The DubLi Reverse Auctions originated as a mere forethought for CEO Michael Hansen in 2003.  He first bought the Technical Division from eBay’s Berlin office late in 2003.  Together with his team they formulated a solid infrastructure for the company, spending three full years constructing the online platform.  DubLi’s beta site launched early in 2007, featuring the Express, Zero and Unique Bid Auctions.

The three auctions went live in January 2008 after several lead programmers spent month finalizing minor technical issues.  Initially the customer base included just 28 European countries.  The first eight months included an acquisition of just over 2.3 million customers, and today DubLi reports a 72 to 1 customer to business associate ratio.  Of the three auctions, the Unique Bid auction dominated customer bidding throughout the first 16 months.

The company’s official North American launch took place on April 4^th 2009.  Since then one of the fastest growing markets in the Fall of 2009 has been Australia and New Zealand, where DubLi was formally introduced in September.  And now it forecasts its global auction platform to roll-out in November 2009.  This will provide a solid basis that seeks to garner worldwide customers.

DubLi also announced three other key developments.  First, they’ve agreed to pay a $1 million cash bonus to any business associate who reaches the top rank of Senior Vice President by the end of 2010.   Secondly, the Backstreet Boys have established a partnership through DubLi’s partner program so that their charity will be linked to the auction site.  And lastly DubLi will become a publicly traded company soon after planning a merger with MediaNet Group.

This brief chronicle of the DubLi history underscores its adaption to change in the e-commerce marketplace.  Looking ahead, it’s quite apparent how the most recent events and announcements pave the way for a formidable advancement in global online auctions and shopping.

Many DubLi business associates have raised the concern about the DubLi auctions being compared to gambling.  This post should debunk any of these claims with a closer look at U.S. Gambling law.

Gambling requires three distinct elements: 1) Chance, 2) Consideration and 3) Prize. Let’s look at each of these more closely.

1) – CONSIDERATION:
Consideration strictly refers to money in American Gambling Law.  The money must be put at risk and the player gets nothing in return for that money, other than the chance opportunity to win a prize.  The subject must also stand to lose the money permanently for no gain.

The Standard Auction Model: Traditional auctions are void of the “consideration” element in the gambling sense, since the auction ends with the highest bidder gaining the right to purchase.  Once the winning bidder pays the matter is resolved, as is the case in a reverse auction.  Today, numerous Fortune 1000 companies utilize the “ordinary” reverse auction with their vendors.

The DubLi Auction Models: In DubLi’s Express Auction and Unique Bid Auction, a customer expends one 80 cent credit to view the price and not to purchasing a chance to buy.  The non-refundable credit represents the consideration element   The Express Auction features prices continually dropping 25 cents with each “show price” click until the customer decides to click “buy now”.  The Unique Bid Auction winner is the only customer to bid the lowest unique 25-cent increment price.

2) – CHANCE:
US Gambling Law states that “chance” equates to an event resolving by a random occurrence completely independent from the participant’s influence.  DubLi does not exhibit this level of chance since the resolution is strictly dependent on the customer’s (participant) conduct.   In either DubLi auction, if no one clicks on Show Price, then the price never drops and there is no resolution to the auction.  Therefore, by definition, there is no random influence acting outside the control of the participants.

3) – PRIZE:
Once again US Gambling Law defines “prize” as anything of value.  This is the only element that DubLi Auctions have in common with Gambling.  The evidence of this is obvious since customers are rewarded with brand new (often luxury) items such as computers, designer clothes or gift certificates.

In conclusion, the DubLi auctions cannot legally be considered games of chance and therefore do not rise to the level of gambling.  Please comment below with your thoughts or questions.

In this second half of the DubLi compensation plan, I’ll cover how some commissions are backed on the package level (bronze, silver or gold) you buy as a business associate.

