In order to understand the heavy criticism and controversy that Telebid caused in its home country it is necessary to understand the basic concept of the whole thing, i.e. how Telebid works. I’ll do my best to explain.
Telebid sells brand new stuff through a unique bidding system. Those can be products such as ipods, LCD-TVs or even cars. Every product starts at a ridiculously low price to attract the maximum number of potential buyers. Everybody who is interested in buying can express their interest by placing a bid. As soon a bid has been placed a countdown for that specific product is set in motion. It counts down a specific amount of time, e.g. 15 seconds. Should this countdown elapse with nobody else placing a bid, the last bidder gets to buy the product at the current price. The current price is determined by number of bids on that products, meaning it increases marginally with every bid that has been placed.
A ficticious example to illustrate the concept: A brand new car is offered by telebid at a starting price of 1 GBP. Approx. 500 visitors decide that they are interested in buying a car at that price. Visitor 1 places a bid – the price of the car goes up by 10 pence. The timer for this product starts counting down from 15 seconds. Within these 15 seconds visitor 2 decides that the car is still worth buying at 1,10 GBP and places a bid when the counter shows 5 seconds to go. Again the price goes up by 10p. The timer restarts its counting from 15 seconds. Now visitor 3 decides to place a bid… and so on.
So assuming each of those 500 people that initially saw the car popping up on the telebid website actually decide to place a bid the price would be at 61 GBP which would still be a pretty good bargain for a brand new car, wouldn’t it?
What’s in it for Telebid?
Reading telebid’s aggressive advertising slogans you are lead to believe that you can save tons of money by obtaining products at 90% off the retail price. Indeed, browsing through some old telebid “auctions” gives the impression that telebid users buy products for quite a bit less than their worth. So how does Telebid finance the whole thing? After all there are not just bills to pay for the products telebid is selling. The whole thing needs to be highly profitable as well. Especially since Wellington Partners, the primary investor behind Telebid has pumped 3 million Euros into the startup.
To understand how telebid can afford to sell products below their retail price and still make huge profit will become clear when I tell you that visitors have to pay for each bid they place. 50p to be quite exact. So take the example from above with 500 people having bid on a brand new car. If you care to calculate Telebid will already have earned 250 GBP by the time the price of the car has reached 61 GBP. Now, considering how many hundreds of people visit the telebid page at any given moment, how likely do you think it might be that during the bidding of those 500 people (approx. 10 minutes) another 500 will have decided that 61 GBP is a pretty good bargain?
In the end the car might sell at a bargain price of 5,001 GBP but telebid will cash in the 5001 plus 25,000 GBP through bids.
What’s in it for you?
Not much unless you enjoy a good thrill and are willing to pay accordingly. But then you might want to check the nearest casino in your neighbourhood. My bet is, you’ll get more a hell of a time out of it there and even get away with loosing less of that precious cash than with telebid. No, seriously! Consider the odds. You COULD end up being the lucky one betting exactly within those 15 seconds when everybody else has lost interest. But then you COULD also win the lottery… Or you could end up as one of those 999 bidders that (together) paid 25,ooo pounds without getting anything out of it but a momentary thrill of dreaming about a bargain. Convinced? If not I am curious as to how many lost bids is it going to take to convince you. Go ahead and try it!
I am looking forward to reading your experiences in the comment section below!