The Diabolical Genius of Swoopo

I don't think all too many folks caught this article in the Sunday Washington Post on the auction website called Swoopo. Here's a taste:

At first glance, Swoopo.com -- which began in Germany as a phone and TV-based auction site called Telebid, migrated to the web as "Swoopo," and launched its U.S. site last year -- looks like an auction site patterned on eBay, with prices for most items starting at a penny and rising as members "bid" up the price. Like eBay, Swoopo has a full panoply of auction tools, such as comprehensive records of all completed auctions and an electronic bidding system ("Bid Butler") that will put in last-second bids to keep you in the auction. Unlike eBay, however, on Swoopo you pay 60 cents each time you make a bid.

Sixty cents? Sure doesn't sound like much when a $1,000-plus camera or computer is at stake. But consider the MacBook Pro that Swoopo sold recently for $35.86. Swoopo lists its suggested retail price at $1,799. But then look at what the bidding fee does. For each "bid," the price of the computer goes up by a penny, and Swoopo collects 60 cents. To get up to $35.86, it takes a stunning 3,585 bids -- and Swoopo gets its fee for each. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.

This site is something else -- I must have wasted three hours today just watching people bid on various items. It's absolutely fascinating watching just how irrational the buying gets on this site.

Here's an example:

Along with all of the great gadgets that get sold on the site Swoopo also makes bid packets available for auction that give buyers the opportunity. Below is a screen capture of two such auction that occurred right around the same time earlier today:

I'm blown away by this.

Sold individually, 300 bids on Swoopo would run $180, but as a package got sold well below that. In fact, the winner shaves 50 cents off the cost of each of his next 300 bids. The 50 bid package, however is a different story. Even though the auction is taking place, literally next door to 300 bid package, the package sells for not only $6 more than the winning price of the much better deal, and almost $9 over the real cost of 50 bids.

Really, I'm just in awe at this. Swoopo had a revenue stream of $28.3 million (!) last year. That's a lot of people playing this game. Here are some more links with some interesting things to say about Swoopo.