DealDash Business Model: How Does It Work and Make Money?

DealDash Business Model
Source: www.dealdash.com

Some platforms sound too good to be true. One of these includes DealDash, which is a bidding fee auction website. This platform allows users to purchase items online. However, it offers them the ability to bargain or bid on those items, which some sites don’t. The platform provides a wide range of products at significantly lower prices compared to retail prices.

DealDash offers a penny auction website where users can bid on a product. With every bid, the price for the item increases by a cent. Penny auctions services have gained significant attraction among users since they offer products for lower prices. However, it doesn’t necessarily guarantee users will get the items at a favourable price.

DealDash started operations in 2009 when a 16-year-old Finnish Entrepreneur, William Wolfram, founded it. The inspiration for the platform came when the founder lost a $20 bid for a MacBook on another penny auction site. After that, he used his savings from previous business ventures to start DealDash. Currently, the company headquarters reside in both the United States and Finland.

DealDash is a relatively smaller e-commerce platform compared to some other big names. However, it has garnered significant attention due to its bold claims. These claims have also led to the discussion of whether it is a scam or real. However, DealDash provides legit services without misleading users. Despite that, its advertising campaigns have irked some users due to those claims.

Over the years, DealDash has grown significantly and served millions of users. The company claims to have over 8 million users. Similarly, it has received fundings from various sources, which has allowed it to grow its platform. DealDash business model uses a gamified approach to e-commerce. This approach and its operations have also brought the company under criticism from many users.

DealDash did revolutionize the auction bidding platform industry. However, its business model is worth looking at for users to understand how it makes money. Before understanding the DealDash business model, it is crucial to consider how it works. This process will also clarify the opportunities that the company uses to make money.

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How does DealDash work?

DealDash uses a unique approach to bidding on products. There are several stages involved in the process of how the platform works. Firstly, it starts with users registering on the website. Once they do so, they can buy bids, through which they can bid on items. Every item also has a timer, which gets reset every time a user places a bid. Once the timer runs out, the last bidder wins.

Purchasing bids

The primary process for using DealDash is to buy bids. These bids are crucial in allowing users to apply to purchase an item. DealDash offers a bid at the cost of 60 cents. However, the website may provide various promotions which provide those bids at a lower price. DealDash offers several packs, which include several bids. These packs come in different sizes.

Some bid packs include 100 bids, while others may have more. Furthermore, DealDash provides promo codes for users to get these free bids on their first purchase. These bids serve as an internal currency for the platform, which users can utilize in placing bids. Each bid that the user makes decreases their balance decreases by one.

Bidding process

After that, the process is users utilizing their bids to purchase items. Every product on DealDash starts with a base price of $0.00. Every time a user uses their bids for that item, its price increases by 1 cent. Therefore, the final price of the item depends on the total bids that users place. Consequently, products that are in demand will cost higher and receive more bids.

However, every product has a countdown, which is usually 10 seconds. Every time a user places a bid on the item, this countdown resets to 10 seconds. Once this timer runs out, the final bidder wins the bidding and gets the product. The winner then gets charged for the final, discounted price as offered by the platform. DealDash offers free shipping for those products.

Through this process, users can buy products at significantly lower prices than retail. The site claims to help users save more than 60% on items. In exchange, DealDash makes money through the process. However, users that don’t win a bidding war don’t lose the credits. Instead, they can still get all of their bids back by selecting the “Buy It Now & Get Your Bids Back Option”.

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What is the DealDash business model?

The above explanation of how DealDash works provides an insight into its business model. DealDash primarily uses an auction-based business model. Through this model, the platform allows users to bid for items online. Based on the process, users may win or lose it. The winner gets the ability to purchase the underlying product at discounted prices.

The auction-based business model that the company uses works similar to other auction sites. However, DealDash uses a customized version of this model to cater to its users. This difference comes in the form of the ability to get back placed bids for losers. Therefore, even though a user may lose a bidding war on a product, they will still receive their bids back. However, they must buy the items for retail prices.

The unique factor to the DealDash business model is the gamification element. Through this element, the company provides a boost to the user experience on the platform. For example, it uses a progress bar that fills up when a user becomes the highest bidder. The more levels a user has, the more they can win weekly auctions.

Overall, the DealDash business model is that of an auction website. However, it also includes a model which involves selling bids to customers. As mentioned, these bids serve as an internal currency, which allows users to use the platform’s features. Through this process, the company makes money while also attracting more users.

How does DealDash make money?

DealDash has over 8 million users, which participate in its auctions. Through its business model, the company has survived in the competitive market. DealDash reported $44 million in 2012. However, there is no current information available on the company’s operations. Despite that, the company continuing its operations for several years suggests it is profitable.

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DealDash makes money from several sources. Some of these sources include the following.

Bids

The primary source of income for DealDash is the bids that it sells to its users. These bids cost users 60 cents. However, some promotions may decrease the price to 12 cents. As mentioned, these bids come in packs of different sizes. Through this process, the company generates more than half of its revenues. However, these bids also help raise other revenues.

These revenues come from the amount received from the winner. For every auction, the company gets a bid amount from the winner and the remaining bids from others. Although the company may offer a product for a discount, this process allows DealDash to recover those costs. On top of that, it enables the company to generate a profit as well.

Sales

DealDash also offers auction losers the option to buy a product through the “Buy It Now & Get Back Bids” feature. Through this process, the company does not lose out on potential profits. Instead, it allows the losers to buy the product while also getting their bids back. Those users get the product for the retail price. However, the company earns through these sales as well.

Others

DealDash also makes money from other sources. These include the income that the company makes from its partners and other networks. Similarly, DealDash receives funding from investors, which are a part of the money it makes. However, these are not a part of the revenues that the company generates.

Conclusion

DealDash is an auction bidding website that allows users to purchase products and items for discounts. The company has accumulated over 8 million users over the years. However, it has also been part of many controversies. The DealDash business model is similar to other auction websites. The company makes money from several sources, some of which are listed above.

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