When you think of the most profitable penny auction site, you probably think about Quibids. Quibids is the largest penny auction site on the internet today. But is it the most profitable one? Honestly, the most profitable penny auction sites are the penny auction sites that truly are scams. The dishonest penny auction sites are the ones the use bots and don't ship the customers products. These sites do not stay around long so short term they might be profitable but sooner or later people realize the penny auction site is a scam and the site closes down running away with peoples money.
But lets get back to Quibids. The site sells a $50 gift card for only $3.50. That is 350 bids at $0.60 each. Thus, Quibids is making $160 off of that one auction ((350*$0.60) - $50 = $160). So it might seem that Quibids is making millions of dollars. However, in an article posted on Quibids.com the company begs to differ. Quibids says that they make a net profit margin of 5-10% every day. This is not much more than major retailers like Wal-Mart that reported a 3.5% profit margin in 2010.
One thing that customers ignore when roughly calculating Quibid's profits is the buy-it-now option on Quibids. Buy-It-Now allows customers to apply the amount that they spent on bids on an auction towards buying the item at full retail price. When a customer chooses buy-it-now, Quibids does not make a profit off that person's bids. The Buy-It-Now price is just slightly above the price a person would purchase the profit off of Amazon. Quibids is probably only making 1% profit on each item sold via buy-it-now.
Quibids also reports to loose money on 50% of their auctions every day. The money that they make on profitable auctions helps pay for the money lost on the non-profitable auctions. Another fact that customers seem to forget is that cost to run a business. Quibids must pay rent for their office space, pay salaries, office supplies, marketing fees and more.
Quibids is still a very profitable company and I definitely wouldn't mind making the money they make. However, they are not as profitable as they seem. Quibids being the most popular penny auction site, think about the profitability of other smaller penny auction sites like Happy Bid Day, BidCactus or Biduh these sites might not be making as much money as it might seem.