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'''Swoopo''' is an [[online auction]] site<ref name="register">{{cite web|url=http://www.theregister.co.uk/2009/01/02/swoopo_startrup/|title=Swoopo&nbsp;— eBay's (more) evil twin}}</ref> where purchased credits, instead of symbolic offers, are used in bidding. Previously to changing its name to Swoopo in 2008, the website was called Telebid. Swoopo is operated by Entertainment Shopping [[Aktiengesellschaft|AG]] and is based in Munich, Germany.
'''Swoopo''' is an [[online auction]] site<ref name="register">{{cite web|url=http://www.theregister.co.uk/2009/01/02/swoopo_startrup/|title=Swoopo&nbsp;— eBay's (more) evil twin}}</ref> where purchased credits, instead of symbolic offers, are used in bidding. Previously to changing its name to Swoopo in 2008, the website was called Telebid. Swoopo is operated by Entertainment Shopping [[Aktiengesellschaft|AG]] and is based in [[Munich, Germany]].


== Mechanics ==
== Mechanics ==


In order to participate in an auction, registered users must first buy bids (called credits, and hence forth referred to as "bid-credits") before entering into an auction. For the [[US]] version of the site Bid-credits cost $0.60 apiece and are sold in lots (called BidPacks) of 40, 75, 150, 400, and 1000. Each credit is good for one bid. Standard auctions begin with an opening price of $0.12, every time someone bids the price increases by $0.12. Other auction types use different values, penny auctions use $0.01, 6c auction $0.06 etc. The price of bids and the increment values vary depending on the regional version of the site used.
In order to participate in an auction, registered users must first buy bids (called credits, and henceforth referred to as "bid-credits") before entering into an auction. For the [[US]] version of the site Bid-credits cost $0.60 apiece and are sold in lots (called BidPacks) of 40, 75, 150, 400, and 1000. Each credit is good for one bid. Standard auctions begin with an opening price of $0.12, every time someone bids the price increases by $0.12. Other auction types use different values, [[penny auction|penny auctions]] use $0.01, 6[[¢]] auction $0.06 etc. The price of bids and the increment values vary depending on the regional version of the site used.


The auction ends when time runs out. However, because each bid extends the length of the auction by 10–20 seconds, the auction could theoretically continue on indefinitely.
The auction ends when time runs out. However, because each bid extends the length of the auction by 10–20 seconds, the auction could theoretically continue on indefinitely.
Line 27: Line 27:
Besides making single bids anytime, users can place a so called "Bidbutler", which is an automatic bidding tool. Users can employ a maximum of 50 Bitbutler bids each time. Once a Bidbutler is active it will automatically bid in the final 10 seconds of the auction in an attempt to keep the user as the highest bidder. This means if two or more Bidbutlers are active they will repeatedly bid against each other (before the auction time increment is applied) until the one with the most bids left is the "winner". Bidbutler bids hold no more value than single manually placed bids, so once the bids booked for a Bidbutler are exhausted a single manually placed bid can become the winning bid.
Besides making single bids anytime, users can place a so called "Bidbutler", which is an automatic bidding tool. Users can employ a maximum of 50 Bitbutler bids each time. Once a Bidbutler is active it will automatically bid in the final 10 seconds of the auction in an attempt to keep the user as the highest bidder. This means if two or more Bidbutlers are active they will repeatedly bid against each other (before the auction time increment is applied) until the one with the most bids left is the "winner". Bidbutler bids hold no more value than single manually placed bids, so once the bids booked for a Bidbutler are exhausted a single manually placed bid can become the winning bid.


The money collected by Swoopo consists of the cost of bids placed and the final auction amount. This means the break even point where the money collected equals the value of the item will be somewhat lower than the value of the item. As an example for a MacBook Pro sold at $35.86 in a penny auction, with an [[Suggested retail price|RRP]] of $1,799, 3,585 bids were placed costing $2151. <ref name="washingtonpost">[http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100684.html?hpid=sec-tech The Washington Post - At Swoopo, Shopping's Steep Spiral Into Addiction]</ref>
The money collected by Swoopo consists of the cost of bids placed and the final auction amount. This means the [[break-even point]] where the money collected equals the value of the item will be somewhat lower than the actual value of the item. As an example for a [[MacBook Pro]] sold at $35.86[[USD]] in a penny auction, with an [[Suggested retail price|RRP]] of $1,799, 3,585 bids were placed costing $2,151. <ref name="washingtonpost">[http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100684.html?hpid=sec-tech The Washington Post - At Swoopo, Shopping's Steep Spiral Into Addiction]</ref>


