Yesterday, I bought an Xbox off of BigDeal.com, one of our First Round Capital portfolio companies. I spent nearly an hour and a half bidding against some guy to try and buy at increments from about $18 all the way to $168. I tried every strategy I knew… holding out to the last second to try and lull him into a sense of security and then jump in… then brute forcing it by counterbidding every second all throughout the $30 and $60 range to try to wear him out. It was an addictive bidding frenzy—and my downside was just buying it at the Amazon price, so I couldn’t really lose. (I didn’t win, but I’ll be back!)
TechCrunch did a good job of covering the company yesterday, so I’ll just pull the highlights:
“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…
…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.”
I’ll be interested to see how the company works towards providing more and more auction transparency. Admittedly, when I bought my Xbox, I didn’t realize that I wasn’t getting my bid points back when I took the “buy it now” price. I thought everyone was seeing the same price, like a loaded gun on the table, and that everyone’s bid lowered it. I figured everyone else’s lost bids were subsidizing my price, but as it turns out, I didn’t really get “refunded” my points back—they just came off the MSRP. So, I effectively just paid the MSRP price… not what I wanted, but not a terrible outcome, since it’s been years since I had a game system and I was kind of itching to get back into it. Perhaps I’ll bring it to the new First Round offices in Union Square (coming this January) and we’ll have entrepreneur Madden tourneys!