The Dubli Business Model

Today, one of my business mentors had me review a business opportunity needing online traffic – Dubli. A friend of his is serious about undertaking this venture, all ready to dive in. My input in this area was sought, for my ability to drive online traffic to a Dubli network site, similar to this one.

Here, I will address the business aspects of Dubli and the prospects of a business owner running a Dubli based business, online. It is likely that if you haven’t been exposed to Dubli, you will in the next few months or this year, as it will reach critical mass.You will hear about some variant of this business model from a Dubli network partner (under another brand name) either as the competition to Ebay or a reverse auction way of selling online or the entertainment shopping that is spreading like wild fire.Every Dubli Associate gets their own unique looking, unbranded Dubli auction site, all of which are intereconnected to the Dubli network.The actual name of the site will vary but not the business concept. The purpose of this blog is to educate business owners, and users on the business aspects of this concept and the online prospects of such a business.

A bit on reverse auctions model of Dubli: At Dubli or a Dubli partner network, one buys a “Dubli credit”, a token that costs $0.80.Similar to Ebay where multiple buyers compete for an item, as they get bid up to the highest bidder. In a reverse auction, multiple sellers compete to sell an item, so they bid down an item toward a sale. However, at Dubli or a Dubli network, there is only one seller and multiple buyers who pay to lower the price by using up pre-purchased tokens.You can choose to purchase the item or wait for other consumers to help lower the price of a branded item (like an Apple Ipod) by revealing the bid price and deciding whether to purchase an item or not:

There are three ways these tokens can be used at Dubli:

In Xpress, you can bet a token to see a price. If you bet at the right time, the price may be low enough that you can purchase at that price.

In Unique Bid, you can spread your tokens to cover different price ranges; in other words, you are betting that your token will be unique and that it will also be the lowest unique token placed as a bet, in competition with all the other consumers. (But this game can end without a winner, so you can’t reclaim your tokens).

In shopping you are referred to partner sites, like Apple, Adobe where Dubli has agreements with these vendors for discount coupon in the range of 0.5-3% over standard purchases online.

Each tokens is priced at $.80, you are actually lowering the price between $.20 to $.25 on use of a token.

The Value Proposition Math:

Let's say an item sold on Dubli network has a market value of $1,000.

The first person to click, will pay 80 cents, and the price will drop by 25 cents and become $999.75 ...If they want to buy it, they can pay $999.75, plus the 80 cents already spent to reveal the price for a total of $1,000.55.

Most people who have used tokens on Dubli, know that products drop anywhere between 10-95% before they are purchased.So you can defer making this purchase for a few hours or days, depending on the number of other people using up their tokens on various partner sites to reveal the price on the same item. This percentage drop is displayed in a large font and you cannot miss this – the reason for this will become clear shortly.Each site will claim 80-90% savings to lure you in.

The next person will pay 80 cents to reveal the price, and the price will drop by 25 cents and become $999.50 and this will go on till the magical point of someone making a purchase.

Taking the 10% level here, say the price drops to $900 and an actual purchase occurs for $900 + 80 cents it cost the winner to reveal the price for a grand total of $900.80.This means 400 tokens have to be “expended” on Dubli network by other losing consumers, who chose to reveal the item’s price and pass on it for a Dubli value of $320 token credits. At 99% level this lucky winner would have bought this item for $10.8, with a total 3960 loosing bids, which would create internal Dubli value of $3,168.

Dubli’s Business Associates are paid commission to create new customer bases and to sponsor new Business Associates (who, in turn, create more new customer bases). Commissions are paid to Associates whenever their registered customers buy credits to participate in Dubli auctions or whenever their customers generate click-through or revenue-share fees by clicking through to Dubli’s search engine partner. In order to create a new customer base, Business Associates buy Dubli credits, and then give away the credits to prospective customers to get them to visit the site and try out the auctions.

When a new Business Associate buys a Product Package, commission is paid to the recruiting Business Associate, just as if a customer had bought the credits (and that is how Business Associates earn commission from recruiting new Business Associates).

These token credits are passed back in a percentage-based fashion to the business associate that found that consumer, and up three or four levels higher to compensate marketing activities of building this network of associates.

You have an option of 3 levels -Bronze for $795.00 with 1100 tokens ,Silver costing $1595 for 2500 credits, Gold at $3195 giving you 6000 credits. Sign up a new rep at Bronze and you can get from $75-$375 commission. At Silver you can get from $75-$750 commission. At Gold you can get from $75-$1500 commission for a sign up. Whenever a bid is placed on your site, you get a percentage of the credit. Dubli's research says that each retail customer that uses one of their auction sites averages to bring 5 new customers and each brings 5 new customers and so on.

