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.
Swoopo is a scam, pure and simple. Even the smallest amount of research will show you that.
hehe, yup it’s a loto scamo, that’s why they’re experimenting with a ‘buy it now’ feature! LOL!
Funding: $14M WTF???
I bid on Swoopo, spent about $70 in bids and won a $1,300 camera for $45. So my total cost was $115. Great deal. Swoopo is most definately not a scam. If you don’t win it must be frustrating, but of course if everyone wins, you can’t get such a great deal. I love it and think the complainers just lost and are sore losers.
hehehe.. riiiiiigggghhhhtttttt..
who is this guy.
obizy.com
Hey all readers. Please believe anonymous comments as they always represent the utmost truth.
BTW: in Israel it’s quite known by now that most (I’d say all but don’t wanna be responsible) sites offering paid bids (and some of the sites offering normal auctions) are bluntly cheating semi-innocent people who think someone’s actually gonna give them a free meal. Good luck with that.
In my opinion, Swoopo is a straightforward business and not a scam. It is new, and yes, it is controversial because the business model is different. I am happy to talk directly with anyone who would like to discuss why they think it is a scam. I am sure I will learn something from you that will be good for the company. The best way to reach me is on Skype. My username is “howard” and please put in your contact request that you’d like to discuss Swoopo so that I don’t accidentally miss your request. Thanks. (I am one of Swoopo’s investors and that is why I care and want to help the company improve.)
It’s a site that profits immensely on dumb people:
http://en.wikip...opo#Controversy
http://en.wikip...y_auction#Risks
you’re a con artist Howard
Thank god we have the TechPolice to protect us all!
Exactly, I don’t see how the hell the US government hasn’t cracked down on it given their view on other online gambling establishments.
WoW
Tons of people hating on an awesome business model they did not think of or execute on or properly.
It’s genius! Good for them for creating an innovative business model in the web world!
If you think it’s scammy don’t use it, but all your talking about it just further helps it!
It’s not a scam at all. You’re just paying a fee, just like a membership, to participate. It’s a genius business model that is highly profitable. They’re making ROIs of 1500%+ on some items.
See the calculations here:
http://tomuse.c...s-deals-illegal
Swoopoo will sweep your money
…sooneer or later
This is not an auction, its a raffle system and illegal in the US. Can we just sue them and get rich on the lawyer fees? Oh I guess only lawyers get to do that.
you can’t sue if you’re not a “victim”
i say we all go in and buy $10 worth of bids then we file a class action
Wow!! TC covering scams.
Why are you giving free advertising to a scam site TC? This is not an auction site, it’s better described as a raffle.
TO ANYONE READING: Don’t waste your money. You won’t win.
Scam alert. Hopefully the TC readers won’t be duped by these guys.
Swoopo is run out of Germany. We all know what goes on in Germany.
Need I say more?
This comment is even dumber than Swoopo.
Ermm, I don’t know what goes on in Germany.
Can you please give a ew more details???
Oh, I don’t know.
Just a little thing called WORLD WAR II.
http://en.wikip...ng_World_War_II
Are you sure WWII is still going on? Have you read the news lately?
I don’t know. So what goes on in Germany, could you please enlighten me?
As a German, I laugh as hard at Americans who think Swoopo is a scam as we did at George W. Bush. Swoopo clearly states on their website how the site works. It is unambiguous. We’ve had Swoopo in Germany for several years and the company is simply a form of entertainment shopping, a hybrid auction, ecommerce and new business model site. You can’t always win, that wouldn’t be entertaining. Some Americans are too lazy to read how something works, or too dumb to understand simple math or they think they should always be able to win a $1000 phone for $5. I opine that Americans who think Swoopo is a scam are the same idiots who try to blame everyone else for their own stupidity. Do these same people think the idiot woman who spilled hot coffee on her crotch after trying to drive her car with her coffee pinned between her thighs deserved a multi-million dollar settlement from McDonald’s?
Whoa, what’s up with the anger? Relax, friend, and your mind will clear up and realize that not all Americans are as dumb as you hypothesize. While Swoopo may not be a scam, it’s an almost certain way to lose money, as you’ll win substantially less frequently than you’ll lose. It’s the same as gambling, which is why it’s generally frowned upon here in America.
