Stay far, far, far away from Swoopo
May 27th, 2009 | by mbhunter |And if you bid on Swoopo.com, please stop. Even if you’ve won an auction. I can just about guarantee you’ll pay back every cent you saved on that one auction win, plus a lot more.
Swoopo bills itself as an auction site, but the auctions are little more than giant, real-time, horribly-addicting raffles: one winner, with lots of losers – some of them really big losers. Coding Horror has posted about it twice, and he thinks it’s pure evil.
Here’s how the “auctions” work:
- Bids cost $0.75 each, bought in advance in bundles of 30. (Red flag #1: You buy in, with real money, with no guarantee of winning.)
- Each bid raises the price of the auction by $0.15 or less. (Red flag #2: The price climbs slowly. Lots of bids are placed. A huge number of bids are placed if you’re talking about “penny” auctions: each bid increases the price $0.01.)
- Each bid adds time to the end of the auction. (Red flag #3: Sniping doesn’t work. The low price relative to retail means that there’s a very good chance someone else is watching and will bid over you.)
- The auction does have a firm ending date. It’s just so far in the future that it really doesn’t matter. (Red flag #4: It’s technically not a lottery, but practically it is.)
Some other red flags:
- Very limited bid history while an auction is going on. With eBay you can see the entire bid history of an auction. On Swoopo you’re limited to the last ten bids. There can be hundreds, if not thousands, or tens of thousands, of bids that are inaccessible during the auction. It makes it very difficult to know how many people are bidding against you. If the “BidButler” is used (an automatic proxy) and if there are a lot of bids placed all at once, you get almost no information about how many people bid against you, or how many times you bid. All you see is “169 BidButler bids” and the last ten bids.
- The record of the completed auctions is there, but searching them is like finding something in the tax code, with all of the pages mixed up, without an index. There is no text search feature, so if you’re interested in what a particular item went for, you have one option for checking out the price history: plow through all 63,000+ completed auctions, ten at a time. The only price history that’s easily accessible is a “recently sold for” price on the auction. Just one. The rest you have to find on your own, and who knows even how many times they’ve sold that item? It could have been just one other time — 43,000 auctions ago.
As an example, there’s a “penny auction” right now for a one-ounce gold bar. Ballpark retail price for this item is $1,000. I’ve watched the auction for the past few hours off and on. Here’s what I know about it:
- I’ve watched the price go up from $18 to $28 in the past few hours. Since it’s a “penny auction,” each bid raises the price $0.01. So, that means 1,000 bids have been placed in the past few hours. People spent $750 to place those bids. Judging by some of the other prices, I’m thinking the auction started at zero. If 2,800 bids were placed, that’s enough to buy the gold bar at retail, twice. And the auction isn’t over.
- The “recently sold for” price is extremely misleading. Underneath the picture of the bar is shown: “Recently sold for $216.98.” It’s true that it did sell for that price: Auction #177136, which ended on May 17th, 2009, at 13:28 PDT. (The winner spent $697.50 in bids, though, so he only saved 10% off of the retail price.) But the most recent price it sold for was far less than that: $3.71 (plus $106.50 in bids). So not only is the quoted price not the most recent price, it’s the highest price I could find with a decent effort. (Can I say it’s the highest price that it ever sold for on Swoopa? No. I went through over 300 pages of past auctions manually and did a google search, but only came up with part of them, and life’s too short.) Here are 32 auction results for the same gold bar. The next highest selling price is barely half of $216.98:
| Date | Time | Price | Bids |
| 5-25-09 | 5:05 | 43.66 | 456.75 |
| 5-25-09 | 12:47 | 3.71 | 106.50 |
| 5-23-09 | 4:28 | 34.24 | 539.25 |
| 5-21-09 | 17:33 | 12.97 | 344.25 |
| 5-19-09 | 12:24 | 2.70 | 75.00 |
| 5-18-09 | 16:24 | 12.57 | 96.75 |
| 5-17-09 | 13:28 | 216.98 | 697.50 |
| 5-17-09 | 12:55 | 1.25 | 42.75 |
| 5-14-09 | 14:09 | 6.22 | 195.00 |
| 5-13-09 | 14:53 | 68.63 | 1441.50 |
| 5-12-09 | 2:23 | 31.91 | 354.00 |
| 5-10-09 | 8:37 | 54.21 | 411.75 |
| 5-06-09 | 3:56 | 34.14 | 903.00 |
| 5-02-09 | 20:01 | 22.09 | 234.00 |
| 5-01-09 | 18:37 | 92.18 | 519.75 |
| 4-22-09 | 16:04 | 71.07 | 225.00 |
| 4-21-09 | 6:30 | 42.05 | 67.50 |
| 4-20-09 | 7:11 | 56.65 | 185.25 |
| 4-19-09 | 5:23 | 33.66 | 104.25 |
| 4-05-09 | 19:10 | 15.46 | 354.75 |
| 4-05-09 | 0:41 | 110.62 | 13.50 |
| 4-04-09 | 23:55 | 21.10 | 368.25 |
| 4-03-09 | 6:46 | 43.42 | 539.25 |
| 3-31-09 | 7:09 | 41.48 | 353.25 |
| 3-29-09 | 11:43 | 8.50 | 195.00 |
| 3-28-09 | 11:25 | 0.34 | 6.00 |
| 3-28-09 | 6:51 | 48.49 | 103.50 |
| 3-28-09 | 0:10 | 25.61 | 345.75 |
| 3-23-09 | 4:17 | 31.15 | 762.00 |
| 3-22-09 | 17.04 | 89.78 | 339.00 |
| 3-21-09 | 11:26 | 64.16 | 177.75 |
| 3-20-09 | 11:42 | 52.33 | 468.25 |
Some people got great deals, others got mediocre deals, and at least one guy paid 50% more than he needed to. (At least he won the bar, though.) What’s the craziest part of all of this? The 32 bars cost about $32,000 or so to purchase. There was about $100,000 spent on bids for these auctions. Enough to purchase the bars three times.
