Thursday, March 13, 2008

Telebid - don't do it!

Telebid have significant amounts of advertising on Facebook, promoting the auction of new items at apparently very good prices, so I thought I'd go and see how it worked.

Here's their guide for new people.

's some commentary on how the whole thing actually works.

Effectively, it is bidding with added gambling. Unlike eBay, a late bid can extend the auction - that's a feature that would probably improve eBay. Unlike eBay, each bid only adds a few pence to the price - again, no problem with that. But most significantly, unlike eBay, you pay Telebid (50p!) for each bid that you make. It is this radical difference that makes Telebid gambling.

So supposing an item - let's say a mobile phone worth £100 - is sold for £20. To get to £20 from the starting price of 10p, there will have been about 200 bids, each of which cost 50p. The "lucky winner" may have only bid once, and only pay 50p for that bid, and the £20 closing price. However, to get to that price, another 199 bids will have been made and been unsuccessful. And the total income Telebid gets from those bids is about £100 on its own. Whoever made those bids gets nothing for them. So the person getting the phone for £20 may have done well. Telebid have certainly done well. But all the other bidders have done very badly.

Bids cost 50p each, even when they are unsuccessful. To highlight the fact that the real winner here will be Telebid, it is even possible to bid on "FreeBid vouchers". As I write, a bidding war is going on for a 300 FreeBid voucher. The price has reached £22.19, and the auction is continuing. So, with an increment on this auction of 7p per bid, 315 bids have been made for the right to make 300 bids. The "winner" may end up with the right to make 300 bids. But the real winner is Telebid, which will have already received over 300 bids as payment for the voucher. (An auction for just 150 FreeBids has reached over £41. That's £205 in bids for £75 worth of bids.)

If you are the sort of person who thinks, "It might be me" - as the National Lottery campaign used to suggest - this might be your cup of tea. Or if you are prepared to work out a system and cynically apply it, exploiting all the other suckers on the site, you might enjoy it. For the rest of the world, I would strongly suggest leaving well alone.