Tuesday, February 15, 2011

Is Beezid Or Skoreit a Scam?

When I first heard of Beezid, and people buying items like big screen tv's for pennies on the dollar, I thought "this has got to be a scam". But let me me be the first to say that there ARE actually people buying brand new quality merchandise for up to 99% off. But before you run off and think you hit the mother lode, let me explain to you how it works.


First of all, unlike Ebay, it costs money to place a bid. So when you first enroll, there is usually an incentive to give you 10 free bids (I used the word ENTER). When an item goes up for bid, the auction will last for a set amount of time and it starts at 1 penny. Theoretically, if you were the only bidder at 1 penny, you would win the item. Each new bid increases the bid cost of the item by 1 cent, so you cannot just bid $80 for an item that might retail at $100. You have to wait until the auction is near the end and watch as the bids go up penny by penny and bid when you think the item has reached it's top price.

It's not as easy as it sounds. There are hundreds of other people that would love that same item at 99% off retail, although it may say that a Kindle 3G+WiFi sold in a prior auction for $11.97, there is no guarantee that the next auction will be anywhere near that price. So it is a gamble to use your bids, $11.97 would be a great price for that item, but then again $12.97 would be too. That is 100 penny bids later, so your 10 free bids could be swallowed up and the price just keeps going up. Or you could wait it out, then miss the auction end completely if the item sells at a lower price.

So when I first created my account, I thought I had an advantage, since I have been doing Ebay for years and I am good with numbers. I am also a salesman myself from wayback and can recognize trends and develop strategies. So the first thing I did was just observe without bidding or even intending to bid. I watched many hours different auctions to see how they panned out. The biggest thing I realized is that you need bids, lots of bids. And you can buy bid packs in groups of 30, 50, 100, 200, 350 and 500. The retail price of a 30 bid pack is $27 which works out to 90 cents a bid. A 500 back of bids retails for $300 which works out to 60 cents a bid. But you can also bid on bid packs, but with your free bids at the beginning, you can only bid on "cherry packs" which are usually a smaller amount of bids.

So you can see where this gets interesting and how the website (and vendors) make their money. You could buy a 50 bid back for $40, then use those bids to bid on a larger bid pack of 100, 500 or even 1000 bids. If you got the new bid packs at a huge discount, you could theoretically lower your cost per bid to a really low level. But if you fail to win the new bid pack auction, you have just wasted some or all of your bids.

So let's just say you used your 50 purchased bids ($40) to bid on an item. Like any auction, it is exciting and hard to be patient. You have to remember that you only have 50 bids and an auction only moves up 1 penny at a time. So an item that sells for $188 at a Beezid auction like a front load washer and dryer that I saw actually had a total of 18,800 bids. And (again theoretically) if each bid cost 60 cents, that would be $11,280. Now with the bidding on bid packs and promos and discounts, the average bid price is considerably less and is broken down in the results of all auctions on Beezid. So if you won that item, you scored big. But if you didn't, and used most or all of your 50 bids, you are just out the money.

What throws a wrench in the gears for people like me is Beezid has what is called "autobeezid". You can set a dollar amount price range that you think an item will sell for, and set how many bids you want to invest and Beezid will automatically place the bids for you to be the highest bidder in that price range. But guess wrong, and it is a quick way to burn up a bunch of bids. And to make matters worse, if 2 or more people use autobeezid in an overlapping price range, every body's bids will be for the most part wasted and the auction price will quickly be driven up until every one's autobeezid bids are gone.

Let me also say that there are also bid pack auctions that are free to bid on. So you can bid on a 50 bid pack and not use any of your bids. If you win, then you buy the bids at a discount. If you lose, you are not out anything. These auctions go a bit higher but are the way to go if you are wanting to start out and not pay retail (your 10 free bids are not going to cut it). They also have "Early Bird Auctions" that if you win, you get all your bids back. Which generally makes the auction go a bit higher, because if you have a lot of bids invested, you are committed, along with everyone else.

So I will end with saying that (at least) Beezid is a very well designed and laid out website that has a great idea. The excitement and interaction is great entertainment and if you are patient and dedicated, you can pick up brand new items at a deep discount. It just may not be as deep of a discount as what it looks like. After you blast a couple hundred dollars on bids, spend hours learning and watching and then pay the $188 delivery charge on the frontload washer and dryer, you may or may not come out ahead. Beezid (and other like sites) and their vendors are making money - good money.

Beezid is NOT an auction site that vendors just dump discontinued, scratch and dent or junk just to get rid of it. But don't think you can walk away with an LG 46 inch flatscreen for $8.50 with little or no effort. So the good news is, auction websites like this are here to stay and are the trendsetters for retail sales. An appliance store does not have to pay the overhead of running a 50,000 square foot retail warehouse. The bad news is, as more and more people join Beezid and participate, it will become harder and more expensive for people like me to keep up. I will probably just go to Best Buy.

UPDATE: While doing research for this post, I stumbled across a Beezid phenomenon that needs mentioning. It seems that Beezid has been accused of unethical and possibly illegal bid counting. The problem appears at the very end of an auction and you get the "Going" sign that the auction is getting ready to end, several people click the bid button at the same time. As a bidder, when you click the bid button, you are legally only authorizing Beezid to count your bid at the exact dollar amount shown as you click. So if 8 people click the bid button within a millisecond, the auction does not jump up 8 cents, only the first person to get in at the next penny level will be the highest. However, according to the accusers, the other 7 are still charged with the bid. This is hard to verify in the frenzy and excitement of the auction, but I have personally been relieved of 2 bids near the very end of an auction and never saw my user name as top bidder.

In the short term this update may seem like a whiny rant, but if you add up all the auctions, this amounts to a buttload of money that is virtually unaccountable at our expense. Beezid blames the snafu on the bidding algorithm and the speed of individual internet browsers.