How does DealDash work & make money?

Company: DealDash
Founders: William Wolfram
CEO: Pasi Lohi
Year founded: 2009
Headquarter: Minneapolis, MN
Number of Employees (Dec 2018): 50
Type: Private
Annual Revenue (Dec 2018): Estimated $9.7M

Products & Services: Pay-to-Participate Auction Website and Mobile App
Competitors: QuiBids | Tophatter| Proxibid

Did you know that William Wolfram, the founder of DealDash, founded the company when he was just 16 years old?
(McKenzie, 2013)

how does dealdash make money — Image Source: DealDash

Table of Contents

About DealDash

DealDash is a pay-to-participate auction site and mobile app for shopping and bidding on a plethora of e-commerce auctions. The site offers auctions on almost anything, from home goods and electronics to jewelry, beauty, and apparel.

Through DealDash, consumers have the opportunity to purchase products at an amazing price – the site advertises “savings up to 99% off.”

However, the opportunity to snag such deals requires no small amount of luck, as only one bidder will win each auction and receive the item.

What sets DealDash apart

Unlike other auction sites, where one bidder wins the item, and everyone else loses the money they bid, DealDash offers a less risky experience for its shoppers. The site offers a ‘Buy It Now & Get Your Bids Back for Free’ option, which enables bidders who lose an auction to get all of their bids back by purchasing the item at its retail price.

So, essentially, as long as shoppers only bid on items they would actually purchase at full price, there should be no real downside to participating in DealDash. The keyword is should, as there have been a fair amount of complaints leveled at DealDash. But we’ll discuss that later on.

As far as traditional penny auction sites go, where consumers gamble their money away for the slim chance of winning a deal, DealDash’s option for consumers to save their bids by purchasing an item at its full price is a pretty groundbreaking feature.

Other features that set DealDash apart include from other e-commerce auction sites include:

The ability to try DealDash for free – the company offers full refunds of your first purchase on the site within 90 days, no questions asked
Free shipping on all items
Items sold only from the retailer/brand’s own stock or trusted partners’ stock (no untrusted third-party sellers)
All brand new, unused items with the original manufacturer’s warranty

DealDash also has unique gamification elements. For example, a progress bar on the site fills up every time a registered user becomes the highest bidder in an auction.

When a shopper’s progress bar fills up entirely, they ‘level up,’ which allows them to win more auctions each week (by default, shoppers are only allowed to win three products a week). According to the founder, the introduction of gamification helped to increase DealDash’s engagement 6x.

how does DealDash work and make money — Image Source: Apple App Store | DealDash App Screenshot

How DealDash works

So, how does DealDash actually work? Here is a overview of how you can bid, win, or buy on DealDash:

Purchase bids
Bid on an item – every bid raises the price by 1 cent
The countdown for the auction is reset to 10 sec every time a bid is placed
When the clock/ timer runs out, the last bidder wins

Buy bids

In order to participate in a DealDash auction, shoppers need to purchase ‘bids,’ which are basically credits. By default, each bid costs 60 cents, but the site is almost always running a promotion that allows buyers to purchase bids at about 12 cents each.

Users have the option to purchase a variety of different sized packs. Each bid can then be used toward bidding in an auction.

Bid on items

Each item on DealDash is set at $0.00 at the beginning of the auction. Every time someone places a bid on auction item, the price increases by 1 cent. As such, the final price of the item depends on how many bids are placed, so the more popular an auction item is, the higher the price.

However, at 1 cent a bid, the price will still end up being about 60 to 99% less expensive than the retail price – for the winner, that is.

Auctions are over when the 10-second countdown clock runs out. However, this clock is reset each time someone bids. If no one else bids in the remaining 10 seconds, the last bidder wins the auction. If you are lucky enough to be the winner, you’ll be charged for the final, discounted price, and the item will be shipped to you for free.

If you aren’t lucky enough to win, you can still get all of your bids back by selecting the ‘Buy It Now & Get Your Bids Back’ option to purchase the item at full price.

How does DealDash make money?

DealDash generates revenue from the following sources:

Bids (typically 12 to 20 cents each)
Referral fees on sales from the ‘Buy It Now’ feature
Investor funding

While more than half of DealDash’s revenue comes from unspent bids, items bought at full price through the ‘Buy It Now’ button also offer a source of revenue for the company;

DealDash earns a referral fee from the brand or retailer for each sale made. While neither of these sources provide substantial margins, Wolfram states that DealDash’s ability to retain customers allows the site to earn a profit – “Eventually customers stay with us and payback that difference in loyalty.”

The sheer volume also plays a part in DealDash’s success, as the site currently serves more than 15 million consumers.

Additionally, the Company has raised about $2 million funds from investors, including Rovio chairman, Kaj Hed, and Carbonite CEO, David Friend.

Complaints toward DealDash

In spite of its millions of loyal customers, DealDash has seen its fair share of controversy. The company faced one class-action lawsuit in 2017 from consumers claiming that the supposed brand name products sold on the site are actually generic, cheap imitation products.

Therefore, the suit claims, the prices of the products through the ‘Buy It Now’ feature are far above the true price of the item. Consumer Reports also claim that these prices are much higher than those of the exact same products sold through Amazon.

Furthermore, DealDash has been accused of touting certain brands as “luxury,” though these brands are non-existent beyond DealDash’s website.