Looks like someone put their Lederhosen on backwards this morning.
http://en.wikip...wiki/Lederhosen
Last time I checked, a traditional Sotheby’s style auction with an entrance fee was totally legal. That’s what Swoopo looks like to me and perhaps some people think it’s a scam because they didn’t read the website. It clearly states what their business is and how it is run. My guess is that because it is new, people don’t know quite what to make of it yet so they resort to claiming it is a scam, which it is not. There is no deception and no apparent “chance” aspect of gambling. Is Sotheby’s with an entrance fee gambling? Now for me, I have tried Swoopo, and I bid a few times and did not win. Am I complaining? No, because I had fun and understood that not everyone wins. If everyone wins, there wouldn’t be a business.
So, at Sotheby’s, when you bid $30,000 and someone else bids $31,000, do you lose the $30,000 and get nothing for it?
’cause that’s how Swoopo works.
http://www.codi...ves/001196.html
http://www.codi...ves/001261.html
That’s not how it works. Since bidding costs money, if you bid 30 times and did not win, you lose the money you used to bid. Not your bid offer.
The bid offer doesn’t mean anything at all — that’s the beauty and the trick of this site. There even used to be bidding where you wouln’t even have to pay the bid offer. So yes, swoopo is like Canada dry.. it looks like a bidding system a la eBay, but it’s not.
It is actually a beautifuly disguised lottery system. Not a scam, but still… the legislator may want to reconsider the status of this site.
http://www.tech...m-crunchup-now/
*cough cough*
Anyone care to shy why this site is a scam?
These two posts have details:
http://www.codi...ves/001196.html
http://www.codi...ves/001261.html
There’s another site just like this called GrabABid. It definitely sucks in the gullible. Don’t bother.
Wow, Michael. It is unreal that you would allow this sort of publicity for a scam site to infect TC. This is a pure scam, no one who buys ‘bids’ will ever win, and they track beginners who are watching auctions and let them ’see’ a few auctions ending with incredible prices so that they start bidding as soon as possible.
Wow, Michael an honest company tries to do something new, and people assume there a scam? Methinks that anyone who calls Swoopo is a scam is actually the type of cheating person who would try to pull of a scam themselves. Swoopo website hides nothing, not how it works, not who the management team is, the investors, the address, everything – open and clear. Look at other competition sites, they hide who they are, maybe there the scam. Long live Swoopo! It is fun and different from boring old ebay.
Seems to be a clone of the UK madbid.com site.
Or vice versa, which was there first, the chicken or the egg?
“scandinavian” auctions are nothing but a scam.
But Dutch auctions are good enough for Google?
Not a scam. I read the website, bought some bids, spent them and lost. The website is very clear how it works. Just because I didn’t win doesn’t mean its a scam. I’m not a sore loser. Maybe people who call it a scam were too lazy to read the instructions?
Auction site??? LOL!
That’s no auction site, that’s a GAMBLING SITE!
I’ve got to say – I am disappointed by the lack of research TC did on this article. Jason, it seems as though you regurgitated a press release. While this business plan is pretty genius (which explains the 10m), I’m fairly certain that most users have thrown away more than just a few dollars. However, is this really a scam or just another take on adult gambling?
Hey — just noticed that my bids are showing up on swoopo for two different auction items. One is in the U.S. for a 3GS, which is what I thought I was bidding on. The other is in the UK, for a completely different item: a 16 GB iphone 3G. What gives?
http://www.swoo...ck-/189429.html
http://www.swoo...te-/189429.html
You are right! These two auctions, although for different items, are perfectly aligned; show exactly the same bids at the same time (even though the amount is detailed once in $ and once in pound).
Until now I though Swoopo is just a gampling/auction site, but now I get the feeling its a scam.
Now the auction is closed. But on the help pages Swoopo actually admits that they pool the bids from people in the US bidding for an IPhone 3GS and the people in the UK bidding for an ‘normal’ IPhone 3G. They call it an “International Auction”
“Why is there sometimes a different item displayed on the same auction in different countries?
