A lot of readers noticed that we’ve been running advertisements for BigDeal, a website that lets users pay to bid on low priced items. In addition to running the ads, BigDeal also created a special cobranded version of their service at techcrunch.bigdeal.com. That page used our logo (with the permission of our sales team), and we received a percentage of revenue generated from that site.
We’ve now ended that relationship and have removed all BigDeal ads from our site. And we have asked them to take down the cobranded version of the service at techcrunch.bigdeal.com.
BigDeal offers a service that is completely legal, and is backed by very well known venture capitalists. On the surface we shouldn’t have any issues with working with them.
But the service is, in my opinion, at best misleading and at worst little more than a scam. Users are encouraged to bid for items, and are told that the “winners of guaranteed auctions get a huge discount, typically 65%-90% off retail.” But the way the service works is extremely complicated. In fact a few of us here at TechCrunch debated exactly how it worked for a half hour after reading the tutorial, and never quite understood it. It took winning an auction and then actually buying the item to understand just how unattractive the whole scheme is.
If your service is so complicated that users have to be mislead to use it, it’s probably not all that great of a deal.
Users must pay $0.75 every time they bid, and to win an auction generally requires quite a few bids. In one auction I won yesterday I had to bid 12 times to win. I spent $9 for those bids. Others bidding against me also paid $0.75/bid, and there were at least 25 total bids on that item. That’s $18.75 in revenue to BigDeal, with no costs.
After the auction, all the money from the bids is gone. Vanished. Poof. That’s the confusing part of the “deal.” Even as the winner, I then had to pay the price I bid for the item, on top of all the bids. Plus shipping. The losers get the option of buying the item at normal retail plus shipping, and can use their lost bids as part of the price. But BigDeal’s retail prices range about 25% higher than the same items on Amazon, so there isn’t much of a deal there.
Confused? That’s the point. At the end of the day, as the auction winner, I paid $19.84 for an item I can get for as little as $25.70 (new) on Amazon. That’s not much of a discount. And the losers would pay $41.99 for the item if they wanted it, plus shipping. That’s 63% MORE than the Amazon price.
BigDeal makes much out of the other side of their service, which lets users get gift cards at a variety of merchants for whatever they’ve spent on bids. But those gift card sales are set up so that only 25% of the price can be paid in credit. So if I spend $100 on bids and I want to convert that to gift cards, I have to shell out another $300 for them. That’s not much of a deal, either.
BigDeal is very similar to other services like Swoopo, and there’s no reason to call them out specifically. I have no real problem with the service other than the extremely confusing tutorial which I believe misleads people into thinking that the service works differently than it actually does.
But I don’t want to send TechCrunch users to that site to potentially waste money on something they don’t understand. And I don’t want our brand associated with theirs on techcrunch.bigdeal.com. So we’re ending the relationship. And we will donate any money we’ve received from them to charity.