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    • RackUp Wants to Make Money With Giftcards… Somehow #tc50

    By Alex Wilhelm on September 14, 2009

    Rackup.com Gift Card Auctions - Always get more than you pay for!RackUp is trying to change around the gift card business. Don’t scoff, it’s a 100 billion dollar market! RackUp is an auction market place where you can bid on gift cards, possibly doubling your money. We are dramatically confused by this startup. It seems that the company is selling giftcards for less money than on their face value.

    Who is going to give them the gift cards?

    It smacks us of Swoopo and Dealio which are not only scammy, but spammy and odd. If this had been the Woot.com of gift cards, I would have cared. Besides, who thinks, you know what, I want to go to Best Buy, I think that I will go out and buy twelve gift cards and make $4. Now I am going to go bid in an auction that I cannot understand, and all of a suffen I make free money?

    If someone can parse this, explain it to us. Presumably you’ll find more information about RackUp here once TechCrunch loads in the panel data and all that.

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    Comments

    1. September 17, 2009 at 7:18 pm
      rob

      Hi, I’m Rob, VP of Strategy, and I’d be happy to clarify, because it’s apparent you aren’t getting it…

      What you are seeing is a totally new auction model. It is expressed using the latest ‘chat’ technology, so that the auction is in true real time. That means all participants can bid, and see bids, without refreshing the page. Not only is this kinda cool, but in a 60 second auction, it’s critical, so people aren’t continuously refreshing their browsers to see whats going on, and missing out on the action.

      To address your other question, where does the $ come from, it’s simple… the retailers. You know those cards in the grocery store? You know the merchants are giving a piece of the sale to the grocery store, right? They are acting as a reseller.

      Well, what we do, is simply give that money back to the user in the form of a bonus… and to make people compete, we have different levels of bonuses. In the case of the demo auctions, what you are seeing is a curve with bonuses ranging from 3% to 100%… which is exactly the same thing as selling 10 cards at 18% off…. kinda.

      Get it? By turning the discount into a bonus… and then distributing the bonus unevenly… you can guarantee anyone that buys a card will ALWAYS get more on the card than they paid. Sure, maybe it’s only 3% sometimes, but where else do you even get that much interest on your money in 60 seconds? Now imagine you get the 100%…

      Watch the video on the how it works page, if you still don’t get it. Basically, Rackup is a site where you put in ‘x’ and you get ‘x + y’.

      So it is definitely not any kind of scam at all… actually its a really cool way at looking at rewarding people for loading gift cards. It’s not smoke and mirrors. It’s just math.

      But don’t take my word for it, try a demo auction for yourself. There is only one button to click, and one list to stay in, so it really isn’t too complicated.

      Actually we WERE going to bring a chimp to do an auction at the TC50 presentation but our board of advisors told us not to. But that was going to be the joke… so easy a monkey could do it. eheheheh serious:)

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