QuiBids Quarterly Q4 2012

www.QuiBids.comDecember 2012Vol. 1, No. 2

QuiBids Quarterly

Hear about QuiBids’ latest site features from CEO Matt Beckham on page 6

A conversation with an online auction expert

A DEDICATION TO BETTER BUSINESSFormer Oklahoma Attorney General Drew Edmondson poses for a photo with QuiBids’ General Counsel Ashley Smith and Chief Financial Officer Jeff Geurts (left to right) at the Torch Awards Thursday, November 8. QuiBids sponsored the awards on behalf of the Better Business Bureau Serving Central Oklahoma, and Edmondson spoke about the state’s need for ethi-cally conscious business practice.

Nick Boccio first got into bidding on penny auc-

tion sites in 2009, an interest that grew into a full-blown hobby when he started Pen-nyBurners.com later that year. PennyBurners filled the role of an industry advocacy blog during a particularly rough stretch of time for penny auctions, which underwent

aggressive scrutiny and often misinformed criticism from media outlets across the board. The blog maintained the most consistent stream of penny auction-related content on the web and drew hundreds of penny auction enthusiasts into its forums each day.

With fewer penny auctions starting up these days, Penny-

Burners isn’t as active as it once was, but in its heyday Boccio was constantly announcing new auction sites, promotions, and site closures, publishing interviews with penny auction owners, warning customers against instances of bid collu-sion or bot bidding, and even

Our interview with Nick Boccio continues on page 2

PHOTO BY MATT CARNEY

NICK BOCCIO

occasionally calling out fraudulent business tactics. He’s since parlayed his years of correspondence with hundreds of site owners into consult-ing services for prospective penny auctioneers.

We called Boccio to discuss penny auctions’ history with the media and how QuiBids changed the game.

QuiBids: Let’s start with the first penny auction site, the German-owned Swoopo (which changed its name from Telebid when it debuted in America). Tell me about the influence it had on the penny auction industry.

Boccio: Swoopo started out before I got into penny auctions, so around October 2009 it was the biggest at the time, but it wasn’t the most exciting. There were a lot of other penny auc-tions trying new things and had bet-ter things to offer their bidders. Many people kind of forgot about Swoopo, even though it was the biggest.

QuiBids: So in 2009, you decided to go full-steam with your blog as a resource for the industry and for customers.

Boccio: We’re advocates for the industry, so I’m happy if people call and say, “Hey Nick, what’s this penny auction thing all about?” and if I have an hour, I will tell them everything they need to know. I just want to be an advocate for the industry.

QuiBids: Can you estimate how many have closed between the height of penny auction sites starting up and now?

Boccio: Yeah, 99% — and it’s probably more than that. Within 90 days, there’s almost the guarantee of failure. I’ve spoken with 200-plus penny auction site owners over the last three years. Every one of them,

with several exceptions, have failed. The exceptions would obviously be QuiBids, Beezid and SkoreIt. [Editor’s note: Beezid merged with SkoreIt in October not long after this interview was conducted.] The majority of penny auctions failed because of a lack of business knowledge.

One of the biggest things that hap-pened with penny auctions was the influx of bid pack purchases up front. Most [penny auction sites] looked at those as a windfall but in reality, they’re more like store gift cards. You buy a $100 gift card at Best Buy, but Best Buy doesn’t pocket that $100. It sets the money aside until you exchange that card for goods. Penny auction bids are a service, and until the user uses those bids, they’re still outstanding; they can still win items with those. In this case, bids are a liability.

QuiBids: Of all those businesses that failed, can you estimate how many resorted to doing business unethically or illegally?

Boccio: If I know somebody is breaking the law, I contact the au-thorities, and I’ve done it in the past. I’ve personally either wrote a letter or contacted consumer protection or the secretary of state for the state the business is in on five or six occasions. I’ve directed other people who’ve felt

that laws were being broken a dozen times.

I don’t think that happens often and the laws that are normally bro-ken concern shilling, but some people will try to get the consumer protec-tion agencies involved when items they won weren’t being shipped.

QuiBids: When was public opinion of the word “penny auction” at its lowest?

Boccio: That’s going to be mid-2010 to about March of 2011. That’s when popular opinion was definitely the lowest, and that was due to sev-eral misinformed news articles and stories on penny auctions that were syndicated throughout the country.

QuiBids: What were the reporters missing in their coverage?

