Empirical Analysis of Auctioneer Profitability in QuiBids Penny Auctions

Amy Greenwald, Eric Sodomka, Eric Stix, Jeffrey Stix, David Storch

Abstract: Given the string of bankruptcies of penny auction websites over the past two years, we use empirical data to investigate whether QuiBids remains profitable. Although profitable on an auction-by-auction basis, penny auction sites have problems retaining users. In order to alleviate this problem, QuiBids has implemented a Buy-Now system, in which losing bidders can contribute money they already lost in the auction towards the purchase of the item at a slightly inflated price. We find that QuiBids makes only limited profit after accounting for Buy-Now, but is able to remain profitable due voucher bid pack auctions. We also show that a large proportion of QuiBids' revenues come from experienced bidders, suggesting that rules designed to promote consumer retention may be working as intended.