BJ's Blog

I am reviewing a new concept in South Africa called penny auctions.

Bidorbuy.co.za has been the King Pin of online auction sites in SA for a long time standing, with Ebay.co.za coming in at second place.

I recently have come across a few more South African online auctions sites such as Hippobay.com and recently two

penny auction sites, Smookoo.co.za and Bidchaser.co.za

Smokoo and BidChaser uses a concept called penny auctions. Penny Auctions is not a new concept but only recently came to South Africa.

Smokoo has been called everything from a scam, a clever con to even scum. Some people say it feels like legal gambling.

BidChaser is similar to Smokoo but for this article I am going to focus on Smokoo. My first visit to Smokoo , as you can imagine, my senses told me something is wrong here, with auctions going only for a few cents. A Sony Camera with a current bid of R0.65;  A Transcend 500GB with a current bid of R0.50c; A Mercedes C180 with a current  bid of R18.30 . Doesn’t something seem wrong here?

So I visited the famous Google , did a bit of research and found that Smokoo is using paid-per-bid auctioning. To place a bid on Smokoo it costs R5 and every time a bid is placed the price of the item goes up by 1c or 5c depending on the auction type. 10 seconds is added to the count down timer every time a new bid is placed

Here is an example:

An auction for an USB Flash Drive that retails for R100 opens with a 12hr count down timer. The opening price for it is R0.00. Just say for argument sake we have 3 people bidding on it Jack, John and Jill and it is a 5c auction.

Jack places a bid. The price goes up to R0.05 . The bid costs Jack R5.

Jill decides to place a bid. The price for the USB F-Drive goes up to R0.10. Jill also now has spend R5.

John decides to get into the action and places a bid. The price for the USB F-Drive goes up to R0.15. Jack’s cost R5.

A few other people get into the action with 17 bids being placed and the current price for the USB F-Drive is R1.00 . R85 has been spent by other bidders.

The timer moves into the last 5 minutes and Jack, John and Jill decide to have a bidding war. Jack places 3 more bids, John places free more bids, and Jill places 4 more bids. Jill is the lucky winner of the USB Flash Drive for R1.50.

Total cost to Jack = R20

Total cost to John = R20

Total cost to Other Bidders = R85

Total cost to Jill R25 + R1.50 = R26.50

Jill walks away with the prize for only R26.50 saving her 75%.

How much have Smokoo made. R20 + R20 + R85 + R26.50 = R151.50 = 150% the retail price

Other bidders have lost a total of R125 but lucky Jill has saved 75%.

One of the problems raised is that  it is misleading and that the actual cost is far more than anticipated. Another problem raised is the fact that you can set a Auto bidder. The dilemma is when two Auto bidders having a bidding war costing you R5 each bid.

One of the biggest problems for me is that once the count down timer hits 0, Smokoo still allows more bids to take place.

What do you think? Is it a scam, a clever con, are they scum, is this almost like legal gambling or do you think their is a place for it in SA and allows people to find products at hugely discounted prices?