Like me, if you’re one of those who has bid on eBay (or other online auction websites) and gotten frustrated with one of those “You’re outbid” emails five minutes later, then seller-side auctions might be a refreshing change.
In the first (and only) example I’ve come across of seller-side auctions, MoneyAisle promises, “sellers bid, buyers win”.
MoneyAisle helps investors get the best rate for their savings by letting banks bid in a live auction. Currently available in the United States, MoneyAisle lets people with spare cash buy Bank Certificate of Deposits (CDs) or High-Yield Savings Accounts in real-time by simply specifying how much money they wish to invest and for what period. MoneyAisle runs a realtime auction among its participating banks and, at the end of the auction lasting 1-2 minutes, you get the name of the bank offering the highest interest rate. MoneyAisle promises that a representative from the winning bank will soon contact investors to guide them with opening their accounts. If the winning bank supports online account opening, MoneyAisle gives investors the option to go directly to the bank’s online platform and complete their purchase.
When I took a test drive on MoneyAisle, I could actually watch the auction live, see the APY rates increasing and the number of banks decreasing from one round of bidding to the other, until finally the auction came to an end with only one bank left in the fray.
For eBay-weary buyers, MoneyAisle is definitely a great experience!
Having said that, I wasn’t too sure about the real-time seller-side auction paradigm shift promised by MoneyAisle. After all, there a number of price comparison sites like moneysupermarket.com, which.co.uk and Stiftung Warentest which publish comparative rates from different product and service providers at periodic intervals. How was one to know that banks were really bidding live on MoneyAisle for my business to offer dynamic rates, which is what made MoneyAisle truly different from conventional price comparison sites that contain “often out-of-date rates from a database” (to quote MoneyAisle)? After all, pictures showing bidding rounds in MoneyAisle could easily be misconstrued as visual representations of MoneyAisle trawling through static rates published by banks?
I noticed that MoneyAisle’s FAQ section does address this point. To the question, “Are the auctions live?”, MoneyAisle provides an unequivocal answer, “Yes, absolutely.”
But, still not fully convinced, just as I know my readers won’t be, I was keen on comparing MoneyAisle’s winning APY rates with those published in comparison websites. Since the aforementioned comparison sites were restricted to UK and Germany, they were of no use in this regard since MoneyAisle only addressed the US market. Luckily for me, I came across a couple of US-focused financial comparison sites like Filife.com and bankaholic.com. I was able to find what I was looking for quite easily in bankaholic.com.
I entered the same amount and period for Bank CD in bankaholic and, bingo, I was able to spot the same bank E-LOAN that had won the MoneyAisle live auction with a winning API of 4.36%. In bankaholic, E-LOAN’s rate was lower (4.27%). To me, this was proof enough that MoneyAisle was able to access more dynamic (and slightly higher) rates compared to those published in comparison sites based on relatively static data.
However, at the same time, I couldn’t escape noticing a higher API of 4.43% offered by some other bank (Flagstar) on bankaholic. Did this suggest that MoneyAisle’s winning rates might not be the highest in the market?
Yes, that’s indeed the case.
As MoneyAisle admits in its website, “there are several reasons that a specific rate may not appear as the winning rate [on MoneyAisle]. Some banks will choose to only participate in auctions for customers in certain geographic regions, sometimes that particular bank might not be part of our network. MoneyAisle is a new service and we fully expect this to improve over time as we add more banks to our growing network”.
Obviously, MoneyAisle’s seller-side live auctions are a great boon for buyers compared to eBay and other conventional buyer-side auction websites. If you have money and want instant gratification, MoneyAisle is the place to go. For, unlike eBay, you don’t have to keep bidding and increasing your bids to win at MoneyAisle. Besides, you don’t have to wait for the 3-7 days that it takes for a typical auction to conclude on eBay.
With MoneyAisle, it’s sellers who keep bidding themselves up until there’s only one seller left. What’s more, a typical auction lasts only a couple of minutes on MoneyAisle, so instant gratification is guaranteed.
What does future hold in store for seller-side auctions? If you scratch the surface, how different are they compared to online price discovery that is commonplace in perishable product categories like air tickets, hotel rooms, car rentals, and so on? Personally I feel that, even if they aren’t very different, there is still a vast market of products beyond Bank CDs and High-Yield Savings Accounts (such as those you’d find on typical comparison sites like moneysupermarket.com) where seller-side auctions can enhance the online shopping experience for buyers.