What is a blind dutch auction?
At zerocool we may use a Blind Dutch Auction to sell certain products. So, what exactly does that mean?
First, in a Blind Dutch Auction no one can see anyone else’s bids. That way, bidders decide the value of the product and how much they are willing to pay for each “unit” of a product. As such, our users ultimately set the price.
Unlike a traditional auction where only the highest bidder wins, a blind Dutch auction works by matching the highest bids to the quantity of product available. For example, if we are selling 100 units then the top 100 bids will win, and the lowest bid within the top 100 bids will become the “clearing price” that all 100 bidders would then pay for each of the 100 units sold.
How It Works
Bid on a box or a case
Once an auction goes live, you can bid whatever price you'd like to pay, for any quantity of product you'd like. And you can place multiple bids at multiple price points. Users have the listed number of days to place their bid (all blind, of course, so no one has any knowledge of what other people are offering).
Submit your bid
Once you're done placing all of your bids and you submit your order, we'll place a temporary hold on your payment method on file for the total amount you're on the hook for. Only when the auction ends and we determine if you've won or lost will we then finalize the payment.
Auction ends and the final clearing price is determined
When the auction ends, we match the highest bids with the amount of product we have for sale. The lowest “winning” bid then sets the price for every bid above it. That becomes the “clearing price", which is the the single price that every winner pays.
Win or lose, we'll let you know
Based on the clearing price, we'll let you know if you win or lose. If you bid $50/box for 2 boxes and the clearing price ends up at $40/box, you only pay the clearing price and you'll be charged a total of $80. But if you bid $30/box, you lose and you won't be charged anything at all.
Wow, you really want to know how this works. Great. Here are some more details:
- When two or more users have bid at the clearing price and there is not sufficient product for each such user, the user who bid earliest wins.
- If a user bids at the clearing price, it is possible that the user will not receive all of the units that they requested to buy at that price. Priority typically goes to the bidders who bid above the clearing price and then to bidders who bid the earliest, except as otherwise stated at the point of sale.
- Once the clearing price is determined, users are automatically charged for the product on which they have bid at or above the clearing price.
- Most product will ship within 4 weeks of the determination of the clearing price. Users will be notified when their product has been shipped.
- A user that wants to bid for multiple products can only bid one amount, i.e., the amount that the user is willing to pay for each product and not for the total number of products on which they are bidding.
- zerocool reserves the right to sell any amount of product, regardless of the amount of product listed for sale; if a product is part of a numbered edition, zerocool will not sell more of such product than indicated.
- zerocool reserves the right to cancel an auction at any time and for any reason.
- zerocool reserves the right to not sell to any user, regardless of whether such user has submitted a winning bid, in zerocool’s sole discretion.
- zerocool may ban any user that zerocool suspects to have evaded, or to have attempted to evade, any rules applicable to a particular auction.
- Still looking for an answer, try our FAQs or read our detailed recap of the first zerocool blind dutch auction .