We do our best to find matching products in all our markets, but sometimes it is impossible to find an exact match. To ensure the auctions remain fair, we always try to ensure that any inexact matches are of comparable products.”
To add insult to injury UK bidders will have to pay the same price in pound for the 3G that the US users have to pay in dollar for the 3GS (meaning they’ll pay more for an inferior product).
If you check the API (smple HTTP request), you’ll see that the currency is not even mentionned: most of the bids appear in all the sites across the world with their own currency. That proves again that the bid offer is just a decoration and means nothing – it is just a TRICK to disguise the site as a bidding site, even though that’s pure gambling.
Click on the icon of 2 hands shaking in the upper right of the auction area. It explains that this is an international auction (most auctions on Swoopo are.) If you click the learn more link in the icons explanation it takes you to their auction type page which explains:
International auctions
Bidding is open to bidders from several Swoopo countries on most of our auctions. Doing this allows us to offer you a greater variety of products than we’d be able to do if we were to only allow bidding from one country.
This “international auction” is also a decoration: a real international auction would take into account the currency exchange rates… they don’t.
By letting people from all over the world playing on the same items, they make sure that the timer doesn’t go to 0 to quickly because all the ‘bidders’ fell asleep.
The last sentence of your comment Mr Bill doesn’t make any sense at all… you go international to make more money and to optimize your system. That’s totally fine with me! The marketing BS to disguise that is what pissed me of.
This site is scam, absolutly. Users are drawn in on the false fact that you could win auctions for incredible low prices while in reality it is pure luck to win an auction with only a few bucks spend.
I read an article from someone bidding on a digital camera worth 1000 euros. In the end he spent 250 bucks on bids and lost anyway. Camera gone, money gone
Just because you lose money in a game, doesn’t make it a scam. I won on Swoopo before and yes, I had to watch it for a long time and make a strategy, and I lost a few times before I won. But I stuck with it and in the end, though in aggregate I paid slightly more ($20 – total of extra bids that I lost at) for the item than if I bought it at Amazon, but I had a lot of fun and maybe I could have won it for less than Amazon. In response to Kayoone – it is not a “false fact” but in fact, you can win at an incredibly low price, but that doesn’t mean you will! If there are people bidding against you, it is a game (as in gaming) and not gambling. I like the comment above that this is a paid Sotheyby’s auction. That’s a simple explanation. Just because it’s not eBay, doesn’t make it a scam. And on Swoopo there’s no “joy bidders” which is great.
That’s not the journalism quality one expects of Techcrunch. An easy rough calculation – 0.15$ divided by 0.75$ – reveals, that bidders in total overpay when the final price is higher than 1/5 or 20% of the list price. In addition that list price is often higher than the price an informed buyer would pay in a web shop, further reducing the “fair price”.
So while Swoopo for sure does not do something illegal, it can be hardly appreciated what they do.
Obviously the bidders as an aggregate have to overpay, for it to be a profitable business model. The whole point is individual payments are much lower and a single user stands a chance of winning the product at a much lesser cost. This might be a scam if swoopo is using “system users” to pump up the price if the auction is going to expire at a low price, which I suspect they might be doing.
They are not doing this, that would be illegal and this appears to be a completely legitimate company (disclosed management team, address, investors, etc.) Why would they cheat if they don’t have to?
Man, are TC readers idiots or what?
There’s NO such thing as a scam if the terms and conditions of the deal are laid out up front, which, in this case, aren’t even that preposterous to begin with.
Bullshit. The terms and conditions of pyramid schemes are laid out from the beginning – sell to x amount of people and make money! – and yet they’re still illegal scams.
Pyramids don’t work if people know they are pyramids because people won’t play them (Madoff hid the fact that he was running a pyramid). They hide that fact and that’s why pyramid’s are illegal. Swoopo hides nothing – I read the website and it clearly explains how it works.
Swoopo is not a scam, it is however gambling masqueraded as auctions. The idea is perfect and reasonable until you realise that when you bid you increase the auction length. My father used it for a bit, I pointed out it was ridiculous and he’d not get anything from it… he didn’t. Those who do are very lucky, it’s the same as slot machines, there is no winning tactic, you only have a small chance of winning.
