DealDash

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DealDash
Type of site
Private
FoundedFebruary 22, 2009 (2009-02-22)
Headquarters
United States and Finland
Area servedUnited States
Founder(s)William Wolfram
CEOMark Streich
IndustryE-commerce
ProductsOnline bidding-fee auction with "Buy It Now" option
Employees65
URLwww.dealdash.com
Users8 million

DealDash is a bidding fee auction website. It was founded in 2009, and is headquartered in Minneapolis, Minnesota, United States.[1][2][3]

Users buy "bids", which are credits priced at 13 cents each, which increase the listed price of the item by 1 cent. If no user places a bid after the previous bid, by a time specified (9 seconds as of 2024[4]), the last user to bid wins the item and must pay the listed price.[4][5] The user has already used bids, meaning they have used more money in total in the auction for the item than the listed price, potentially more than the manufacturer's suggested retail price (MSRP). Users that lose the auction lose their bids, unless they choose a "buy it now & save your bids" option, with the buy-it-now price being higher than MSRP.[6]

DealDash, as with other bidding fee auction websites, has faced criticism for misleading advertising and marketing, from consumer organizations such as Consumer Reports and Truth in Advertising. The criticisms state that the prices listed on the DealDash site, and in their advertisements, are the vastly lower-than-market price the successful user pays for the item itself, excluding the amount they paid for bids. In certain cases, even in DealDash's own advertisements, the amount a user has paid for bids placed plus the final price is higher than what would have been paid in a regular retailer. The criticisms state that bidding fee auction websites operate as an unregulated form of gambling.[6][7][8]

DealDash's own terms of service formerly told users that they are unlikely to win auctions using the service, and are likely to spend more money using the service than the retail cost for any products they might receive. The terms stated that the "entertainment value" of using the service made the higher prices "fair" compared to shopping at the lowest price retailer.[9] However, the terms were updated in 2016 to no longer include those statements.[10][11]

History[edit]

DealDash was founded in 2009 by William Wolfram, a 16-year-old Finnish entrepreneur, who had lost $20 bidding unsuccessfully for a MacBook on an earlier penny auction site. Wolfram had generated approximately $500,000 in affiliate sales a year earlier buying popular YouTube videos for $50, borrowed from his mother, then collecting revenue from affiliate marketing links he would add. He used the money he had saved to start DealDash.[12][13][14][15]

The company's business model, as with prior sites, is that customers enter into bidding, where they pay for each bid on an item, regardless of whether they succeed or not. Each bid marginally increases the price of the item until the end of the auction, at which point the item is sold to the final bidder.[8] DealDash differs from predecessors mainly in that losing bidders are given an option to apply money they had spent unsuccessfully bidding on an item towards purchasing the item at a posted retail price.[12][2]

DealDash obtained early financing from a youth program of Tekes, a Finnish public funding agency.[15] It later raised approximately $1.5 to $2 million in venture financing from the Chief Executive Officers of Rovio Entertainment (publisher of Angry Birds) and Carbonite.[12][16] The company grew quickly, quadrupling its revenue yearly for its first three years. As of early 2012 it was earning $1 million profits on $44 million revenue.[12] By 2013 it had 67 employees, yearly revenues approaching $100 million,[17] and was ranked as Finland's second-most visible startup based on attention from media, bloggers, influencers, and users.[18] According to Socialbakers, DealDash was the most talked about brand on Facebook's "People Talking About This" during a period in May 2013,[19][20] and had the highest engagement rate that September.[21]

In 2013, when Wolfram was still 20 years old, DealDash moved its headquarters from Helsinki, Finland, to Minneapolis, Minnesota.[12] In August of that year, the company also created the site DealDashReviewed.com to house and aggregate reviews and testimonials from their customers.[22][23]

Business model[edit]

DealDash, like other auction sites, has been described as a gamified approach to e-commerce.[24] To participate, registered bidders first buy "bids" priced at $0.13 each, that they may spend bidding on auctions.[25][4][5] Standard auctions begin with an opening price of $0.00, with every bid placed increasing the price by $0.01 and removing one paid "bid credit" from the user's balance. Bidders may choose to place single bids, by manually clicking the bid button, or through an automatic bidding tool called the "BidBuddy".[5] An auction clock restarts from a maximum of 9 seconds (as of 2024[4]), every time a bid is placed. If no new bids are placed before the clock runs out, the last and highest bidder is declared the winner of the auction.[24][26]

Criticism[edit]

DealDash has been criticized for offering poor value to customers and for making disclosures only in fine print.[2]

Penny auction sites, including DealDash specifically, have often been criticized for failing to disclose or include the cost of bids in what customers actually spend in total to win a product. In a conventional auction, bids are based on prices that participants are willing to pay, with the item sold to the final bidder within a set period that bids the highest price. This usually allocates the item to the person who is willing to pay the most. By contrast, penny auctions award items to parties that are persistent or lucky enough to place the final bid, with money raised primarily from the cost of bidding rather than the final price of the item. In most cases, users spend substantial sums of money without winning anything. DealDash and others have been compared to gambling by consumer groups.[6][8]

According to Consumer Reports, the "buy it now" prices can be significantly higher than the same products on Amazon.com.[6] Unsuccessful bidders not using the option lose the value of the bids placed. A company spokesperson says DealDash generates significant business from bidders who choose to buy items after losing, with hundreds of orders processed daily.[27]

Consumer Reports also reported that many "luxury" brands touted on DealDash are non-existent beyond the website and their trademarks are registered by the owner of DealDash, through another company that he is associated with, namely Galton Voysey.[28]

Consumer organization Truth in Advertising reported that a DealDash television commercial shows "Roseanna" winning a $349 KitchenAid stand mixer for "less than $25". Small print explains she bid 761 times on that mixer, which cost her over $456, plus the $25 "price" she won it for. This means she paid closer to $481 – well over the stated $349 retail price.[7] Both Truth in Advertising and Consumer Reports noted that DealDash's own terms of service tell users that they are likely to spend more than the retail cost for products and are unlikely to save money using the site[6][7] (the terms of service were updated in 2016 to no longer include that statement[9][10]).

