FYI: Swoopo.com; bid @ your own risk

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Linrandir ( 108 )
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FYI: Swoopo.com; bid @ your own risk

Post by Linrandir » Sun Feb 28, 2010 4:06 pm

I read about this swoopo.com website on the local game club's forums and felt the article was important enough to bring to everyone's attention.

The phrase "diabolically manipulative" comes to mind...feel free to discuss.

cited article:
Originally Posted by Jeff Atwood
Dec 11, 2008
Profitable Until Deemed Illegal
I was fascinated to discover the auction hybrid site swoopo.com (previously known as telebid.com). It's a strange combination of eBay, woot, and slot machine. Here's how it works:


You purchase bids in pre-packaged blocks of at least 30. Each bid costs you 75 cents, with no volume discount.
Each bid raises the purchase price by 15 cents and increases the auction time by 15 seconds.
Once the auction ends, you pay the final price.
I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25.

So that $229 item ultimately sold for $1,125.90.

But that one final bidder got a great deal, right? Maybe. Even when you win, you can lose. Remember that each bid costs you 75 cents, while only increasing the price of the item 15 cents. If you bid too many times on an item -- or if you use the site's "helpful" automated BidButler service, which bids on your behalf -- you'll end up paying the purchase price in bids alone. For this item, if you bid more than 305 times, you've paid the purchase price -- and only raised the cost of the item by $45.75 total.

OK, so bidding a lot is a bad idea, so maybe we only bid one time, or a few times, and near the end of the auction? Great plan, except the auction is extended 15 seconds each and every time someone bids in those final seconds. There are absolute end dates for the auctions, but they're usually so far in the future that the auction will end through attrition long before they reach their end date. I've often wondered if eBay would implement this feature, as it would effectively end last second sniping, a huge problem for auction sites. Well, beyond the obvious problem with auctions, which is that the most optimistic person sets the price for everyone else.

There's something else at work here, though, and it's almost an exploit of human nature itself. Once you've bid on something a few times, you now have a vested financial interest in that product, a product someone else could end up winning, rendering your investment moot. This often leads to irrational decisionmaking -- something called the endowment effect, which has even been observed in chimpanzees. So instead of doing the rational thing and walking away from a bad investment, you pour more money in, sending good money after bad.

It's pretty clear to me that swoopo isn't an auction site. It bills itself as "entertainment shopping". I think it is in fact a lottery; the only way to win here is sheer dumb luck.

Or, of course, by not playing at all.



But wait -- it gets worse! Swoopo also offers


Penny auctions, where each bid only increases the price of the final item by 1 cent, while still costing you 75 cents.
FreeBids auctions, where the item up for grabs is Swoopo bids. Near as I can tell, this is swoopo printing their own money.
100% off auctions, where the "winner" (and I use this term loosely) pays nothing for the final item, regardless of what the final price is bid up to. Imagine the bidding frenzy on this one at 75 cents a pop.
Cash auctions, where you win actual real money at the end. It's like they're not even trying to pretend they don't run a gambling site with these.
It's not clear that Swoopo even has the items they auction; they appear to sell first, then use the money they gain from the completed auction to buy and ship the item. Furthermore, they have a clause in their Help under Delivery and Shipping that lets them ship "equivalent" items:


On rare occasions we are no longer able to source the specific item detailed in the auction. When this happens, we will contact you and offer to send you an equivalent item of at least equal value. Many of the products we sell are high-technology items that have a short life-cycle, so often this will mean an upgrade to the newer version of the item.
There are also rumblings that swoopo silently pits users from the different territory websites against each other in individual auctions, such that UK users are unwittingly bidding against US users. This is done to ensure that there is around the clock bidding to extend auction end dates as long as possible.

In short, swoopo is about as close to pure, distilled evil in a business plan as I've ever seen. They get paid for everything up front, and as they drop ship everything there's no inventory or overhead to worry about. It is almost brilliantly evil, in a sort of evil genius way. You can't stop people from endowment effect fueled bidding when they have the individual chance, however small it may be, to win a $2,000 television for $80 -- while collectively sending the house $10,000 or more.

My admiration stops short of sites that prey on the weak and the uneducated -- and of business plans that are almost certainly illegal, at least here in the US
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Re: FYI: Swoopo.com; bid @ your own risk

Post by Ironhide » Sun Feb 28, 2010 5:45 pm

Looks like a Beezid rip-off site.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by BITZJUNKIE » Tue Mar 09, 2010 9:44 pm

Amen Ironhide 8)

Thank you Lin for bringing this up on the forums. Knowledge truly is power ;).