A true break even point would need to take into account the amount that Swoopo actually pay for the item and the proportionate amount of running the site and operations. Swoopo has claimed to make money on roughly half the items sold <ref name="blnz" />
A true break-even point would need to take into account the amount that Swoopo actually pays for the item and the proportionate amount of running the site and operations. Swoopo has claimed to make money on roughly half the items sold <ref name="blnz" />


In August 2009, Swoopo modified its business model to include a "Swoop-it-now" function which allows bidders who lose an auction to apply all of their lost bids towards the purchase of the item they were bidding on. Nevertheless, prices of "Swoop-it-now" items are higher than retail prices.<ref name="msnmoney">{{cite web|url=http://articles.moneycentral.msn.com/SmartSpending/ConsumerActionGuide/the-crack-cocaine-of-auction-sites.aspx|title=Swoopo: The crack cocaine of auction sites}}</ref>
In August 2009, Swoopo modified its [[business model]] to include a "Swoop-it-now" function which allows bidders who lose an auction to apply all of their lost bids towards the purchase of the item they were bidding on. Nevertheless, prices of "Swoop-it-now" items are higher than retail prices.<ref name="msnmoney">{{cite web|url=http://articles.moneycentral.msn.com/SmartSpending/ConsumerActionGuide/the-crack-cocaine-of-auction-sites.aspx|title=Swoopo: The crack cocaine of auction sites}}</ref>


Users from Swoopo must bid against users in all countries where Swoopo operates. {{As of|August 2009}}, Swoopo operates in Germany, the United Kingdom, Austria, Spain, and the US. The same auction can be active on multiple regions, with the current price based on the opening price plus the number of bids times the bid increment price. So an item on the US site currently listed at $12 (Opening $0.12 and 99 bids incrementing the price by $0.12 per time) will be listed on the UK site with a current bid of £10 (Opening £0.10 and 99 bids incrementing the price by £0.10 per time). As it not possible to determine the source of the bids, the amount collected by Swoopo cannot accurately determined, in the preceding example it could be $59.40 if all bids were US based or £49.50 if all bids were UK based. The closing prices will not necessarily represent a market based foreign exchange rate. {{Citation needed|date=August 2009}}
Users from Swoopo must bid against users in all countries where Swoopo operates. {{As of|August 2009}}, Swoopo operates in Germany, the [[United Kingdom]], [[Austria]], [[Spain]], and the [[US]]. The same auction can be active on multiple regions, with the current price based on the opening price plus the number of bids times the bid increment price. So an item on the US site currently listed at $12 (Opening $0.12 and 99 bids incrementing the price by $0.12 per time) will be listed on the UK site with a current bid of £10 (Opening £0.10 and 99 bids incrementing the price by £0.10 per time). As it is not possible to determine the source of the bids, the amount collected by Swoopo cannot accurately determined, in the preceding example it could be $59.40 if all bids were US based or £49.50 if all bids were UK based. The closing prices will not necessarily represent a market based foreign exchange rate. {{Citation needed|date=August 2009}}


The item under auction may not be identical between regions, though will be similar. For example a different brand of USB memory stick maybe offered in different regions, though the capacity is the same. [http://www.swoopo.com/auction/super-talent-luxio-32gb-flash-drive-blac/212439.html US][http://www.swoopo.co.uk/auction/super-talent-luxio-32gb-flash-drive-blac/212439.html UK]
The item under auction may not be identical between regions, though will be similar. For example a different brand of [[USB memory stick]] maybe offered in different regions, though the capacity is the same. [http://www.swoopo.com/auction/super-talent-luxio-32gb-flash-drive-blac/212439.html US][http://www.swoopo.co.uk/auction/super-talent-luxio-32gb-flash-drive-blac/212439.html UK]


