able to ramp up revenue quickly b/c most people will lose on the bids and these guys keep their money.
It is just a matter of time before massive lawsuits hit them or regulators chase them. I bet they have a great general counsel b/c they will need one.
this is so dumb it’s not even worth thinking about. can i have the last 30 seconds of my life back plz?
Ugh, BigDeal site is the bastard hellspawn of predatory gambling.
Swoopo (the original company that BigDeal is a clone of) is basically a penny auction scam. It’s not an auction site, it’s a gambling site, and the house always wins.
The user is encouraged to make continual micro-bids because, hey, it’s only a few quarters, and they might get a camera for a fraction of the cost! In reality, their chances of being the actual winner of a discounted item are pretty damn slim. Furthermore, the collective bids of the users outweigh the item’s actual cost (e.g. if a camera costs 500 dollars, and 1000 users make a 75 cent bid, the camera collectively is sold for $250 more than its actual value, and only 1 user benefits from a supposed discount).
BigDeal’s supposed “legitamization” of Swoopo’s model is pretty piss poor as well. They claim that they help out the user by reducing the “Buy it Now” price by the amount that the user had previously bid on the item. This isn’t helping the user out, it’s locking them into purchasing an item they may have impulsively bid on. And saying that they’ll sell discounted gift cards for accumulated bids? More cash lock-in.
These two sites annoy me because they’re going after people that may have compulsive gambling tendencies. It’s taking the combination of the lottery and a slot machine all in one.
(Also, did TechCrunch get paid to post this article? Check this line out:
The site, which claims to only feature the top-of the line products, has also added high-quality pictures of all items and quirky (yet informative) descriptions of products. For example, part of the description for the Nintendo Wii includes a poem, ‘Ode To The Nintendo Wii.’”
How the hell is that informative or objective? Was that line just cut & pasted straight from BigDeal’s press release?)
My question is it not worth it if you were planning on buying an item at list price to use this site? That way you have the chance (however tiny that may be) of winning the item at a reduced cost and if you lose the auction (oh so likely!) you are still going to pay the list price but without the loss of your bid money as it is deducted?
It never ceases to amaze me about the dumb herding mentality VCs have. They make sheep look like leaders!
lol they copy madbids I guess