Anatomy Of An Auction
The word anatomy is defined as “the study of the body plan of animals” so you may be wondering why I’ve chosen to use it to describe an auction.
The reason is that I view an auction as a “living” thing. Each auction has it’s own individual “personality” based upon the various bidders involved. Every auction is unique, but watch enough auctions and you will notice that most auctions follow a certain pattern.
When an auction begins, it typically goes through a stage which is a bit like throwing a piece of raw meat into a cage filled with hungry lions.
Bidding is usually quite frantic as people seem to be trying to establish their dominance. During this stage there is often a lot of “bid stomping” and a general lack of civility. To give you an idea just how wild this stage can be, I’ve actually gone into auctions with my BidBuddy set before the auction began and had the $5.00 limit reached before even one of my bids was placed. I’m not sure if people are intimidated with all of this aggressive behavior, but auctions do sometimes end during this stage. Mostly auctions that end during this stage end because there are very few bidders involved. Obviously, bidders who are lucky enough to win during this stage are BIG winners.
Eventually, an auction settles down and most if not all bids are placed by BidBuddies.
This stage is the realm of a particular type of bidder known as the “power bidder”. The power bidder’s one objective is to win the auction by simply outspending the competition. Power bidders have no problem blowing through vast amounts of bids to take home the prize, and most of them have a “win at any cost” mentality. One of the best bios I’ve seen on DealDash read “When I grow up, I want to be a power bidder”. I got a big laugh when I read this since I’m quite certain it was said with tongue-in-cheek. Now hopefully I’m not going to offend too many of you, but power bidders are not to be confused with intelligent bidders. There really isn’t much thought or strategy involved with loading up the BidBuddy with hundreds of bids and letting it run from beginning to end. Believe it or not, there are actually people who feel that bidders who are willing to “go the distance” by bidding continuously from beginning to end are somehow “entitled” to win. This idea is absurd! That may be how it works in a standard auction, but penny auctions are an entirely different animal. For the most part, bidders during this stage accomplish only one thing, they earn DealDash a lot of money. Many auctions do end during this stage, but the “winners” often realize little if any savings. In fact, power bidders often bid beyond the point where the cost of their bids plus the auction price equals the retail price of the item. I don’t understand what it is they hope to accomplish by bidding so foolishly other than to scare people away from bidding against them again. Considering DealDash has more than 2 million members, it could take quite a while to scare them all off. Another indication that bidders during this stage are not concerned with wasting bids is the fact that they often bid against more than two other bidders. In my opinion, this is a complete waste of bids! What are the chances that two bidders will suddenly drop out simultaneously? Yes, it does occasionally happen, but is it really worth wasting hundreds of precious bids to protect against this happening? If you said yes, you need to remember there will be more other auctions. It’s not uncommon to see as many as five, six, or even more bidders throwing away bids accomplishing nothing more than jacking up the price of the item. There’s really no good reason to bid during this stage.
Now, if you think about it, penny auctions are really not about what price the item sells for.
I believe this idea is so important that it’s worth saying again. Penny auctions are not about what price the item sells for. To prove my point, let’s look at the $300.00 iPad Mini 16GB. The average selling price is currently $70.83. Who wouldn’t buy this item for $70.83? Anyone would buy it, but you don’t get this price unless you are the bidder who places the final bid. Penny auctions are all about one thing – placing the final bid. In the case of the iPad Mini 16GB, it’s about placing the final bid without spending more than $229.17 worth of bids. Nobody understands this better than bidders known as “jump bidders” or “bid jumpers” or simply “jumpers”. We’ll use the term “jumpers” since DealDash uses the term “No Jumper” to refer to the practice of jumping into the auction late in the bidding. The term “bid jumper” can be confusing because it is often also used for bidders who bid before allowing the clock to run out. I like to call these bidders “bid stompers” instead. That aside, jumpers are perhaps the most despised bidders, but in my opinion, this is very unfair. As Robin points out in the article “In Defense Of Bid Jumpers” this is a legitimate bidding strategy, and actually requires the bidder to do their homework. I agree completely, and have a lot of respect for bidders who are able to use this strategy successfully. I’m sure I probably lost a few readers with that statement, so my thanks to those of you who are still here. People like to accuse jumpers of “stealing” auctions. This argument is simply ridiculous. Nobody OWNS anything until the final bid is placed. The fact is that winning auctions in this final stage requires more skill than at any other time in the auction. If you’re like me and see no reason to bid against more than two other bidders, you too could end up being called a “jumper”.
To sum up, most auctions involve three distinct stages, one requires luck to win, one requires money, and one requires skill.
Luck and money are something you either have or you don’t, but skill is something we can all have if we’re willing to work at it. I wish you much success.
