One of the two types of auctions made available to buyers on Dubli is the Unique Bid auction.
In Dubli’s Unique Bid auctions buyers place bids with Dubli credits over a fixed length of time the auction runs for. At the conclusion of the auction the winner is the buyer with the lowest unique bid.
Today I thought I’d take a look at the advantages and disadvantages of this auction model.
Unique Bid Auction Pros
When I started writing this article I jotted down a list of pros and cons for the Dubli’s unique bid auction system. What I had after a short while was a list of cons and no pros.
In the interest of fairness I thought long and hard about what possible pros there are to a unique bid auction. The only thing I could come up with was the small chance that you win a unique bid auction.
Unfortunately there’s quite a few things that get in the way of this.
Unique Bid Auction Cons
1. More buyers = less chance of winning
Whilst this is true of any auction model, it’s of particular importance when it comes to the unique auction bid model because there’s a finite amount of bid spots.
Dubli works with twenty five cent increments so there’s four bid slots in the dollar. Naturally the more potential buyers there are the more chance there is of all available price points being bid on.
This brings us to the next con.
2. No unique bid = no auction winner
In the event of there being no unique bid, the auction is simply reset and started again. Participation in the previous auction via the spending of credits is non-refundable.
At four price points in every dollar (400 for every $100) it’s easy to see how Dubli’s own success can quickly wind up being its biggest problem in providing value to bidders.
Imagine how hard it would be to win a unique bid auction if Dubli had just a quarter of the millions of users eBay has.
3. Last minute bids could be a waste of money
Unfortunately the only way to know if a price point has been bid on already is for you to bid on it yourself. Whereas in a traditional auction it pays to have patience and bid towards the end of the auction, in Dubli’s unique bid auction model this can actually be a waste of money.
When you place a bid on on a unique bid auction item you are notified whether or not your bid is unique. If the bid was placed towards the auction end you are racing time to get bids in and often this can lead to over spending.
The counter to this is placing bids well before the auction is approaching it’s finish. However due to buyers being informed immediately whether or not their bid is unique, this is actually not in the bidders best financial interests.
With each early bid a price point is taken up. Given that there is a fixed amount of price points per auction, every bid potentially removes a price point as being bid on.
The more price points go early on the less there are towards the auction’s close when bidding typically increases. From a bidder perspective, reducing your available unique price points to bid on is a big disadvantage.
4. Span bidding
In its unique bid auctions Dubli permits span bidding. Span bidding allows bidders to place bids covering a span of price points. Bidders are able to span one thousand price points at a time, although this would set you back $800 so you’d want to be bidding on something very expensive to make back your investment.
The relative ease in which bidders can place span bids means probability wise, span bidders are far more likely to win an item.
Of course the catch here is that they also then need to ensure that along with the cost of postage, they actually cover their bid costs and still come out in front of buying the auction item elsewhere.
As you can see there’s a lot more negatives to participating in a unique bid auction vs. positives. I guess overall the idea behind a unique bid auction is the removal of any read bidding strategy.
Whereas in a traditional auction you can wait till the auction end before bidding and walk away if you’re out priced, in a unique bid auction your really just playing pot luck.
Unfortunately this pot luck factor occurs regardless of which stage of the auction you choose to place a bid during; be it the beginning, middle or end of the auction.