Does QuiBids make excessive profit on their auctions?
How much profit does QuiBids generate?
Our goal is to provide customers with entertainment and great deals while also being fair and transparent. As part of that commitment, the QuiBids 101 section will feature a number of articles that detail how the company works and how that affects our customers. We’re committed to building our company the right way – by taking good care of the customers who continue to shop with us.
A Common Question
One of the largest misconceptions we face is that we’re turning large and even excessive profits on the auctions we run. Currently we operate on a net profit margin of around 5%-10% each day. For comparison purposes, Wal-Mart reported a net profit margin of 3.5% in its most recently reported fiscal year.
Some wonder how that’s possible, when an iPod Touch can prompt as many as 1500 bids in a single auction. Let us explain.
The most common misunderstanding about our business model is that only one product is won per auction. The reality is that customers often choose to exercise the “Buy Now” feature, which means that multiple items are sold every time we host an auction.
What this means is that the iPod Touch that had 1500 bids placed on it might have led to one auction winner and, say, seven customers choosing to “Buy Now.” Because we incur business costs for dealing with these seven other purchases, this drives down our profit margin. This downturn is part of the cost of providing good customer service, which we are always glad to provide.
QuiBids Loses Money on Many Auctions
QuiBids takes a loss on about half of our auctions on any given day. Although we often don’t make as much money as it seems on very competitive auctions, we do take very real and material losses when auctions do not generate many bids. Much of the profit from profitable auctions goes towards covering the losses from the unprofitable auctions.
The Costs of Doing Business
In addition to the costs associated with supporting “Buy Now” and our unprofitable auctions, QuiBids does incur plenty of expenses common to any business: marketing, office rent, and customer support just to name a few. Here are two significant facts about these areas of expense:
1. QuiBids offers phone support during typical business hours.
2. QuiBids offers a no-questions-asked refund policy for unused bids.
What It All Means
As QuiBids continues to grow in popularity we’re committed to keeping our costs and profits as low as possible so that we’ll continue as the leader in entertainment shopping. We really appreciate our customers and are excited about the company’s future!