Sotheby’s extends the auction length each time someone bids. Same as Swoopo. Different from eBay so don’t confuse the two. Nothing wrong with extending the auction, it’s actually the traditional way of doing it. You’re just used to eBay (which hasn’t innovated in years). Now there’s something new.
Not comparable. Sotheby’s doesn’t charge on each bid.
…also I read some comments from a swoopo employee a while back claiming that they very rarely make a profit, but if you look at the actual figures they make up to 500% profit per item.
I looked at some of the closed auctions and see that some of the auctions they lose a lot of money, so some they win, some they lose. It’s a balance and that’s their business to make more on some to cover losses on others. Here’s a $1500 TV they sold for $12 and lost money. Their business looks like a balancing act http://www.swoo...hdt/188600.html
Just like any business they have products they sell for cheap to attract customers, this isn’t a loss as such, it’s just an advertising expense.
Also, you clearly don’t understand how it works. You buy bids upfront, about 10 for $10, so a bid costs you $1. You bid on the product, the price is raised by $0.01 and you lose $1. So for every $0.01 they make $1, so on that TV they made $1203 + $12.03 (the final price).
Bids are actually $0.75 so they made $902 on bid fees and thus lost about $600 on the TV. Good point about calling it a marketing expense though.
When you factor in the large number of bidders all paying $0.75 per bid and the number of bids the winner made it’s quite possible that the TV was paid for several times over so there was really no loss at all. in fact that TV could have paid for the next several TV’s that are sold so they are reaping a great profit.
I think It is a brilliant concept for a business but the odds of winning an item for far less then what you would pay in a store is minimal after you factor in what you spend on bids.
sam you get the logic, and sly go learn some math logic. Sam is $0.75 not $1. Swoopo can easily make thousands off every item by raking $.75 on every bid, adding $0.01 to the price, and prolonging the time. Am not saying is a scam, the problem is that 99% of the bidders dont understand the logic. If the model last, is way profitable than ebay and amazon combined. Am a startup fan, i know ebay will be coming to invest soon.
Cause I am sure they spend MSRP for every product…
The TV probably cost them $900
Jason, delete this. You look stupid.
Just because something is legal, doesn’t mean it should be written about, linked to, or funded.
Shame on August Capital.
You probably have something against Cash4Gold too? Just because you don’t like something, doesn’t mean others don’t. Of the millions of people who have used sites like Swoopo (which has been in business for several years), many are quite happy and enjoy it. It seems that people who don’t win have an axe to grind. Glad we have people like you looking out for the rest of us.
Written about because it is interesting. Linked to because it is controversial, and new/unique. Funded because it looks like a good business.
Good for Swoopo. Trying new things to improve. I hope they figure it out. Doing something new and unique is hard and there are always naysayers. I hope they prove all the negative people wrong.
Read Joshua Stein’s analysis on Swoopo, and how he concludes it’s a gambling site. The main difference with Sotheby’s or Amazon others have mentioned above is that while the first may charge an entrance fee, it doesn’t charge you a fee every time you bid, and the second doesn’t charge any fee at all to bidders. If you lose the auction, you don’t pay – with Swoopo, you can lose an infinite amount of money, and even if you win, end up paying MORE than what the article costs! Read:
http://jcs.org/...ame_swoopo_com/
and part 2
http://jcs.org/...opo_com_part_2/
Technically with Swoopo you don’t pay if you lose either. According to terms of service bids are nonrefundable so once you’ve purchased them they are worthless unless you actually use them. So you are giving them something worthless anywhere except at Swoopo to accept your bid.
Not gambling. Not a scam. More like a carnival game. You pay a buck and throw a baseball to knock down some very heavy (metal) milk bottles. If you do it, you get a prize. It is hard to do, not everyone can do it, someone very strong can’t win every time. Definitely not gambling and totally legal. The article is about Swoopo testing “buy-it-now” feature with price dropping each time you bid. Now that’s interesting and innovative and maybe it solves all the bitching people are doing. We’ll have to wait and see when it is launched in the US. Certainly Swoopo is interesting and gets a lot of people riled up, which is probably what Jason wanted. Nice job Jason.
