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MLM Auction Software and the fatal flaw of Penny Auctions

Permalink 10/23/11 12:16, by admin, Categories: MLM Software, Members Back Office, Features


The proliferation of MLM companies selling Auctions as their stand alone product is alarming.

The desire of MLM company owners to start an MLM Company with all digital or virtual products is likely the biggest reason for the dearth of MLM Auction Software related MLM companies in the marketplace currently. There are some major differences between the MLM Viability of Traditional MLM Auction Software, Reverse Auction Software, or Penny Auction software.

While traditional Auction (think Ebay) and reverse auction (think Dubli) can be nice add on products for MLM, the Penny Auction can be catastrophic.

The concept of selling credits for posting items to an auction and the fast growth of membership with interest in what is being sold by the MLM auction using the MLM Auction Software is pure and true, Ebay has been doing it for years, and making a boatload of money doing it. The only difference is they charge on a service by service basis vs. the purchase of up front credits that is often necessary to make an MLM Auction concept work.

A traditional Auction like Ebay is a fantastic product to add to an existing MLM company.

The issue with Traditional MLM Auctions is the actual consumability is quite limited and as a stand alone Virtual Product offering, it is hard to prove value as many purchasing your credits will never use them as they were possibly only interested in making money in your commission plan. This basic concept can make a pure idea turn horribly illegal.

The consumability issue due to a limited market of people wanting to empty their garage or storeroom of unneeded treasures with the use of MLM Auction Software in an MLM company is what paved the way for the more exciting options of MLM Reverse Auction and finally the concept tha took MLM Auctions just a little too far, the MLM Penny Auction.

Done right, the Reverse Auction Software can be a massive exciting and fun ADDITION to a traditional MLM company looking to have something new and current the breeds high member interactivity and a reason to be constantly logging into your back office increasing your communication and training opportunities. It can be a bit of work in administration as you always need to procure items for sale and ship items sold, but ultimately done properly can be an effective addition.

Even done right, the Penny Auction is a flawed concept from the get go. While the consumability of credits is the hightest on the MLM Penny Auction, there are 3 major issues facing the penny auction.

1. Items that do not get enough bids when you are small going for way to few bids costing the company a lot of money. This leads to EXPENSIVE gift giving as a result of using MLM Penny Auction Software.

2. Member confusion. The fact that you add time to the clock each time a bid is placed makes members go crazy in misunderstanding and complaining they are sure they were the last bid. This can create a lot of member unhappiness. This leads to MASSIVE support costs.

3. CRUSHING bandwidth needs making it very costly to operate the MLM Penny Auctions EVEN if you only have 10,000 or so members playing.

To summarize, in our opinion and experience in selling MLM Software, MLM Auction Software, MLM Reverse Auction Software, an yes even MLM Penny Auction Software, Traditional Auction and Reverse auctions can be excellent add ons to an MLM Company when done right. The Penny Auction should be avoided at all costs EVEN THOUGH it will be the one your members beg for the most. is an MLM Software provider that has available all types of MLM Auctions as optional modules for their MLM Software.

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