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Dissecting BassaBids online auctions

It is a known fact that SMS popularity in the US is a far cry from what it is in Europe. US mobile plans, with their large blocks of monthly minutes, create less of an incentive to use SMS. This in turn produces an interesting paradox. Businesses built around SMS take up big market share in Europe but they are practically non-existent in the US.

No one probably knows if SMS ever becomes popular or not in the US but some are willing to bet on it. BassaBids is one such company. What is BassaBids and what do they offer?

The lowest unique bid wins

On the surface, the idea behind BassaBids might appear very much like a regular online auction in the sense that people make bids and win things. The difference is that it is not the highest bid that wins, but the lowest one, or to be precise, the lowest unique bid. For example if you are the only person who made a bid of 3 cents while a few other people made a bid of 1 and 2 cents, then your bid wins. Here is a chart that explains it:

BassaBids Auctions

Bids are free during beta

If you go to the website right now, you will notice that it is still in beta. There is only one auction active and it is free to bid on it. In addition, the SMS part of the service is still disabled, which leaves you with the Web as the only way to bid.

I have signed up for an account and have been making bids for some time. There are probably hundreds of others testing their luck as well because shortly after I place my bid, I often get back an alert right away that my bid is not unique and I need to make another one. I will be very surprised if I turn out to be the winner.

What is the catch?

The free auctions that BassaBids runs are costing them one iPod Shuffle a week. This is a good way for the team to tune up their bidding engine and to generate some buzz along the way. Everyone loves free stuff!

Starting end of this month, the company is planning to launch a few “not free” auctions that will have a $1.99 per bid fee to participate, according to the How it Works section. If you look at the front page, you will notice that the first such auction is for MacBook Pro which has 8500 “remaining bids” next to it. It means that the auction will start on April 30, 2007 and will run until 8500 bids are made. If the price per bid doesn’t change, BassaBid will have $16,915 in revenue for a laptop valued at $2799. Not bad, huh?

Update 04/12: The company reduced “remaining bids” counts shortly after this post was published. Read the comments for details.

Why enabling SMS is important?

Bidding on things online with BassaBids is a pretty dull process right now. It is nothing like the show JellyFish puts up around their daily SmackDeals auctions. Yet, enabling SMS bidding opens a whole new market for it. I can see things really pick up when you can make bids in a circle of friends or, say, while enjoying a drink in a restaurant.

In addition, enabling SMS opens an additional revenue stream for BassaBids, from profit sharing with the mobile providers charging you for those SMS messages.

Online auctions or online gambling?

The more I think about the business model the more similarity I find with online gambling. As you make a bid, you don’t have a way of knowing if it is a winning one or not, unless you have tried out each and every bid starting with $0.01. If someone bids the same amount as you do, you will get a “not unique bid” alert and will be tempted to give it another try, and so on. This is exactly the feeling I often experienced when I went to Las Vegas last summer.

Each person who makes a bid has an equal chance of winning the prize, which in the case with the MacBook Pro above means that each bid has a 1 out of 8500 chance of winning. Don’t let the “lowest unique bid wins” motto confuse you. BassaBids is nothing about saving money or bargain hunting. As soon as you start paying for those bids, it becomes an addictive game where you have much more chances to lose than to win!

This post is sponsored by BassaBids via ReviewMe




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