Boccio: Well, the reason the reporters think something wrong is happening is because they’re com-paring penny auctions to eBay. That was their first mistake. They looked at eBay — which doesn’t add time after every bid is placed — and com-pare that to what penny auctions do and conclude that penny auctions are wrong. But anybody who’s been to any sort of auction knows that that’s just how they work.

The next big thing was the distrust with these anonymous websites. eBay’s really big. You feel secure with big things. So it’s easy to make a bad guy out of somebody you don’t know.

QuiBids: How much of a gamechanger for the industry was it when QuiBids came along offering the Buy Now feature across all its auctions?

Boccio: QuiBids completely changed everything. I really believe that. QuiBids quickly became the

December 2012www.QuiBids.com2

An online auction expert

Our interview with Nick Boccio continues on page 3

QuiBids completely changed everything. I really believe that. QuiBids quickly became the standard for what a penny auction ought to be, in that the value returned to the customer was much higher than all the other penny auction sites, and the risk was lower because everything had a Buy Now.

Continued from page 1

Building trust with your cus-tomers used to mean look-

ing them in the eye when you shook their hand. While digital transaction seems to have antiquated such pre-Internet traditions, the need for trust between a business and its customers hasn’t deteriorated. In fact, it’s more necessary than ever before.

As an online-only retailer, QuiBids’ rapport with customers didn’t come easy, said Josh Walker, QuiBids’ Direc-tor of Customer Support.

“The biggest challenge is getting past the initial skepticism many cus-tomers experience from inaccurate information they come across,” Walk-er said. “So we do our best to make ourselves available to them, to take the time to educate them about how the site works.”

After the company’s A-minus Bet-ter Business Bureau rating, two of the things QuiBids Cus-tomer Support representatives most commonly point out to skeptical customers are its Grant Thornton audits. The London-based independent assurance firm completed its second annual audit of the assertions made by QuiBids’ management in September, concluding that the company “maintains effective controls to provide reasonable assur-ance” of seven promises QuiBids makes to its customers.

December 2012 3

We maintain effective controls to provide reasonable assurance of the following:

1 Bids are placed by bona fide users and do not manipulate the bidding process to inflate the bid

price or affect who wins the auction (i.e., no use of bots, shill bidding, or bidding by QuiBids employees).

2 Winning auctions and “Buy Now” orders are fulfilled (i.e., shipped).

3 Customers are provided with the “Buy Now” option for at least two hours after the end of each

auction, allowing them to purchase the item with a discount based upon the real bids they used in the auction for that item.

4 The Online Entertainment Retail Auctions website displays to cus-tomers through the “check-out”

page the only charges they will incur.

5 Customers are informed that QuiBids will not request customer password information other than

during the registration, login, and pass-word change processes.

6 The confidentiality of QuiBids’ customer’s data is protected.

7 Bids are processed in the order received (i.e., “first in, first out”) without the element of chance.

Read the complete report at www.QuiBids.com

QuiBids' claims tested by Grant Thornton

QuiBids completes second audit

A conversation with an online auction expert

www.QuiBids.com

standard for what a penny auction ought to be, in that the value re-turned to the customer was much higher than all the other penny auction sites, and the risk was lower because everything had a Buy Now. I would expand on that by also saying that — from a business standpoint — QuiBids really wrote the book on how to make a successful penny auc-tion site with its aggressive online and national media advertising campaigns.

When QuiBids opened and every-thing had a Buy Now, you saw a lot of other sites copying that. Swoopo was doing Buy Nows on some of its auc-tions, and some sites have popped up and already died off that were also trying to adopt the same model, with the 100% Buy Now.

QuiBids: Do you think QuiBids is justified in choosing the name “entertain-ment retail auction” to differentiate from the less desirable term “penny auction”?

Boccio: Of course. Penny auc-tions didn’t have a fair first shot.

If QuiBids didn’t separate itself in terminology, then every time people look up information about penny auctions to learn about QuiBids, they’d get negative search results. It’s not productive because QuiBids isn’t all the other penny auctions and QuiBids is really the model of what everybody else should be doing. So it was a smart move to differentiate the terminology.

This interview with Nick Boccio has been edited to fit the format of this newsletter.

Without an education in computer programming, how is a customer supposed to know a legitimate auction opponent from an algorithm directed to drive up the auction price?

