In an attempt to sell products at a much higher price than the market, and at the same time have people line up to purchase its products, some sites have developed how the traditional auction system works to involve large crowds of people and create a win-win situation for everyone.
One of the most notable Dutch websites in this aspect is ProductVeiling.com. The website puts a certain product for the general public to bid on. Each product auction has an expiry time, every time someone bids up, the expiry time is increased by 5-30 seconds to give the chance for others to counteroffer. The bids can be done manually or automated. Where a person can limit the number of bids he is willing to make and the systems bids for him/her in the last second of the desired item auction. Every bid costs the user 1 point, the point is worth 50 cents. Furthermore, every bid increases the product price by 1 cent. However, the most interesting option in the system, and the reason behind the preclaimed win-win situation, is the buy option. If a person wants to buy a product with a market price of 100 euros for example and he already spent 40 euros bidding for it and did not win the bid, then he has 24 hours to pay 60 extra euros to obtain the product. Therefore, if a person needs a product, he can either buy it at market price or bid his way into buying it cheaper. To illustrate the system, consider an example of an article worth 1000 euros, the bid starts at 1 euro and the winner obtained it for 201 euros. The bidders have increased the price by bidding it up one cent at a time 20,000 times. Each bid costs the bidder 50 cents, therefore, the total amount the website obtained for the product is the 201 that will be paid by the auction winner and 10,000 euros from let’s say 500 people bidding 40 times each (spending 20 euros each). From the website point of view, the 1,000 euro product was sold for 10,201 euros. If any body from the losing bidders wants the product, he has to pay 980 euros more to buy another copy of the product. Then the company realizes the regular profit margin that retailers realize.
This reliance on large numbers allows the company to sell the products for prices that are unrealistic or unacceptable by any single person, but seems very logical when large crowds are involved. More systems have been put in place to encourage more people to participate by assigning sections reserved for beginners, sections for active bidders where auto-bidding is not available, etc. Furthermore, even as the bid winner, you still have 24 hours to decide if u want to pay the product price and obtain it or not. Products that are sold vary from electronics, to gift cards to bidding point to even cash, when you can buy 250 euros for 3.16 euros as shown in the following picture of bid winners.