Been to BeeZid as well to investigate an I wouldn't be suprised if these two sites (possibly others as well) are tied in some fashion outside of the aforementioned "business practices" :evil:

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Re: FYI: Swoopo.com; bid @ your own risk

Post by Ironhide » Wed Mar 10, 2010 12:57 am

BeeZid appears legit. They even have commercials on TV here in NC.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by Linrandir » Wed Mar 10, 2010 2:30 am

8) Having enough money to afford commercials doesn't necessarily mean they're legit. It just means that they're doing well enough to afford TV commercials and want to expand their business. :-D
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Re: FYI: Swoopo.com; bid @ your own risk

Post by Ironhide » Wed Mar 10, 2010 2:48 am

True, but the commercials bring them attention; and attention brings them lawsuits if they don't conduct themselves within the limits of the law.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by BITZJUNKIE » Wed Mar 10, 2010 6:15 am

... Though I haven't ever seen an advertisement (on TV or anywhere for that matter) for Swoopo until this thread mentioned it.

Does that mean if a site like this doesn't advertise in any media format, it's still an acceptable business practice or advertising makes it more / less legit than a site that fits the same profile? I may be off, but I don't believe that advertising makes a business legitimate by any means.


It was that same ad, that I saw locally here in Utah, that originally drew me there to begin with. Beezid and Swoopo (along with other like sites for that matter) may be legit, but maybe I'm old school too: if it quacks like a duck and walks like a duck... :lol:
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Re: FYI: Swoopo.com; bid @ your own risk

Post by Ironhide » Wed Mar 10, 2010 7:25 am

I've always been of the mind that only shady businesses try to keep themselves under the radar.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by s_o_r_r_o_w » Wed Mar 10, 2010 4:21 pm

Ironhide wrote:I've always been of the mind that only shady businesses try to keep themselves under the radar.
Enron? Madoff? :)


In terms of right out capitalist business sense...you really have to hand it to these guys.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by MagickalMemories » Wed Mar 10, 2010 5:21 pm

s_o_r_r_o_w wrote:
Ironhide wrote:I've always been of the mind that only shady businesses try to keep themselves under the radar.
Enron? Madoff? :)


In terms of right out capitalist business sense...you really have to hand it to these guys.
I don't think he's saying shady businesses never come out from under the radar.
I think he's saying that, if they try to stay under the radar, he believes them to be shady.

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Re: FYI: Swoopo.com; bid @ your own risk

Post by s_o_r_r_o_w » Wed Mar 10, 2010 5:23 pm

MagickalMemories wrote:I don't think he's saying shady businesses never come out from under the radar.
I think he's saying that, if they try to stay under the radar, he believes them to be shady.
Gotcha. Point well taken.
I am always in the market for weird and wonderful GW oddbitz and ephemera. PM me if you have something old/weird/rare.

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Re: FYI: Swoopo.com; bid @ your own risk

Post by Ironhide » Thu Mar 11, 2010 3:45 am

MagickalMemories wrote:
s_o_r_r_o_w wrote:
Ironhide wrote:I've always been of the mind that only shady businesses try to keep themselves under the radar.
Enron? Madoff? :)


In terms of right out capitalist business sense...you really have to hand it to these guys.
I don't think he's saying shady businesses never come out from under the radar.
I think he's saying that, if they try to stay under the radar, he believes them to be shady.

Eric
Exactly.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by bluemeenie » Thu Mar 11, 2010 10:11 pm

Actually NPR did a story on this as well as PC Weekly (I think your qouted item is actually from that PC Weekly article).

I went there and took a look around and watched it and it is pretty right on....yah sometimes you might get lucky and be the last bidder and only really bid that one time but if not man.....y ou could drop some serious cash and not know it.
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Re: FYI: Swoopo.com; bid @ your own risk

Post by GMMStudios » Wed Apr 21, 2010 3:52 am

Wow. It really is like they are printing their own money. Each PENNY the auction is up represents someone spending about 80 cents.

So a pack of 50 bids (which Beezid just made up) retails for $40. So a good price on Beezid for the average person would be, say $30? Thats almost 3000$ in bids used to get it to $30.00.

Wow

Also this isnt really a scam. Everyone knows what they are getting, its just that Beezid is on both sides of the user. Both making money by selling an item to someone, and then collecting when people bid.

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Re: FYI: Swoopo.com; bid @ your own risk

Post by Spire_182 » Wed Apr 21, 2010 6:51 pm

I love it when a scam comes together

:mrgreen:

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