“Many customers question the legitimacy of this type of company when it comes to shipment and bids placed, and they should; it’s their money,” Walker said. “Being able to provide an unbiased, professional opinion from a third-party is invaluable to our business.”

Continued from page 2

December 20124 www.QuiBids.com

Friends and Fun!QuiBids in the Community

T he OKC City Rescue Mission accommo-

dated services to an esti-mated 410 homeless and near-homeless people per day last year, encompass-ing medical care, shelter, food and social services.

It is the Mission’s goal to not only serve the city’s homeless populations’ needs, but to do so with empathy. So we were hon-ored when the Mission invited our employees to help celebrate the opening of its new Food Resource Center in September by hosting a block party for its clients.

We painted faces, set up for a band to play, threw footballs, and otherwise got to make some new friends at the Mission!

PHOTOS BY ERIK GAUSE

Compliance Manager Nader Nassar spent his afternoon timing races on the inflatable obstacle course. Of the estimated 500 people served dinner at the block party, many of them were children.

Compliance Representative Alyse Cox flexes her artistic muscles by painting a young girl’s face at the block party.

ABOVE: The Impact Hunger Food Resource

Center will be able to help provide 1.2 mil-

lion more free meals.

RIGHT: Two QuiBids employees, Mark

Moderie (left) and Marshall Welke, smile

in between turns at tossing the football

with some City Rescue Mission clients.

December 2012 5www.QuiBids.com

QuiBids had the privilege of pre-senting the Oklahoma Make-

A-Wish Foundation’s second annual Walk for Wishes at the Oklahoma City Zoo in November, and we’re excited to announce participants raised more than $35,000 that went straight to the Foundation’s mission to grant wishes for Oklahoma children who face life-threatening illnesses.

More than 700 people gathered to-gether in teams to participate in this year’s walk, many of them named for Make-A-Wish-sponsored children. That’s about 300 more participants and $15,000 more raised than last year’s inaugural Walk.

Participants arrived as early as 6:30 a.m. , so we provided the necessary coffee, bagels and games for the kids

ABOVE: Sara Howell, Claire Turmelle, and Meike Parker (left to right) pose for a quick photo after setting up a booth at the Walk for Wishes.

LEFT: Team Bailey was one of the largest groups at this year’s Walk for Wishes. They posed for this photo before the event began.

Members of the Oklahoma City Thunder Drummers pose for a photo with the younger members of Team Tucker before the 2012 Walk for Wishes at the Oklahoma City Zoo.

Fun and fundraising at the zoo! — and grown-ups with no fear of hula hoops — to play when they returned from their morning walk through the zoo. The Oklahoma City Thun-der cheerleaders and drumline were around, too, and the OKCPD Bomb Squad showed interested parties some of the equipment they use on the job.

PHOTOS BY MATT CARNEY

December 2012www.QuiBids.com6

4 NE 10th St., Ste. 242Oklahoma City, OK 73104

PLACEPOSTAGE

HERE

A letter from the CEOA traditional retail op-

tion was always in the cards for QuiBids. De-spite establishing our com-pany on a relatively new model that at-tracted customers looking for the fun of scoring enor-mous deals, we’ve long been plan-ning more ways to retain them after-ward.

In the early goings of our company we real-ized that — in an industry as competitive as ours — our growth was integrally bound to the quality of our

customer value proposi-tion. We’ve expanded and improved that proposition more in the last six months than in the first two and

a half years of business. If Qui-Bids 1.0 was an old black-and-white TV, then the site now looks more like one of the high-definition plasma screens we sell.

In addition to redesigning the

website in June, we recent-ly opened up the QuiBids Store, a place where custom-ers earn Voucher Bids for

purchasing products at re-tail pricing. Customers can read and publish their own product reviews, and our improved auction format now allows them to choose from tens of thousands of products at any given time, instead of just a few hun-dred. All these improve-ments have fundamentally expanded what we offer to customers without sacrific-ing any of the original thrill that enticed them to shop with us in the first place.

So to answer anybody who thinks that QuiBids is using its new Store function to imitate traditional retail-ers: Nope! We’re just trying

MATT BECKHAM

Get in touch with QuiBids!

www.QuiBids.com(405) 253-38834 NE 10th St., Ste. 242Oklahoma City, OK 73104

Jill FarrandPublic Relations [email protected]

to improve on what we do best, and that’s giving peo-ple the most fun way to shop for what they want online.