There’s a lot that’s been written about the auction site “Swoopo” and the general opinion that it’s a bit of a con. It’s not actually a con – it just takes advantage of greed and stupidity.
To sum up how things work, here’s an example: the Swoopo website auctions off a Nintendo Wii. Normally these are around £170. Like using eBay, I bid online at £100. Someone outbids me, so I bid £105. Someone outbids me again, so I bid £110. The auction then ends with me as the highest bidder, so I win the Wii for £110.
But with Swoopo, there’s a trick.
No there’s not, there’s two.
Or maybe three if you count the fact that many auctions are international.
Every time you bid, you use up credits which must be purchased in advance. Each credit (bid) costs 50p and increments the auction price by a fixed amount. In addition to this, every time someone makes a bid, the auction time is extended by about 15 seconds. So unlike eBay, there is no fixed closing time and things can be ending “in less than a minute” for several hours. Plus, bids are non-refundable: if you don’t win the auction, you don’t get your money back. And that’s the rub. Everyone who is bidding on an item is paying for their bids. Here’s a real-world example of an item that finished recently.
A Nintendo Wii Fit (normally around £70 in the shops) started at 0p. The item sold for £57.90, with a bid increment of 10p. The headline figure is that someone picked up a bargain Wii Fit for £57.90 + P&P instead of £70. But, to reach a final price of £57.90 with a 10p increment, that means 579 bids must have been made on the item. Now at 50p each, I make that £289.50 to Swoopo in bid money alone. Now the winner also needed to pay the auction price of £57.90. Total to Swoopo is £347.40, plus P&P for the item. Now you’re starting to see why people think it’s a con.
True, the winner of the Wii Fit could have made one bid and won it at £57.90, making a total cost of £58.40. But they almost certainly bid many more times than that.
Now actually bidding on any of the items is a bit pointless, but I’ve started to make a habit of browsing the completed listings to see what people are buying and how much they’re spending. The trick is to look down the “Savings” column to find the “0%” markers. That usually means someone has lost money on the deal.
Here’s some real world examples that I have pulled from the website. By the way, the “advertised price” is what Swoopo reckons is the retail value, not what I could have got the item for online. You make your own mind up as to whether that figure is artificially high.
Samsung LE46B650T2 46" Full HD Crystal LCD TV
With an advertised price of £1,008.17, the winner placed 1540 bids and won the auction at £79.00. Total cost to winner is £849.00. Not bad going.
Samsung UE32B7020 32" LED TV
Advertised price of £849.99. Winner placed 1516 bids and won the auction at £119.30. Total cost to winner is £877.30.
Microsoft Arc Mouse (Black)
Proving people can lose out on cheap goods too, an advertised price of £30.97 went for £15.20 after the winner placed 64 bids. Total cost is £47.20.
Nintendo Wii Console + Wii Sports
As above, advertised price of £174.96. Winner placed 261 bids and won the auction at £94.00. Total cost is £224.50.
Bet the kids were pleased, if not the wife.
My favourite out of all of this has to be the notion that the website auctions off bids for its own website. The following auction was to win a “50 bids voucher”, which by its very nature, would normally cost £25.00.
The winner placed 47 bids to secure the voucher at a bargain price of £18.10. So this genius has managed to spend a total of £41.60 to end up with £25 to spend on the website. He (and it was an American “he”) could have saved his time and burned a 20 dollar bill, yet still been up on the deal.