== Controversy ==
== Controversy ==
The method of selling employed by Swoopo is controversial and has been criticised.<ref name="msnmoney" /><ref>{{cite web|url=http://technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/|title=technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/<!--INSERT TITLE-->}}</ref>{{Verify credibility|date=August 2009}} The company, responding to claims that Swoopo is a type of gambling, stated that winning auctions involves skill and is not reliant upon chance.<ref name="blnz">{{cite web|url=http://www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html|title=www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html<!--INSERT TITLE-->}}</ref> Ted Dziuba writing for [[The Register]] stated that Swoopo "doesn't amount to a hustle, it's simply a slick business plan," and that while it might be close to gambling, "the nondeterminism comes directly from the actions of other users, not the randomness of a dice roll or a deck of cards."<ref name="register">{{cite web|url=http://www.theregister.co.uk/2009/01/02/swoopo_startrup/|title=Swoopo - eBay's (more) evil twin}}</ref> Nevertheless, the argument about "skill game" is put down by MSN Money: "Chris Bauman", director of Swoopo in the US, "told one blogger: 'Winning takes two things: money and patience. Every person has a strategy.'
The method of selling employed by Swoopo is controversial and has been criticized.<ref name="msnmoney" /><ref>{{cite web|url=http://technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/|title=technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/<!--INSERT TITLE-->}}</ref>{{Verify credibility|date=August 2009}} The company, responding to claims that Swoopo is a type of gambling, stated that winning auctions involves skill and is not reliant upon chance.<ref name="blnz">{{cite web|url=http://www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html|title=www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html<!--INSERT TITLE-->}}</ref> Ted Dziuba writing for [[The Register]] stated that Swoopo "doesn't amount to a [[hustle]], it's simply a slick business plan," and that while it might be close to gambling, "the [[non-determinism]] comes directly from the actions of other users, not the [[randomness]] of a dice roll or a deck of cards."<ref name="register">{{cite web|url=http://www.theregister.co.uk/2009/01/02/swoopo_startrup/|title=Swoopo - eBay's (more) evil twin}}</ref> Nevertheless, the argument about "skill game" is put down by [[MSN Money]]: "Chris Bauman", director of Swoopo in the US, "told one blogger: 'Winning takes two things: money and patience. Every person has a strategy.'
Indeed, he undoubtedly does. The problem is that, as with the gambling systems peddled by countless books, none of those strategies will actually work. Just remember that no matter how many times you bid, your chance of winning does not increase".<ref name="msnmoney" /> [[Ian Ayres]] writing for [[New York Times]] blog called Swoopo a "scary website that seems to be exploiting the low-price allure of [[all-pay auction]]s".<ref>[http://freakonomics.blogs.nytimes.com/2008/12/16/an-all-pay-auction/] "An All-Pay Auction", Ian Ayres, 12/16/2008, </ref>. MSN Money has called Swoopo "The crack cocaine of online auction websites", and stated that "in essence, what your 60-cent bidding fee gets you at Swoopo is a ticket to a lottery".<ref name="msnmoney" />
Indeed, he undoubtedly does. The problem is that, as with the gambling systems peddled by countless books, none of those strategies will actually work. Just remember that no matter how many times you bid, your chance of winning does not increase".<ref name="msnmoney" /> [[Ian Ayres]] writing for [[New York Times]] blog called Swoopo a "scary website that seems to be exploiting the low-price allure of [[all-pay auction]]s".<ref>[http://freakonomics.blogs.nytimes.com/2008/12/16/an-all-pay-auction/] "An All-Pay Auction", Ian Ayres, 12/16/2008, </ref>. MSN Money has called Swoopo "The [[crack cocaine]] of online auction websites", and stated that "in essence, what your 60¢ bidding fee gets you at Swoopo is a ticket to a [[lottery]]".<ref name="msnmoney" />


Speaking to the BBC, Professor Mark Griffiths of [[Nottingham Trent University]], stated that "[[penny auction]]" sites in the [[UK]] should be regulated by the [[Gambling Commission]]. However the Gambling Commission said that it "was not convinced that penny auctions amounted to gambling."<ref name="bbc">{{cite web|url=http://news.bbc.co.uk/1/hi/business/7793054.stm|title=Penny web auctions under scrutiny}}</ref>
Speaking to the [[BBC]], Professor Mark Griffiths of [[Nottingham Trent University]], stated that "[[penny auction]]" sites in the [[UK]] should be [[gambling regulation|regulated]] by the [[Gambling Commission]]. However the Gambling Commission said that it "was not convinced that penny auctions amounted to gambling."<ref name="bbc">{{cite web|url=http://news.bbc.co.uk/1/hi/business/7793054.stm|title=Penny web auctions under scrutiny}}</ref>