“You pay a buck and throw a baseball to knock down some very heavy (metal) milk bottles. If you do it, you get a prize.”
In Swoopo’s case, though, the other players are essentially allowed to hold the milk bottles down.
Or at the arcade there is a game where you pay $1 and then use a robotic arm to try to pick up a small toy and put it into the chute. Game of skill. Hard. If it was so easy, the games wouldn’t exist. Swoopo is a hard game, that’s why it exists. I’m really curious how many of these negative posters have actually tried Swoopo. I tried, and won. I had to bid about $150 before I won, but in the end, I saved $225 on the computer I bought. It wasn’t easy. It was exciting, and frustrating, but ultimately I won. If I lost my money and didn’t win, I think I could accept it though. I’ll see next time I bid at Swoopo on something else.
…that is gambling.
” the act of playing for stakes in the hope of winning (including the payment of a price for a chance to win a prize); “
You missed the point. The key word is “chance” and that is based on probability. There is no probability here. You can’t calculate the odds of winning a Swoopo auction because it is a game of skill, just like you can’t calculate the odds of winning a Sotheby’s style traditional auction.
There’s no skill at all because the only determining factor on when the auction ends is when the other participants have run out of money. If I put Mike Phelps and 7 other swimmers in a series of 8 races there’s a good chance that Mike will win at least 4 of those races. That’s skill.
If I put 8 people into 8 eight swoopo auctions with the same amount of money they’d probably all win once on average, which is basically gambling.
Skill is not what this is. Unlike ebay where you can “snipe” by bidding at a certain time, if you bid with swoopo the timer is reset. It’s just a game of luck, whether or not everyone else stops bidding and/or runs out of bids to make.
The difference is that at Swoopo there is only one teddy bear, for all the people at the carnival. And it doesn’t cost only $1 to throw the baseball, it costs $1 for each turn. It’s only until everyone gives up throwing that they award the teddy bear.
Everyone who didn’t last until the end gets *nothing* even though they knocked down the milk bottles X times.
The last person standing, who actually gets the prize, may have gotten a deal — but may have in fact paid more in $1 fees than the bear is worth… depending on the fortitude of the other carnival goers.
Hmm.. wait, let me just see the site first before adding my comment. Wow
I love that the trolls that “invest” in Swoopo can chime in on the scam. This is right up their with ponzi schemes, good timing to promote a garbage site. I’m sure August will make money on the investment, but will they sleep better at night?
It’s not a scam but is a form of online gambling which is illegal also you are bidding against people across all of their sites for a product not just users of the us version of the site
I have reported them to the California attorney generals office and they are investigating. Only a matter of time before thos ship sinks in the us other sites just like it have already been shut down here in the us
better pull your money out now while you can
Oh no, not the AG. I was hoping to be part of a class action lawsuit here I get a Swoopo sticker and the lawyers get 5M.
if they raised 10mil in VC funding im sure they checked if its legal? also look the site takes paypal as a funding source. If it was not legal would paypal be a payment method, i know i wouldnt want to have 100k held by paypal.
*** the fact is your all just kicking yourself for not coming up with it yourself. ***
STOP SCREAMING and go register yourself a domain and get coding.
Just cause the US is anti-gambling does not mean the rest of the world is not. The avg Australian spends 1k in betting a year.
Well they claim it’s all legal even under US law. However two lawyers I spoke to thought that this did not follow the definition of an action and is therefore a lottery/gambling. Gambling is illegal in the US. A lottery / raffle needs to follow very stringent conditions to be legal.
I’ll try to explain why rational people tend to think that this kind of sites are scams. Please note I’m not referring specifically to Swoopo.
While these sites advertise on their opening towards the mechanics of the game, one can always assume, that being a closed computer-based system, it can be rigged without the public’s knowing, thus being a scam.