Lawsuit[edit]

DealDash faced a false-advertising class-action lawsuit in 2017, with plaintiffs alleging that consumers were deceived into thinking they could purchase items for less than their retail value but in reality having little chance of winning items or saving money. Plaintiffs also argued the allegedly premium products on offer were generic items manufactured by companies with links to Wolfram.[29][30][7][31] Eight months later, the lawsuit was dismissed.[7]

See also[edit]

References[edit]

  1. ^ "DealDash® - About Us". www.dealdash.com. Retrieved April 14, 2024.
  2. ^ a b c "DealDash Sees Explosion Of Growth". ArcticStartup. October 21, 2011.
  3. ^ "DealDash® - Orders & Shipping". www.dealdash.com. Retrieved April 14, 2024.
  4. ^ a b c d "DealDash: How Does it Work?". DealDash. Retrieved January 30, 2016.
  5. ^ a b c "DealDash® - How to bid in an Auction". www.dealdash.com. Retrieved April 14, 2024.
  6. ^ a b c d e Giorgianni, Anthony (June 30, 2014). "Bidding on penny auction sites is risky". Consumer Reports. Retrieved August 31, 2016.
  7. ^ a b c d e "DealDash.com". Truth In Advertising. November 1, 2013. Retrieved August 21, 2016.
  8. ^ a b c Mayer, Caroline (May 12, 2014). "Are Penny Auction Sites Seen on TV For Real?". Next Avenue. Retrieved August 31, 2016.
  9. ^ a b "DealDash™ - Terms of use (last archived version with "less than merchandise value" disclaimer)". web.archive.org. January 11, 2016. Retrieved April 14, 2024.
  10. ^ a b "DealDash™ - Terms of use (first archived version of page without "less than merchandise value" disclaimer)". web.archive.org. March 8, 2016. Retrieved April 14, 2024.
  11. ^ "DealDash® - Terms of Use (current)". www.dealdash.com. Retrieved April 14, 2024.
  12. ^ a b c d e Hamish McKenzie (March 21, 2013). "This 20-year-old's three-year-old startup did $44M in revenue last year". PandoDaily.[permanent dead link]
  13. ^ "Huikea kasvupyrähdys: 20-vuotias yrittäjä takoi 31 miljoonaa euroa". Talouselämä. Retrieved October 14, 2016.
  14. ^ "Vuoden Kasvaja: kasvu 430 prosenttia 34 miljoonaan". Kauppalehti. Retrieved October 14, 2016.
  15. ^ a b "Different Types of Tekes Financing – With William Wolfram of DealDash". ArcticStartup. March 16, 2012.
  16. ^ Vilpponen, Antti (January 11, 2012). "DealDash Recruiting Talent With Strong Growth And $1M Investment". ArcticStartup. Archived from the original on November 6, 2012. Retrieved August 21, 2012.
  17. ^ Jo Best (November 20, 2013). "Top tips for startups from the companies that got funding, and the VCs ready to invest". ZDNet.
  18. ^ Nick Clayton (January 24, 2013). "Finland's Top 100 Startups". Wall Street Journal.
  19. ^ "Obscure Direct Response Brands Dominate Facebook Chatter". Adweek. Retrieved May 24, 2013.
  20. ^ "Suomalaisbrändit Fb:ssä: Nokian perässä 2 startupia". Kauppalehti. Retrieved October 14, 2016.
  21. ^ David Cohen (September 12, 2013). "Walmart Still Top U.S. Brand On Facebook For August; DealDash Leads Post Engagement Rate". Adweek.
  22. ^ "DealDash Reviews". DealDash Reviews. DealDash. Retrieved September 30, 2014.
  23. ^ "DealDashReviewed.com WhoIs". DomainTools. DomainTools. Retrieved September 30, 2014.
  24. ^ a b Anderson, Greg (October 24, 2011). "DealDash Sees Explosion Of Growth". ArcticStartup. Archived from the original on January 6, 2012. Retrieved August 21, 2012.
  25. ^ "Haluatko iPadin 13,66 dollarilla? Tällä tavalla syntyi veret seisauttava kasvutarina". Talouselämä. Retrieved October 14, 2016.
  26. ^ "Deal Dash - Frequently Asked Questions". DealDash. Retrieved August 21, 2012.
  27. ^ Vilpponen, Antti (May 5, 2011). "Interview With William Wolfram, CEO of DealDash". ArcticStartup. Archived from the original on April 14, 2012. Retrieved August 21, 2012.
  28. ^ "Customer Accuses DealDash of Selling "Cheap, Generic" Products Disguised as Independent Luxury Brands".
  29. ^ "Is DealDash a bargain penny auction site or a "perverse lottery"?". NBC News. Retrieved November 28, 2022.
  30. ^ Moak, Bill. "Penny auction sites: The house always wins". The Clarion-Ledger. Retrieved November 28, 2022.
  31. ^ "Class Calls Penny Auction Site DealDash a Scam". www.courthousenews.com. Retrieved November 28, 2022.

External links[edit]

Retrieved from "https://en.wikipedia.org/w/index.php?title=DealDash&oldid=1219055676"