Speaking to the New York times, Glen Whitney, a mathematician and a former quantitative analyst at the hedge fund Renaissance Technologies, stated. “In aggregate, consumers trying to obtain these products are overpaying. Unless you have an edge over other people who are bidding, and you can get them to subsidize your purchase, you shouldn’t do it. It’s a chump’s game.”<ref name="nyt">{{cite web|url=http://www.nytimes.com/2009/08/17/technology/internet/17shop.html|title=Sites Ask Users to Spend to Save}}</ref>
Speaking to the New York Times, Glen Whitney, a [[mathematician]] and a former [[quantitative analyst]] at the [[hedge fund]] Renaissance Technologies, stated. “In [[aggregate]], consumers trying to obtain these products are overpaying. Unless you have an edge over other people who are bidding, and you can get them to [[subsidization|subsidize]] your purchase, you shouldn’t do it. It’s a chump’s game.”<ref name="nyt">{{cite web|url=http://www.nytimes.com/2009/08/17/technology/internet/17shop.html|title=Sites Ask Users to Spend to Save}}</ref>


Recently{{When|date=August 2009}} Swoopo has hired the star gambling lawyer Anthony Cabot of the Las Vegas law firm of Lewis and Roca.<ref name="nyt"/>
Recently{{When|date=August 2009}} Swoopo has hired the star gambling lawyer Anthony Cabot of the Las Vegas law firm of Lewis and Roca.<ref name="nyt"/>
Line 49: Line 49:
German [[consumer protection]] bodies also warn about the auction type offered by Swoopo and other similar auction platforms, likening them to gambling.<ref name="focus">{{cite web|url=http://www.focus.de/digital/internet/verbraucherschutz-vorsicht-vor-gluecksspiel-internetauktionen_aid_371423.html|title=Vorsicht vor Glücksspiel-Internetauktionen}} {{de icon}}</ref> In May 2008 a ruling from a court in Bochum (Germany) nullified the request for payment made by the company against one bidder.<ref name="bochum">{{cite web|url=http://www.damm-legal.de/ag-bochum-die-versteigerung-im-internet-einmal-anders-bereicherung-des-betreibers-durch-erfolglose-gebote|title=VAG Bochum: Die Versteigerung im Internet einmal anders&nbsp;— Bereicherung des Betreibers durch erfolglose Gebote}} {{de icon}}</ref>
German [[consumer protection]] bodies also warn about the auction type offered by Swoopo and other similar auction platforms, likening them to gambling.<ref name="focus">{{cite web|url=http://www.focus.de/digital/internet/verbraucherschutz-vorsicht-vor-gluecksspiel-internetauktionen_aid_371423.html|title=Vorsicht vor Glücksspiel-Internetauktionen}} {{de icon}}</ref> In May 2008 a ruling from a court in Bochum (Germany) nullified the request for payment made by the company against one bidder.<ref name="bochum">{{cite web|url=http://www.damm-legal.de/ag-bochum-die-versteigerung-im-internet-einmal-anders-bereicherung-des-betreibers-durch-erfolglose-gebote|title=VAG Bochum: Die Versteigerung im Internet einmal anders&nbsp;— Bereicherung des Betreibers durch erfolglose Gebote}} {{de icon}}</ref>