One could always rig the system so that the following formula is being followed:
A = real price of the product (400$ for a phone)
B = money raised by auction (listed price + number of bids * 17 cents)
While B < A a server-side script “bids” on the site. The system then keeps track of these computer-generated bids and removes them from the above formula. Once enough bids have been placed and the money raised is higher than the real price of the product, they can “release” the product, meaning that the system will not bid anymore. At this point the bidding occurs only between regular users. And finally one user wins, hence the happy posts above.
So we can certainly argue that the scam is not in the system itself, but can be in the implementation.
Should be called Scamo!
Shame TechCrunch covers this instead of legitimate companies like:
lessaccounting.com
getharvest.com
blinksale.com
pipelinedeals.com
Regardless of how Swoopo works, there are other factors into viewing it as a scam. In all my research on the company I haven’t found one case of verified winning. Sure, some people say they won, but there is never any hard evidence that they are telling the truth. Don’t you think if people were getting great deals on products like Mac books and iPhones they would be blogging about it and taking pictures? Until I see hard evidence that Swoopo is audited by official agencies and ACTUALLY SHIPS PRODUCTS, I will continue to believe it is a scam. Yeah, someone wins every auction, but who? Could be a bot, could be an admin of the site.
Quite the opposite. If you win at this game, you don’t want more people to know about it and start bidding, because the less people the better. Long live Swoopo.
In some sense you are right, but this can’t be applied 100% of the time. At some point someone is going to want to share their joy of winning. The Mac community is especially vocal about product acquisition, so you think there would be videos of excited fans unboxing their comps or phones that they won at a low price. Again, I haven’t seen ONE case of someone showing the product they have won. This simply doesn’t add up given today’s culture of oversharing. As far as I’m convinced, the auctions are rigged and a very small % of real users are winning.
The fact that so many people here disagree on even the fundamentals of the rules and whether it is a game of skill or chance means it is nearly impossible for the rest of the world to figure out.
I’m surprised they haven’t been sued yet.
Sue this, sue that. To have a case you have to break a law. I’m sure Swoopo wouldn’t run their business if it were illegal. I’m sure they know what they’re doing. I think some people get upset because they didn’t win and want to blame Swoopo for it. Read the website and see that it is perfectly clear what they do. No deception at all. Great concept and I wish them success for trying something new. I wish I’d thought of it.
Really if you sit back and think about it, the ONLY real difference between ebay and them is they charge you to place a bid. If ebay decided to charge you .10 per bid would that be illegal? NO, its the service fee for using the system.
It goes back to my first post, your all just mad and kicking yourself for not coming up with the idea yourself!
Not true. There are two important additional provisions that would have to be added:
1) you are only allowed to raise the bid by a fixed amount ($0.01 in some cases)
2) each bid extends the auction
I urge you to do a little research and read some of the linked articles before you declare it not a scam. I think you’ll find that it is made of pure evil.
There are tons upon tons of these sites out there now. swoopo, myhammer, crazyhammer, madbids, and countless others in tons of languages.
Simply put, its gambling. A raffle is a form of gambling, this is essentially a raffle. Anywhere where you pay money to play and only have a chance at winning is gambling.
The thing is, I don’t see why this is worth investing in. There’s absolutely no defendable position in this kind of a company other than branding. This model is copyable and only takes a small constant audience visiting the site to be profitable. In fact the backend software is easy to obtain, it takes 1 month for a decent programmer to design a good interface, and maybe another month to generate enough press to get going.
This is a quick money scheme, any fund that invested in this is simply out of deal flow and can’t do better.
The bid offer doesn’t mean anything at all — that’s the beauty and the trick of this site. There even used to be bidding where you wouln’t even have to pay the bid offer. So yes, swoopo is like Canada dry.. it looks like a bidding system a la eBay, but it’s not.
It is actually a beautifuly disguised lottery system. Not a scam, but still… the legislator may want to reconsider the status of this site.
BTW I love your blog!
This is a scam any way you look at it. Do any of you actually believe that the ‘bidders’ who are bidding every $0.01 increment up on a TV being auctioned at the ‘penny auction level’ are actual customers? So you think that there are people paying $0.75 to bid a 40″ LCD up from $2.05 to $2.06 when they know they thing will eventually sell for 50X that? Is that what you Swoopo defenders believe?