Each business associate gets a unique site for $200 (I don’t think these can be purchased on Dubli tokens) with all the backend functionality of Dubli and a value proposition of “We start at the lowest price on the market – From there it goes down, down, down”. Here are some of the Dubli partner websites:

1. Joe Morgan’s shop
2. Tine Rasmussen’s shop
3. Zinic Auction site
4. A fun way to shop
5. Maze Auction site

Let's look at the online ways of driving traffic:

1. Natural Search Optimisation (SEO) – Tens and thousands of identical duplicate content sites, with identical titles, usually hosted on the same server (or IP address, on rackspace’s network). Outside of the home page none of these sites have the remotest possibility of ranking in natural search. Most home pages won’t even show up even if you lookup by the full .com term, but are in google’s index – filtered out for duplicate content.
2. Pay Per Click (PPC, Adwords) – On a value proposition of you cannot find prices any lower than on this site?The only winner here will be Google.
3. Affiliate or Database marketing – It is better off for the database owner to create their own Dubli site for $200 and provide the kick back to the referring Dubli associate, so new duplicate sites have to be created for this tactic.You will be encouraged to buy lots of tokens depending on the reach of your database.
4. On site content – None of the sites support blogging, or much original content – so this option is out.
5. External content – You can create external sites with blogs, viral elements to drive traffic to your Dubli portal – this method can work.
6. Viral traffic – viral videos, facebook apps or other widgets to lure consumers to play entertainment games to buy at cheapest prices – this also works.

Dubli’s marketing program states that they encourage people to build relationships through in- person meetings and expand through offline relationships. There are very few ways for a business owner to find new consumers through traditional online channels.

Can this business model work?

I have seen many of my friends in various MLM programs for the last 20 years, some that have made money, many that have lost it and in between. The common factor among winners is that they get in early, create their own brand like this one and when it reaches critical mass find the next hottest thing, take all your friends with you and then rationalize the failure of the prior business on aspects, fixed in the current opportunity.

When cheques are shown by the top line associates as a way to lure new associates, you know this is on the early up swing, which is the case today.Purchases being made are for the Dubli tokens that have to be pre-purchased to be sold at various prices for the next associate to buy to give away, lure customers in to buy at a low-low price.

So what is wrong with the Dubli’s business model?

1. Tulip mania: With thousands of Dubli partner networks creating these independent micro sites and Dubli aggregating the token click fees and revenue share fees, and providing branded products at discounted prices – we are at the start of a consumer bubble for the cheapest product purchase online. As it encourages its consumers to wait for the lowest prices to catch a bargain, Dubli will be able to sell consumer products cheaper than any online wholesaler because of the near 4:1 ratio of Dubli credit value to actual dollar before a sale occurs. This will enable Dubli to push products bought at normal wholesale prices and sell them online at cheap prices. Do you see the tulip mania starting here?

   

2. Gambling: What Dubli calls entertainment shopping, one needs to ask when a person puts a token to discover the price of a item, with the intention of getting it at the lowest price – what is the difference between this action and the action of a person sitting infront of a gambling booth, placing a dollar with hope of getting three 777s, to win a car for $1?

   

   Each business associate is creating a mini Pokie’s like franchise by purchasing these token credits and lure customers in to win branded items at low prices. Same things happen at Las Vegas casinos where some peoplewin a Mercedes for a dollar, and others pay for the Mercedes and the casino’s make a profit.

   

   It’s not Ebay that needs to be worried about Dubli, rather Tatslotto and Las Vegascasinos. The majority of Dubli promoters live in the State of California, where it is illegal to run gambling operations without a State license as in many U.S. States. This is why Dubli operates in the UK, and Germany and Denmark. The online model of Dubli will likely take years before government intervention or some sort of ruling on the online gambling aspects of this business.Needless to say, owning a Pokie’s franchise for $200 is likely going to bring in money as the lines are always longest at Tatslotto in Australia.

3. No economic value created: The lucky winner who used only one token to get an item wins something, at the expense of losing tokens passed back up through an associate chain, rewarding the business associates for their actions – finding consumers willing to use up their tokens.These tokens are worthless and create no economic value to anyone beside Dubli, and unsuspecting business associates lured in by the greed to make money, to own a piece of the Ebay or Google’s action.

4. Trend: The only people winning items on Dubli micro sites are their promoters, which means they have few customers, or the promoters are spending more money on tokens than their customers.

5. Owner's track record: The current CEO and founder, Michael Hansen, marketed in Denmark and managed firms that have been bankrupted during his involvement. There is contrary opinion to it published by Dubli’s own site for brand management of Dubli scam, either way what is clear is that the owners know when to exit a business at the right point. There is a probability that the owners may exit again – before this bubble bursts.

In summary, if you are comfortable with business aspects of Dubli, go for it, but be smart as a serpent and innocent as a dove.Most online traffic sources will not be effective as Google is pretty effective on eliminating duplicate content SPAM on its network.The Dubli business model does not have the aspects of More Sales, More Profits and More Free Time for the business owners, as business owner will need to know when to jump to the next opportunity. Of the seven attributes for successful online business for consultative selling, it fails on two attributes #1 – the ability to create a unique psychographic reason for being and #2 – operating from the framework of love, as there will be more losers than winners among consumers hunting for the lowest price for an item on Dubli’s network.

Other relevant reading links - whirlpool,spin1, 2,3,4,5