Techcrunch states that Swoopo is an "'entertainment shopping' site that’s one part auction-house, one part virtual casino" <ref name="techcrunch">{{cite web|url=http://www.techcrunch.com/2009/06/26/unique-auction-site-swoopo-expands-to-canada-testing-buy-it-now|title=Unique Auction Site Swoopo Expands To Canada, Testing ‘Buy It Now’}}</ref>; whereas as the alarm:clock calls it a "gambling auction biz". <ref name="alarm">{{cite web|url=http://www.thealarmclock.com/mt/archives/2009/04/gambling_auctio.html|title=Gambling Auction Biz Swoopo Raises $10M}}</ref>. Toptenreviews states: "it warrants considering Swoopo with some different terminology. Rather than "auction" site, maybe we should designate Swoopo as a gambling site--a type of QVC-meets-the-internet-age ponzi scheme". <ref name="topten">{{cite web|url=http://online-auction-sites.toptenreviews.com/swoopo.com-alternative-to-ebay-or-evil-scheme-.html|title=Swoopo.com: Alternative to Ebay or Evil Scheme?}}</ref>.
[[Techcrunch]] states that Swoopo is an "'entertainment shopping' site that’s one part [[auction house|auction-house]], one part [[online casino|virtual casino]]" <ref name="techcrunch">{{cite web|url=http://www.techcrunch.com/2009/06/26/unique-auction-site-swoopo-expands-to-canada-testing-buy-it-now|title=Unique Auction Site Swoopo Expands To Canada, Testing ‘Buy It Now’}}</ref>; whereas as the alarm:clock calls it a "gambling auction biz". <ref name="alarm">{{cite web|url=http://www.thealarmclock.com/mt/archives/2009/04/gambling_auctio.html|title=Gambling Auction Biz Swoopo Raises $10M}}</ref>. [[Toptenreviews]] states: "it warrants considering Swoopo with some different terminology. Rather than "auction" site, maybe we should designate Swoopo as a gambling site--a type of QVC-meets-the-internet-age [[ponzi scheme]]". <ref name="topten">{{cite web|url=http://online-auction-sites.toptenreviews.com/swoopo.com-alternative-to-ebay-or-evil-scheme-.html|title=Swoopo.com: Alternative to Ebay or Evil Scheme?}}</ref>.


Telebid, as Swoopo was known in the past, has sued one blogger in Germany for EUR 15,000 for criticizing the company online.{{Citation needed|date=August 2009}} In a well publicized case,{{Citation needed|date=August 2009}} a court in Berlin decided that claim from Telebid was not valid.<ref name="ruling">{{cite web|url=http://tobe.blogg.de/eintrag.php?id=757|title=Telebid: Verklagt oder verliebt}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}<ref name="ruling2">{{cite web|url=http://www.tutsi.de/telebid-verliert-prozess-gegen-blogger-sofina-gmbh-gegen-tobias/2008/06/20/tutsi-blog-aktuell/|title=Telebid verliert Prozess gegen Blogger: Sofina GmbH gegen Tobias}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}<ref name="ruling3">{{cite web|url=http://tobe.battson.de/2008/kurzer-prozess-mit-telebid/|title=Kurzer Prozess mit Telebid}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}
Telebid, as Swoopo was known in the past, has sued one blogger in Germany for €15,000 for criticizing the company online.{{Citation needed|date=August 2009}} In a well publicized case,{{Citation needed|date=August 2009}} a court in [[Berlin]] decided that claim from Telebid was not valid.<ref name="ruling">{{cite web|url=http://tobe.blogg.de/eintrag.php?id=757|title=Telebid: Verklagt oder verliebt}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}<ref name="ruling2">{{cite web|url=http://www.tutsi.de/telebid-verliert-prozess-gegen-blogger-sofina-gmbh-gegen-tobias/2008/06/20/tutsi-blog-aktuell/|title=Telebid verliert Prozess gegen Blogger: Sofina GmbH gegen Tobias}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}<ref name="ruling3">{{cite web|url=http://tobe.battson.de/2008/kurzer-prozess-mit-telebid/|title=Kurzer Prozess mit Telebid}} {{de icon}}</ref>{{Verify credibility|date=August 2009}}


== Financing ==
== Financing ==
Swoopo has received financing from two venture capital firms: an undisclosed amount in December 2006 by [[Wellington Partners]]<ref>{{cite web|url=http://www.wellington-partners.com/wp/port_swoopo.html|title=www.wellington-partners.com/wp/port_swoopo.html<!--INSERT TITLE-->}}</ref> in Munich and $10 million in April 2009 by [[August Capital]] in Silicon Valley.<ref>{{cite web|url=http://augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html|title=augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html<!--INSERT TITLE-->}}</ref>
Swoopo has received financing from two [[venture capital]] firms: an undisclosed amount in December 2006 by [[Wellington Partners]]<ref>{{cite web|url=http://www.wellington-partners.com/wp/port_swoopo.html|title=www.wellington-partners.com/wp/port_swoopo.html<!--INSERT TITLE-->}}</ref> in Munich and $10 million in April 2009 by [[August Capital]] in [[Silicon Valley]].<ref>{{cite web|url=http://augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html|title=augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html<!--INSERT TITLE-->}}</ref>


