DealDash
| Company type | Private |
|---|---|
| Industry | Online auctions, E-commerce |
| Founded | 2009 |
| Founder | William Wolfram |
| Headquarters | Minneapolis, Minnesota , United States |
| Products | Bidding fee auction platform |
Number of employees | 67 (2013) |
| Website | dealdash |
DealDash is a bidding fee auction platform established in 2009, with its main office located in Minneapolis, Minnesota, United States.
Participants buy bids at a cost of 13 cents each, and every bid raises the auction item's price by one cent. The auction concludes when no additional bids are placed within a predetermined interval (9 seconds as of 2024), awarding the item to the final bidder who pays the closing price. However, users frequently spend more in total than the displayed item price, occasionally exceeding the manufacturer's suggested retail price (MSRP). Those who do not win lose their bids unless they choose the "Buy It Now & Save Your Bids" option, which permits purchasing the product at a price above MSRP.
Consumer advocacy groups such as Consumer Reports and Truth in Advertising have criticized DealDash for promoting prices that do not account for bid expenses, which can create an inaccurate impression of savings. These critics highlight that when bid costs are combined with the final purchase price, the total may surpass standard retail prices. Furthermore, bidding fee auctions have been characterized as a lightly regulated form of gambling.
Earlier versions of DealDash’s terms of service acknowledged that winning auctions was unlikely and users might spend more than retail prices, rationalizing this by emphasizing the "entertainment value" of bidding. These disclaimers were removed in 2016 to align with revised company policies.
History
DealDash was created in 2009 by William Wolfram, a Finnish entrepreneur who was 16 years old at the time. His motivation stemmed from losing $20 while bidding on a MacBook through a penny auction site. Prior to founding DealDash, Wolfram earned approximately $500,000 annually via affiliate marketing by acquiring trending YouTube videos and embedding affiliate links. He invested these earnings into launching DealDash.
The company’s model requires customers to pay for each bid placed on auction items, with each subsequent bid incrementally increasing the price until the auction concludes. Differing from earlier penny auction sites, DealDash allows unsuccessful bidders to apply their spent bids toward purchasing the item at retail price.
Initial funding originated from Tekes, a Finnish government agency supporting innovation, followed by venture capital investments between $1.5 and $2 million from executives at Rovio Entertainment and Carbonite. The business experienced rapid expansion, with revenue growing fourfold annually during its first three years. By early 2012, DealDash reported revenues of $44 million and profits reaching $1 million. In 2013, it employed 67 staff members and approached $100 million in revenue, becoming Finland’s second most prominent startup based on media coverage and user engagement. That same year, DealDash was the most talked-about brand on Facebook during May and led engagement metrics in September.
In 2013, at age 20, Wolfram moved DealDash’s headquarters from Helsinki to Minneapolis. Additionally, the company launched DealDashReviewed.com to collect and showcase customer reviews and feedback.
Business model
DealDash operates a gamified online auction platform where participants buy bids at $0.13 each to enter auctions. Auctions commence at a starting price of $0.00, with every bid incrementing the price by $0.01 and deducting one purchased bid from the user's balance. Participants may bid manually or utilize an automated feature known as "BidBuddy." Each bid resets the auction countdown to a maximum of nine seconds, and the item is awarded to the highest bidder once the timer reaches zero.
Criticism
DealDash has been criticized for providing limited customer value and insufficient transparency regarding total expenses. Unlike conventional auctions where the highest monetary offer secures the item, penny auctions like DealDash reward persistence or chance, generating income primarily through bid sales rather than final purchase prices. A considerable number of users invest substantial amounts without winning, prompting consumer advocates to liken the system to gambling.
Consumer Reports observed that DealDash’s "buy it now" prices frequently surpass those found on Amazon, and unsuccessful bidders who forgo this option forfeit their bid costs. The company acknowledges significant revenue generated from users purchasing items after failing to win auctions.
Additional concerns involve DealDash marketing "luxury" brands that exist exclusively on its platform, with trademarks held by an affiliated entity, Galton Voysey. Truth in Advertising criticized misleading promotions, including an advertisement where the winner spent considerably more on bids than the stated retail price of a KitchenAid mixer. Both organizations noted that DealDash’s terms of service once disclosed that users are likely to spend beyond retail prices and seldom achieve savings; however, these disclaimers were removed in 2016.
Lawsuit
In 2017, DealDash was subject to a class-action lawsuit accusing the company of false advertising by misleading consumers into believing they could purchase items below retail cost while facing minimal chances of winning or saving money. Plaintiffs also alleged that supposed premium products were generic goods linked to companies affiliated with Wolfram. The lawsuit was dismissed after eight months.