Swoopo
 | |
Type of site | Online auction site |
|---|---|
| Available in | English, German and Spanish |
| Owner |  Entertainment Shopping AG |
| Revenue | €20 million in 2008 ($28.3 million) |
| Employees | 50 |
| URL | http://www.swoopo.com/ |
| Commercial | Yes |
| Registration | Required |
Swoopo is an online auction website[1] where all bidders have to pay for credits that they use to bid on items on the website, even if they do not end up winning the auction.
Mechanics
Customers buy bids in advance (costing $0.75 each in the US, or 50 pence in the UK). Most "auctions" begin at $0.15 or 8 pence, and increase by the same amount with each "bid". Some items, known as "penny auctions", only increase by $0.01 for each bid, but still cost contestants $0.75 per bid. Each bid also increases the auction's end time by 10–20 seconds. Although the contest winners often pay a low price, Swoopo earns money from the bids placed.[1][2]
For example, if an item in a "penny auction" retails for $1000 sells for $80, 8000 bids must have been placed. For these 8000 bids (at $0.75 each), Swoopo earns $6000.
In $0.15 auctions, Swoopo receives more than the retail price for the item from bidders as long as the final price is above 16.7% (one-sixth) of the retail price. This is because for each $0.15 of the final price, Swoopo is paid $0.90 total ($0.15 by the winner of the item plus $0.75 by a bidder). Because $0.90 ÷ $0.15 = 6, Swoopo is paid 6 times the final price each item in a $0.15 auction.
In one auction bidders paid a total of $27,675.50, including the "fixed price" of $98, for a $1300 item.[3]
Controversy
The method of selling employed by Swoopo is controversial and has been criticized.[4] [5] The company claims that winning auctions involves skill and is not reliant upon chance.[6] Ted Dziuba writing for The Register stated that Swoopo "doesn't amount to a hustle, it's simply a slick business plan." and 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."[1] 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".[7]
Speaking to the BBC, Professor Mark Griffiths of Nottingham Trent University, stated that "penny auction" sites should be regulated by the Gambling Commission. However the Gambling Commission said that it "was not convinced that penny auctions amounted to gambling."[8]
See also
References
- ^ a b c Swoopo - eBay's (more) evil twin
- ^ http://www.swoopo.com/new.html
- ^
"Auction results page for a fixed price auction with 36,769 total bids". 2008-12-20. Archived from the original on 2008-12-20.
Price: $5,515.50 [i.e., 36,769 total bids, nominally $27,576.75 to swoopo] This auction ended on Nov-08-2008, at 20:02 PST Worth up to: $1,249.99 Placed bids (336): $252.00 FreeBids (98): $0.00 Final price: $98.00 Savings: $899.99
{{cite web}}: line feed character in|quote=at position 75 (help) - ^ http://technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/
- ^ http://www.codinghorror.com/blog/archives/001196.html
- ^ http://www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html
- ^ [1] "An All-Pay Auction", Ian Ayres, 12/16/2008,
- ^ Penny web auctions under scrutiny