== See also ==
== See also ==

Revision as of 20:41, 7 September 2009

Swoopo
Type of site
Online auction site
Available inEnglish, German and Spanish
OwnerGermany Entertainment Shopping AG
Revenue€20 million in 2008 ($28.3 million)
Employees50
URLhttp://www.swoopo.com/
CommercialYes
RegistrationRequired

Swoopo is an online auction site[1] where purchased credits, instead of symbolic offers, are used in bidding. Previously to changing its name to Swoopo in 2008, the website was called Telebid. Swoopo is operated by Entertainment Shopping AG and is based in Munich, Germany.

Mechanics

In order to participate in an auction, registered users must first buy bids (called credits, and henceforth referred to as "bid-credits") before entering into an auction. For the US version of the site Bid-credits cost $0.60 apiece and are sold in lots (called BidPacks) of 40, 75, 150, 400, and 1000. Each credit is good for one bid. Standard auctions begin with an opening price of $0.12, every time someone bids the price increases by $0.12. Other auction types use different values, penny auctions use $0.01, 6¢ auction $0.06 etc. The price of bids and the increment values vary depending on the regional version of the site used.

The auction ends when time runs out. However, because each bid extends the length of the auction by 10–20 seconds, the auction could theoretically continue on indefinitely.

Besides making single bids anytime, users can place a so called "Bidbutler", which is an automatic bidding tool. Users can employ a maximum of 50 Bitbutler bids each time. Once a Bidbutler is active it will automatically bid in the final 10 seconds of the auction in an attempt to keep the user as the highest bidder. This means if two or more Bidbutlers are active they will repeatedly bid against each other (before the auction time increment is applied) until the one with the most bids left is the "winner". Bidbutler bids hold no more value than single manually placed bids, so once the bids booked for a Bidbutler are exhausted a single manually placed bid can become the winning bid.

The money collected by Swoopo consists of the cost of bids placed and the final auction amount. This means the break-even point where the money collected equals the value of the item will be somewhat lower than the actual value of the item. As an example for a MacBook Pro sold at $35.86USD in a penny auction, with an RRP of $1,799, 3,585 bids were placed costing $2,151. [2]

A true break-even point would need to take into account the amount that Swoopo actually pays for the item and the proportionate amount of running the site and operations. Swoopo has claimed to make money on roughly half the items sold [3]

In August 2009, Swoopo modified its business model to include a "Swoop-it-now" function which allows bidders who lose an auction to apply all of their lost bids towards the purchase of the item they were bidding on. Nevertheless, prices of "Swoop-it-now" items are higher than retail prices.[4]

Users from Swoopo must bid against users in all countries where Swoopo operates. As of August 2009, Swoopo operates in Germany, the United Kingdom, Austria, Spain, and the US. The same auction can be active on multiple regions, with the current price based on the opening price plus the number of bids times the bid increment price. So an item on the US site currently listed at $12 (Opening $0.12 and 99 bids incrementing the price by $0.12 per time) will be listed on the UK site with a current bid of £10 (Opening £0.10 and 99 bids incrementing the price by £0.10 per time). As it is not possible to determine the source of the bids, the amount collected by Swoopo cannot accurately determined, in the preceding example it could be $59.40 if all bids were US based or £49.50 if all bids were UK based. The closing prices will not necessarily represent a market based foreign exchange rate. [citation needed]

The item under auction may not be identical between regions, though will be similar. For example a different brand of USB memory stick maybe offered in different regions, though the capacity is the same. USUK

