We are all familiar with the typical Auction that takes place at Sotheby’s or any well established auction house. A group of people interested in certain works of art for example, gather at the auction house and as each item, in this case each painting or sculpture goes up for bid, the bidders begin to place bids on the items that are being auctioned off. The perceived value of the particular piece, in conjunction with the desire of the bidders to add the item to their collect, etc continues to drive the price up until no one is willing to bid any higher and last highest bid gets to buy the item at the last price bid.
In the case of a reverse auction such as those that are gaining popularity at DubLi.com, the bidders or participants actually drive the price down rather than up. How the mechanism works in a reverse auction is very interesting and will be the center piece of this article. In the case of the DubLi Reverse Auctions, the mechanism that allows the price to be driven down is very simple, yet very ingenious.
The first thing that draws consumers to the auctions is that all the products are brand new, brand name and fully warranted from companies like LG, Panasonic, Apple, Sony, Mercedes Benz, BMW, Audi, Gucci, Louis Vuitton and many more. Add to this the potential of purchasing these brand names at very significant discounts; sometimes as much as 95% off the retail price and you have the formula for creating some very exciting buying circumstances. The kind of buying circumstances that people love to talk about. In other words, the auctions create perhaps the most significant viral marketing tool online today.
Anyone can participate in a DubLi Reverse Auction; the only requirement is that they must have a bank of DubLi Credits, with each credit costing 80cents. The consumer then finds a product in any one of the 3 reverse auctions; the Express Auction, the Zero Auction or the Unique Bid Auction. The credits play a different role in each of the three auctions.
The Express Auction: In the express auction the consumer basically buys when he or she thinks the price is right. For example, if you were to pick out an Apple iPod Nano, you would click on the image of the nano which would bring it to the top of the page, allowing you to see a complete product description before you had to spend a credit. The first thing you will notice is that the "Starting Price" is guaranteed by DubLi to be the lowest retail price you can find anywhere online of all the major online retailers, including Apple. As a matter of fact, if you were to purchase it at the starting price and you found it for a lower price anywhere online within the next two weeks. DubLi will pay you the difference plus 10% of the difference.
The next thing you will notice is that you can’t see the "Current Price". It is grayed out – here is where the DubLi Credits come into play. If you want to see the current price you must click on the green "Show Price" button. Each time you click on the show price button it cost you ONE dubli credit, or 80cents. Every time a consumer clicks on the show price button, it lowers the price of the product by 25cents. For example, if after clicking the show price button the current price of the nano was now at $95 and the start price was $174.00. That means the price dropped $79, and if you divide the $79 by 25cents (remember the price drops 25cents every time the price is checked), that tells you the price has been checked 316 times.
The flip side of that is the consumer/you spent 80cents and saved, in this case, $79. That is a great deal for you the consumer. Even if you had only saved $40, I think you would agree it was well worth spending the 80cents.
At this point you now have a decision to make. You can decide this is a GREAT price and you can click the "BUY NOW" button and you can purchase the Nano for $95. However, you can’t sit and think about it too long, because if someone else, anywhere in North America, clicks on the "SHOW PRICE" button before you click on buy now, you will loose the ability to purchase the Nano and will have to click the show price again in order to grab it.
You begin to see that the auctions not only offer the consumer the "POTENTIAL" to purchase products at very significant savings, but they also create a lot of excitement and a lot of buzz online. You can imagine how fast it spreads online as consumers are posting their successes on facebook, twitter, etc. And the more people that come into the auctions, the faster the prices drop; the faster prices drop the more people come into the auctions. It’s like pouring gasoline onto a fire.
As an example, on June 27th 2009, David Duncan of Orlando, Florida bought a brand new C300 Mercedes Benz for $8,000.50. The retail value of the car is listed at $37,000. David can’t help himself and he is telling everyone he has every met what a great deal he got at DubLi’s Reverse Auctions.