If you believe this, I have a real peach of a bridge to sell you. Please contact me in Nigeria as soon as possible.
Your Truly
Dr. Okoyo
The bidders are real people. They don’t shill.
I see. So when the bidding on a $1,200 dollar LCD starts at $1.00, you believe that there are real people paying $0.65 to bid $1.01 in the hopes that no one else is going to bid $1.02, right? You believe that?
If you do, I’m really sorry to be blunt about it, but you’re a fool.
And I guess this might negate my argument, because if you’re fool enough to believe that, you may be fool enough to bid $1.01 on that TV.
Another way this is a scam is as follows. They track new members and watch them watching ‘auctions’. There are no actual members bidding on these items, it’s all the computers or the shills or whatever. They let the newb watch a few of these end with amazing prices. Then they see the newb starting to bid themselves. Do you think the newb isn’t going to suddenly run into another member who seems to be bidding one increment higher every time the news bids? I can assure you, that’s what the newb will experience.
Sites like this know that they are going to get one purchase out of each ‘customer’ because once you try to win something you quickly realize it’s a scam.
rick – do you know for a fact that Swoopo shill bids, or are you just imaging that is what they do? their business model is so genius, do you really think they would do something illegal just to make even more money? they already have a brilliant business model. they show all their management faces on the website, and they took investment from professional investors, so though other sites may be a scam, I think Swoopo is honest. brilliant and honest.
I know this site is a joke and I wouldn’t use it, but you’re clearly missing how it works. You pay to have bids, you buy 10 bids for $7.50 and you can bid 10 times. Everytime you bid the price is increase by a preset amount (normally $0.15 or $0.01 in penny auctions) and you have 1 bid removed from your account at a the bid cost value, which is apparently $0.75.
So, you bid on “Big Samsung TV” increasing the price from $0.01 to $0.02 and swoopo take 1 bid from your account, which is valued at $0.75 and increase the final price at $0.01, they also extend the time by xx seconds (normally 15). If you win the auction, you lose the bids you placed + the final price.
If I see a TV for $0.00 and decide to bid, I can place a bid and the price will go up to $0.01, swoopo will take $0.75 from my account. If another person bids, the price increases to $0.02 and swoopo now have $1.50, this continues until the product is at it’s final price, if we assume this is $100, swoopo have made $0.75 x 100 (for each $) x 100 (for the $100), so they now have $7500, the winning bidder than pays the $100 final price and gets the TV. Swoopo sold the TV to the final bidder for $100 and made $7500. The retail price could have been $200.
There is no “trickery” or swoopo faking bids, they’re all totally legitimate, why would they fake bids when there are enough idiots to bid? They don’t track what you look at just to make you buy, why would they need to? You’re over complicating it.
@cc
Do I know for a fact that it’s a scam? Well, you tell me. Would you pay $0.75 to bid a ‘penny auction’ item that will eventually go for about $100 up from $0.35 to $0.36? Of course you wouldn’t, no one would. You wouldn’t pay to make that bid because there is zero chance that it will be the winning bid.
@Samuel Ryan
I read your post 3 times and I have no idea what you’re talking about. You seem to have totally missed the point of my post. Try re-reading it and then post again if you wish. I’m crystal-clear on the way it works. You have clearly never watched an auction taking place. If you had you would see that certain ‘members’ are bidding items up $0.01 at a time and allegedly paying to do so, when the price is $0.50 on an item that everyone knows will sell for 100X that much. Would you do that? No. Would I? No. Would anyone in their right mind? No.
I’m not saying this is an illegal scam. There are plenty of legal scams out there. I’m just saying it’s manipulated gambling. @Ben
If no one starts bidding at the beginning, who’s doing the bidding? Of course none of us would pay to bid $0.32 for an item that will eventually be going for $124. Right? Would you? No one would. Who’s bidding then?
You don’t have to start bidding when the auction starts. You can start bidding when the price is already high, so you don’t spend as much in bids and you let others bid the price up first. Then you’ll be close to the sale price. They list all the closed/finished auctions and final prices so they are giving you the data to determine when you may want to start bidding. That’s called strategy and not gambling.
