New idea, feedback please

[Dave]

Hello,

I had an original idea for a website today that seems pretty decent. I would like your feedback because I am most likely overlooking something because to me this idea seems like it could be successful.

The idea is for an auction website, where users can buy and sell products. The difference? A system that makes all auctions start from 0.00 and with the seller receiving the total sum value of the product before the auction has even started. So, how is this possible? Each product will have a distributed fund system, in which the expected value of the product can be made up by its prospective buyers. The system will be point based, where points can be converted into money payments once the item has been sold. An example is the best way to explain this...

Lets say we have Product A. The seller defines the expected value of product A as 1500 points (lets say this is the equivalent of $15.00). The seller also set's a divider value of 100 points. This means that the product will need 15 prospective buyers. Once the 1500 points has been reached, the auction can begin from 0 points. This is great because the seller receives their expected 1500 points while each prospective buyer now has a better chance of capturing the product at a much, much cheaper value. This means buyer's can also afford a product, that may usually be out of their price range.

So why a point based system? Because of incentives and benefits e.g. a member receives 500 points for signing up etc and to maintain a fair transaction between members. Like if one member decides to illegally withdraw their product after receiving the points, the system can automatically retrieve them, where as with real money payments (like PayPal) retrieving the funds would be very hard.

Points can also be distributed to members who help to monetize the service through advertisements. For example, this means that a 14 year old who has no money can easily sign up and receive points for their contribution to the service, which they can in turn spend on products. It also means members have a fair chance of gaining back points they may have lost on other auctions where they failed to win, but were a prospective buyer.

What do you think of this idea? Please let me know.

EDIT

Seller's will define their own point values for items. A conversion rate will be set (say 100 points = $1) for different currencies. Your point about complexity is very true. I will try and break this idea down to a simplistic level when portraying it to the general public.

The great thing about a point based system is it will help to reduce the amount of scams/fraud. Seller's receive the buy-in points but can only convert these into real money once all transactions have been successful. If a product is found to be a scam then the system can easily retrieve points, where as real money is much harder to get back.

Refunding buy-points is also a possibility. The more members that use the service, the more money the service will earn from advertisements. Part of this can be returned to customers who have lost points on buy-ins.

Edit: Points act like an intermediary between members. A safety net for reducing their losses. All auctions will also have a short time limit to help provide fair advantage to all members.

Another point I have failed to cover is that winning points do not go directly to the seller, because the seller has already received their money from the buy-ins. Lets say buyer receives 1500 points from buy-ins on Product A and the winning bid in auction is only 500 points. This means that the winning bidder receives a product at much much less than its estimated value, while the rest of the points go back into the system and get distributed back to user's who continue to actively use the service in future.

Thanks

 

[DDC_Cyn]

If I understand correctly, you're trying to set up more of a swap meet - where I give my item to someone in return for points then use those points to buy some one else's item?

There was a DVD trading site like this. Personally, I think it's too complicated to work out. It might be good for low value items like books and DVDs but there's still shipping involved and valuing the items. . . could work but. .

 

[Dave]

If I understand correctly, you're trying to set up more of a swap meet - where I give my item to someone in return for points then use those points to buy some one else's item?

There was a DVD trading site like this. Personally, I think it's too complicated to work out. It might be good for low value items like books and DVDs but there's still shipping involved and valuing the items. . . could work but. .

Not quite. Sorry about the poor explanation, it is actually difficult to explain my idea simply. Let me break down the example for you.

Seller puts product A up for sale at 1500 points.
Pretty self explanatory this one..

Seller sets divider at 100 points.
A divider is how much each prospective buyer must contribute before the product can go on auction. So this means 15 prospective buyers will need to contribute 100 points each. Once 1500 points have been contributed the product goes on auction from 0 points.

The auction is just like any other, user's place bids, with the highest bid winning.

User's can receive points back from contributing to the service, because of advertisements.

Point based system also helps to reduce the possibility of a scam, because points can be retrieved, while real money is much harder. Seller's can convert their points to real money and receive them instantly through something like paypal.

I hope that clears things up a bit

 

[doomna]

Then whats the benefit for first 15 prospective buyers who contribute 100 points each.

 

[Dave]

Then whats the benefit for first 15 prospective buyers who contribute 100 points each.

The main benefit is that the product starts from 0 in auction. A better example would be a more expensive product. This example assumes the service has a big enough userbase.

A product goes up for sale at $1,000 (lets say around 100,000 points). The average person can't afford this. What if the divider for this product was set at 500 points? With 200 prospective buyers each contributing 500 points they will all have a chance of getting the product, because it will only start from 0.

 

[monaco]

My only criticism here is that the system seems too complicated. If it can't be made obvious how it works, nobody will use it; especially if it pertains to their money