It’s been a while since we last took a look at Swoopo, the “entertainment shopping” site that’s one part auction-house, one part virtual casino. Since launching in late 2008, the site has closed a $10 million funding round led by August Capital, and has grown to over 2 million members. Now, the site has quietly expanded to launch a Canadian portal, and is also beginning to test a ‘buy it now’ function on its German site that allows users to apply the costs of their previous bids towards the purchase of an item.
For those that aren’t familiar with Swoopo, here’s how it works: the site uses a unique pricing model that invites you to purchase virtual “bids” for 75 cents, which can then be used to bid on goods ranging from video games to high-end televisions. Whenever you bid on an item, its price increases by fifteen cents and an extra 20 seconds are tacked on to the duration of the auction. Oftentimes items wind up selling substantially below their market value, but this lower price comes with some risk: if you bid on an item, you don’t get that 75 cent bid back when the auction concludes. Even if the item winds up selling below its normal market price, Swoopo can make money from these bids (the site does sometimes lose money on an auction, but relies on the proceeds of other auctions to cover them).
It’s definitely a departure from traditional auction sites like eBay, and after navigating through the flashy site it’s easy to see why it might be a bit more fun. Sure, there’s always a chance that you’ll throw away a few dollars on lost bids, which will be enough to put some people off, but you also have the potential to score a TV for a fraction of its typical retail price (of course, dozens or even hundreds of bidders might be competing against you). To help take some of the risk out of bidding, the site is experimenting with a ‘buy it now’ feature (apparently only on its German site for now), which allows you to apply the cost of your bids towards purchasing a product outright for its normal market value. You won’t be able to get the low auction price, but you’re not throwing away the cost of those bids, either, which should be enough to drive even more bidding.