I was just reading over the Terms and Conditions – specifically in the Shipping section – doesn’t mention anything about shipping to Canada. I wonder what those costs will be for any item won.
Ooops. I was reading the T&C pdf that was sent to my account. The website T&C do mention shipping within Canada.
For anybody who would like another example of their business model (I think my math is right):
Say they sell an item that costs them $80 and retails at $100, and the bidding starts at $0 (zero dollars).
If the bidding on that item is likely to go to about $90, the number bids would be 90/.15 = 600.
So, the money made by Swoopo *before* they have even actually sold the item is 600*.75 = $450. As you can see, the money they make from selling the actual product is almost irrelevant.
Two separate topics here:
1. That you pay to bid and therefore a scam
2. Whether or not it is gambling
As for 1. – This is just like a normal traditional auction except that you pay for the right to bid. Very clear and upfront. If you don’t want to pay to bid, then don’t use Swoopo. Not a scam, nothing deceptive at all about the business model.
As for 2. – This is just like a normal traditional (Sotheby’s style) auction, where the clock extends with each bid until nobody bids anymore. Different from eBay. Just like Sotheby’s (time tested for 100+ years). This is not gambling, it is not a game of chance. It is a completely legitimate and well respected business model.
Putting 1 and 2 together does not make it a scam or gambling. For a scam you have to cheat people and be deceptive. Swoopo is not. For gambling there has to be chance, and a Sotheby’s style auction with a large room full of bidders is not chance based.
You’re forgetting that you can only bid the item up $0.01 (or $0.15).
And yes, it is the combination of these THREE things that make it a scam.
I don’t agree. Combining these things doesn’t make it a scam. A scam implies deception. The rules are very clear and if you read them, then you can decide if you want to play or not, and the rules don’t change once you start playing. It’s OK if people don’t like it, then they shouldn’t play it. But it is not a scam. No deception = no scam (in my opinion).
So pyramid schemes are OK in your book?
paying to participate makes it a lottery
I love new stuff that flies in the face of convention. Long live Swoopo the Great! (Even though I’m too chicken to bid.)
Seems like a strong argument it’s not a scam.
Swopoo is not a scam it is however like roulette and obviously a gambling game
it cashes in on the fact that there are so many suckers on the Internet It is clever but will ultimately be proven to be illegal here in the USA
Americunts don’t know how to Swooooooopo
The more people use this site, the less chances they will have at winning, seems like a self-destructing business model to me…
I don’t think so, the more people that go to the site, the more concurrent auctions they run on the same items, so not self destructing. I have been looking at Swoopo for a couple of months. My conclusion is that it is not a scam in any way (totally transparent company business model and company), but the problem is many people don’t read and think about the business before they play. As for me, I’d jump into an auction after the price is already pretty high so that I don’t pay a lot of bids to bring the price up to the higher point. Kind of interesting that this new business model is so polarizing to people.
Very questionable business. Takes advantage over people who do not fully understand the logic of such auctions. From economic perspective it never makes sense to participate in the auction.
Scam this, scam that – all I have to say is tell that to the guy who just won a 42 inch TV for 66 cents.
http://www.swoo...&aid=188569
You still don’t get it? No one won that TV. It was their bot that won it. The notification that someone won a TV for $0.66 is an ad for the credulous. There was also a notification that someone won a .999 pure 1 oz gold bar for $2.50. Really? Do you really believe this?
Reading through these comments makes me realize that their scam model can work – there are enough credulous newbs out there to make it happen, at least for a while.
Just because rick is dishonest and would steal from people if he had the chance doesn’t mean Swoopo would. Why would Swoopo risk doing anything illegal if they don’t have to because they have a good business. Really. I wish I knew rick’s last name because I would never do business with a dishonest guy like him.
Dear jamie, swoopo isn’t doing anything illegal. There no need to do so. They are satisfied with the money they are making from their “customers” who pay them many times, in total, the retail value of each item. As rick said, their bot (with various usernames) makes sure that the items won’t be sold before they have earned several times their retail value. I also believe that there is somebody, like the one-hundred-named aforementioned bot, who run from blog to blog to defend them. Uh? eh?