Quarterly Bonus: In the summer of 2009, DubLi announced a 50% Quarterly Bonus for Gold package holders.  This bonus awards a 50% bonus to those who sponsor at least $6500 in packages on their frontline within a three-month quarter.  For example, if a Gold member sponsors 3 gold members (~$9,000) on his frontline from October through December, he’ll receive $4,500 as a BONUS in the month following the quarter.

Sales Director 3x3x3

Reselling credits. When you buy a gold package, you have purchased the credits at a 25% discount from their $0.80 retail price.  That means that when you resell them, you earn the margin between what you paid ($0.60) and what you sell them for ($0.80).  This favorable 33% margin is a compelling reason why initial bronze BA’s upgrade to gold following their start.  A bronze package holder would have a 14% margin due to a 10% initial discount. So All of the income from the sales of your credits is, therefore, entirely tied to the package you purchase.

The shopping portal revenue.  Once your customers begin purchasing the shopping portal you still receive compensation based on your package level and the purchase amount.  DubLi has set up a revenue sharing relationship such that bronze, silver and gold package holders will receive 10%, 15% and 25% (respectfully) of the total revenue.

Although the revenue percentage of each item varies, I’ll illustrate an example using a 5% pay-out.  For instance, let’s assume your customer purchases a new computer through a shopping portal’s merchant for $1000.  If the total revenue generated is arbitrarily 5%, DubLi receives $50 ($1000 x 5%).  Of that $50 DubLi pays the Gold package holder BA 25% (or $12.50).

A bronze package holder would have receive 10% of the $50, or $5.00.

DubLi Debit Card

The same percentage specific to the item serves as a discount to the customer.  This percentage of the total price of the item represents the available commissionable dollars. Using the computer example from above, the customer would receive $50 rebate at the end of the month and is loaded on their “Load and Spend” Debit Card. They can use this card anywhere MasterCard or Discover is accepted.

Hopefully now you have a better understanding of the DubLi compensation plan.  Please post your questions below in the comment section.

DubLi business associates can earn compensation in a number of ways, however, generally speaking the compensation falls into one of two categories:

* Income based on the BA’s organization rank (Team Member, Team Leader, Team Coordinator, Sales Director, and Vice President),or …

* Income based on the package level (Gold, Silver or Bronze) that you buy when you become an associate.  I’ll cover this and the shopping portal revenue in the next post.

The video here gives you a beginning look at the DubLi compensation plan in the early stages:

Your introductory title as a DubLi business associate is a Team member.  As a TM you earn an up-front commission of $28.75, $67.50 or $149.75 for a Bronze, Silver or Gold frontline sponsor (see image below).  These values are based on a 5% commission.

Image 1: Frontline Commissions

Once you sponsor three BA’s (of any package level), you become a Team Leader.  You now earn up-front commissions according to the second row for frontline sponsors.  These are double what a TM would earn since TL’s are paid out at 10%.  As a TL, you would receive 5% of your frontline sponsors new BA’s (see image 2).

The Team Coordinator level is attained by sponsoring 3×3 and earns frontline commissions according to the third row in image 1.  All of these dollar values are based on purchased credit packages, whether they be initial or subsequent.  The Team Coordinator is a solid goal upon starting in DubLi since this is where bonus’s begin.  BA’s of TC or higher are paid a 20% bonus commission each month based on the month’s production.  So if a TC sponsored several BA’s that totaled $5,000 in November, DubLi would pay him/her an additional $1,000 in December.

Image 2: Commission Percentages

Here are the exact percentages you earn based on your rank and the new BA’s organizational position:

• Earn 5-25% in Retail Commissions on Credits purchased by Personal Active Retail Customers.
• Earn 20% from all Credit sales generated by personally enrolled BA’s.
• Earn 15% overrides on all Credit sales generated by Team Members.
• Earn 10% overrides on all Credit sales generated by Team Leaders.
• Earn 5% overrides on all Credit sales generated by Team Coordinators.
• Earn 2% 1st generation bonus on all Sales Directors.
• Earn 1% 2nd generation bonus on all Sales Directors.

Look reading about about the DubLi compensation plan in my second post.  Comment below with questions.