I’ve never purchased anything from Swoopo and haven’t seen their financials, but after looking at their site and reading several reviews I’ve decided it is probably one of the most brilliant business models I’ve seen.
What is Swoopo?
Swoopo is an online auction site that sells high end electronics and other goods at ridiculously low prices. I mean silly low. Plasma and LCD TVs regularly go for under $100 – and they aren’t small either. We’re talking over 40 inches. High end laptops and video recorders also regularly sell for under $100. The prices are amazing. But there’s a catch.
How it works: Swoopo’s online auction system differs from the more popular EBay. Instead of allowing bidders to bid any amount, Swoopo only allows bidders to bid in fixed amounts ($0.15) and charges bidders $0.75 per bid. That’s right, Swoopo charges people to make a bid. Here is the bidding process as advertised by Swoopo:
- Bidding on our auctions starts at just 15c, with no reserve prices.
- The price only goes up by 15c with each bid placed.
- If a bid gets placed in the final moments, we extend the auction by up to 20 seconds.
- Each bid placed on an auction costs just $0.75, enabling us to offer such amazing deals.
Watching an auction. If you visit the Swoopo homepage you can see current auctions taking place. As the auction gets down to the final seconds a bid raises the price by $0.15 and adds more time to the clock. Since it only costs a few cents to make a bid, why not take a chance? And that is what people do. Except there are also automated programs that allow bidders to set a limit on how many bids they are willing to make and/or how high they are willing to bid. It can add up quickly! Watching the auctions is almost hypnotizing and I can see how easy it would be to get sucked in.
Is Swoopo a Scam?
I read several online articles stating Swoopo is a scam. But after watching a few auctions and looking at the site, I don’t think it is a scam. I’m pretty sure everything is as advertised. But I also think that some people get upset with the bidding structure or may not understand it.
Bidders have to pay to make a bid, and once the auctions end, the winner gets the item and the losers go home with a lighter wallet and no prize. I can see how this makes for sore losers.
Swoopo is a great deal – for Swoopo!
As I mentioned in the opening paragraph, Swoopo’s business model is amazing. People have a tendency to give in to temptation, and what could be more tempting than a 42 inch plasma TV for less than $100? The beautiful thing (for Swoopo) is that it takes 600+ bids to get to that level, and Swoopo makes money on each bid, plus the winning bid. Swoopo also offers penny auctions, which raises the bid price by one cent instead of fifteen cents. These auctions are also big money makers because thousands of bids take place before the final sale.
What about the items they sell for pennies on the dollar? The folks at Swoopo LOVE selling high end items for pennies on the dollar. It is the best advertising they can get. Swoopo has stated they lose money on many of the items they sell, but my guess is that they make a boatload on the other items. Trust me, they wouldn’t use this business model if it weren’t profitiable.
Should you use Swoopo?
I’m all about saving money. But I wouldn’t rely on Swoopo as a way to purchase electronics at a steep discount. In my opinion, Swoopo equates to little more than gambling. You could win big, but the odds are stacked against you.
Here are a couple more articles about Swoopo:
- Is Swoopo Nothing More Than a Well-Designed Gimmick?
- Swoopo Looks to Set the Record Straight.
- Swoopo – great auction deals or great scam?
Have you used Swoopo? What do you think about it?