Penny auction sites are one of the most popular trends in online shopping. While online penny auctions provide an excellent way for customers to obtain incredible savings on all kinds of products, the lack of regulation to prevent penny auction fraud is causing serious damage to the penny auction market. The use of shill bidding and bid bots, combined with poor customer service, is driving this wonderful business model towards the cliff of public distrust. Penny auction bidders are beginning to lose interest in this type of online shopping because many penny auctions are overran with deception and corrupt business practices. Many owners are only concerned about making money from penny auctions and they fail to see the need to build trust in their brand. If left unchecked, the erosion of trust in these discount shopping sites will ultimately lead to their demise.
Why trust in penny auctions is important
Amazon is the king of online shopping sites because it not only offers consumers the best price on most products but because it’s a highly trusted business that provides excellent customer service. While the current penny auction business model offers users an incredible opportunity to obtain even greater savings on the same products that Amazon.com sells, penny auctions are stereotyped as untrustworthy due to the ever growing list of negative user experiences. When people hear the word “penny auctions” they are increasingly associating them with online scams. If site owners hope to make penny auctions a long-term business model, they must build trust into their brand by properly addressing the concerns of their users. In the list below we’ve provided some potential solutions to rebuild trust and improve the integrity of penny auction websites.
Strategies for building trust in penny auction sites
- Remove all shill bidding practices – This is an obvious solution to an incredible problem that is eroding the integrity of the penny auction market. The fear of shill bidding is probably the number one reason why most people don’t use penny auction websites.
- Uncouple revenue from the final selling price – Owners could remove themselves as the sole beneficiary of product auctions by moving to a marketplace model where the site receives a flat rate listing fee for facilitating the buying and selling of products for merchants. By adopting a marketplace approach there would be no incentive for penny auction owners to engage in such shill bidding practices as their revenue would no longer be solely dependent on how many bids were sold or the final selling price of an item.
- Improve security and accountability – By adopting tougher security measures to ensure customer information is protected and not easily stolen or misused, customers are more likely to use a service. Moreover, a system of accountability that includes things like user ratings, reviews, and partnerships with entities that provide business oversight such as the Better Business Bureau can greatly improve transparency and regain consumer trust.
- Replace credit card payments with PayPal – This is a simple change that would offer more protection for customers and reduce user customer fears of credit card fraud or the sale of their financial information.
- Reimburse bidders for losing bids – Offering bidders credit for lost bids towards the purchase of any item at competitive discount prices removes the majority of risk that prevents people from joining penny auctions sites. This will diminish profit margins for site owners temporarily but the number of new users they’ll gain as a result will lead to an increase in sales and more returning customers.
A warning to dishonest penny auction site owners
Honorable penny auction site owners that take steps to properly address the concerns of their users and build trust into their brand will emerge as leaders in this market. Those that do not adopt better business practices will see their traffic dwindle and sales plummet as a result. While they may be able to deceive some users for a short period of time, the power of the real-time web and its ability to disseminate information in a quick manner ensures that their success will be short-lived. Furthermore, it’s very likely that the growing assertion of fraud that exists with penny auctions will sooner or later capture the attention of the proper authorities and at that point you’re going to be held accountable whether you like it or not. Thus it is in the best interest of all related site owners to strive to improve the overall shopping experience for penny auction bidders.If you liked this article, please take this time to share it with your Facebook friends using the Facebook button (see Facebook post button to the left) or retweet it using Twitter (see retweet button to the left). You may also want to follow us or subscribe to the site to stay up-to-date with this article. If you'd rather follow us from your Facebook account, join our Facebook fan page or subscribe to our NetworkedBlogs profile.
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