Controversy

The method of selling employed by Swoopo is controversial and has been criticized.[4][5][unreliable source?] The company, responding to claims that Swoopo is a type of gambling, stated that winning auctions involves skill and is not reliant upon chance.[3] Ted Dziuba writing for The Register stated that Swoopo "doesn't amount to a hustle, it's simply a slick business plan," and that while it might be close to gambling, "the non-determinism comes directly from the actions of other users, not the randomness of a dice roll or a deck of cards."[1] Nevertheless, the argument about "skill game" is put down by MSN Money: "Chris Bauman", director of Swoopo in the US, "told one blogger: 'Winning takes two things: money and patience. Every person has a strategy.' Indeed, he undoubtedly does. The problem is that, as with the gambling systems peddled by countless books, none of those strategies will actually work. Just remember that no matter how many times you bid, your chance of winning does not increase".[4] Ian Ayres writing for New York Times blog called Swoopo a "scary website that seems to be exploiting the low-price allure of all-pay auctions".[6]. MSN Money has called Swoopo "The crack cocaine of online auction websites", and stated that "in essence, what your 60¢ bidding fee gets you at Swoopo is a ticket to a lottery".[4]

Speaking to the BBC, Professor Mark Griffiths of Nottingham Trent University, stated that "penny auction" sites in the UK should be regulated by the Gambling Commission. However the Gambling Commission said that it "was not convinced that penny auctions amounted to gambling."[7]

Speaking to the New York Times, Glen Whitney, a mathematician and a former quantitative analyst at the hedge fund Renaissance Technologies, stated. “In aggregate, consumers trying to obtain these products are overpaying. Unless you have an edge over other people who are bidding, and you can get them to subsidize your purchase, you shouldn’t do it. It’s a chump’s game.”[8]

Recently[when?] Swoopo has hired the star gambling lawyer Anthony Cabot of the Las Vegas law firm of Lewis and Roca.[8]

German consumer protection bodies also warn about the auction type offered by Swoopo and other similar auction platforms, likening them to gambling.[9] In May 2008 a ruling from a court in Bochum (Germany) nullified the request for payment made by the company against one bidder.[10]

Techcrunch states that Swoopo is an "'entertainment shopping' site that’s one part auction-house, one part virtual casino" [11]; whereas as the alarm:clock calls it a "gambling auction biz". [12]. Toptenreviews states: "it warrants considering Swoopo with some different terminology. Rather than "auction" site, maybe we should designate Swoopo as a gambling site--a type of QVC-meets-the-internet-age ponzi scheme". [13].

Telebid, as Swoopo was known in the past, has sued one blogger in Germany for €15,000 for criticizing the company online.[citation needed] In a well publicized case,[citation needed] a court in Berlin decided that claim from Telebid was not valid.[14][unreliable source?][15][unreliable source?][16][unreliable source?]

Financing

Swoopo has received financing from two venture capital firms: an undisclosed amount in December 2006 by Wellington Partners[17] in Munich and $10 million in April 2009 by August Capital in Silicon Valley.[18]

See also

References

  1. ^ a b "Swoopo — eBay's (more) evil twin". Cite error: The named reference "register" was defined multiple times with different content (see the help page).
  2. ^ The Washington Post - At Swoopo, Shopping's Steep Spiral Into Addiction
  3. ^ a b "www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html".
  4. ^ a b c d "Swoopo: The crack cocaine of auction sites".
  5. ^ "technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/".
  6. ^ [1] "An All-Pay Auction", Ian Ayres, 12/16/2008,
  7. ^ "Penny web auctions under scrutiny".
  8. ^ a b "Sites Ask Users to Spend to Save".
  9. ^ "Vorsicht vor Glücksspiel-Internetauktionen". Template:De icon
  10. ^ "VAG Bochum: Die Versteigerung im Internet einmal anders — Bereicherung des Betreibers durch erfolglose Gebote". Template:De icon
  11. ^ "Unique Auction Site Swoopo Expands To Canada, Testing 'Buy It Now'".
  12. ^ "Gambling Auction Biz Swoopo Raises $10M".
  13. ^ "Swoopo.com: Alternative to Ebay or Evil Scheme?".
  14. ^ "Telebid: Verklagt oder verliebt". Template:De icon
  15. ^ "Telebid verliert Prozess gegen Blogger: Sofina GmbH gegen Tobias". Template:De icon
  16. ^ "Kurzer Prozess mit Telebid". Template:De icon
  17. ^ "www.wellington-partners.com/wp/port_swoopo.html".
  18. ^ "augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html".
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