This startup launched at TechCrunch50 earlier in September and seeks to take the gift card market and online auction scene and turn them on their heads.Â¬â€ The aim is to give more to the auction winner than just a gift card that they’ve paid for.
The auctions on Rackup.com are very fast-paced with gift cards eventually coming from every conceivable venue (from Wal-Mart to Starbucks to generic VISA).Â¬â€ The auctions themselves can be extremely engaging and are kind of difficult to explain, but I’ll try.
When an auction is listed for a card, you bid on it: say $10 on a $50 card.Â¬â€ Someone quickly outbids you at $11, then another at $12 and soon, you’ve put in a bid for $20, putting you in the top spot.Â¬â€ But not for long.Â¬â€ Eventually, the auction will sell with the card.Â¬â€ The first person to bid gets a higher dollar:value ratio, obviously, but all of the top 10 bidders on an auction can cash in on this.
Watching the history of the auction, you can see how these numbers are added.Â¬â€ The average discount (value) on most auctions is around 18%.Â¬â€ This means that if you’re the auction winner for that $50 gift card, you’ll receive it with an (average) 18% bonus–in other words a card with $59 on it.Â¬â€ Each person in that top 10 list can get a decreasing return on value if they choose to purchase cards still available from that auction (most auctions are multiples).
Like I said, it’s kind of complicated to explain and you just kind of have to try it.Â¬â€ The value goes up the more people who’re bidding, so an auction with, say, twelve bidders will have a lower added value markup than one that has fifty.Â¬â€ It’s sort of like gambling, except you aren’t putting any money into it unless you actually decide to buy the gift card–which is totally optional up until the auction closes (if you’re the high bidder).
Auction fees are paid by retailers (sellers) rather than the buyer (unlike Swoopoo) and all of the sellers are the retailers whom the card being sold represents.Â¬â€ So far, Rackup has recruited twenty retailers for the Beta and has raised $3.5 million in funding.
This is a cool idea and, frankly, a ton of fun to try.