There are a few big winners, but a whole lot of big, big losers. Though I don’t think the solution is to get Congress to do something about it, I will say this about Swoopo: Stay far, far away.
15 Responses to “Stay far, far, far away from Swoopo”
By Shamoon Siddiqui on May 27, 2009 | Reply
Hello there mbhunter,
First and foremost I’d like to thank you for giving such an in depth analysis of Swoopo and it’s related clones. Over the past few month, several hundred Swoopo clones have popped up and all have replicated the business model exactly. I wouldn’t call the business model “evil”, because they are pretty transparent about how it all works and what they’re doing, so it really is up to the user to figure out what they want to do and how much risk is acceptable.
I represent a new competitor in the field, PriceDrip, which takes the model and turns it on its head… literally. Instead of the price going up forever and ever, the price actually goes down over time. Like standard auction sites, you place a bid at the amount you’re willing to pay and yes.. you do have to pay to bid.
Anyway, always good to see new debates and ideas out there, so keep it coming! By the way, I enjoy your blog and think your post on 25 ways you save money to be quite delightful. Very helpful tips.
Cheers,
Shamoon
By mbhunter on May 28, 2009 | Reply
Shamoon: Thanks for your comment.
Swoopo’s business model exposes itself when looked at in the correct way, but it does require some thought. It’s not difficult for people to get completely skinned on Swoopo.
They’re evil. Brilliantly evil, perhaps, but still evil. Being clear about your evilness doesn’t change the fact that you’re evil.
Adults can make their own decisions, and judging by the success of Swoopo, a lot of adults make poor decisions in their interaction with that site. If I save a few people the pain of lost money on that site, then I’ve done a good thing.
It will be difficult for sites like Swoopo — and PriceDrip, probably, if for no other reason than it’s a pay-to-bid site — to convince regulators that they’re not gambling sites, especially considering the huge profit margins they’re sporting. But before that, the payment processors like PayPal may cancel their agreements with these sites, which will effectively shut them down.
By Funny about Money on May 31, 2009 | Reply
I don’t understand why one would not want to have a scam like this regulated. It’s clearly a rip-off. It takes some serious sophistication to understand that it’s a rip, and many adults lack that kind of sophistication. Indeed, the people who are least likely to grasp that this is a flaming rip-off are the very folks who can least afford to be ripped off. This is the reason we have laws against crooked dealing.
If this so-called “business model” is not illegal now, it certainly should be. Entertainment Shopping is located in the UK (apparently…at one point its publicity claimed the company was in Cupertino, CA), but one of its major investors is in Menlo Valley. It would be interesting to know what the U.S. Attorney General says about it.
By JimmyDaGeek on May 31, 2009 | Reply
Swoopo is simply symptomatic of the human condition. People are financially undisciplined and mathematically illiterate. They want something for nothing. Education is meaningless when desires trump logic. Hence our subprime financial mess. Why else do people play lotteries after being told time and again that it’s basically a loser’s bet? Why have people continued to START smoking for the last 40 years after being told over and over that smoking is bad for you?
By mbhunter on Jun 3, 2009 | Reply
Funny About Money: Regulation legitimizes it in a way, though. In addition, other more legitimate but confusingly similar ventures will get taken down with it. It would be better if the payment processors just pulled out. That would kill it without additional laws.
Jimmy: True … there are winners and losers in life, despite much effort to educate the losers.
By Just Sayin on Jun 7, 2009 | Reply
O M G
This sounds really evil.
By Montana on Jun 10, 2009 | Reply
Hi guys! Yes, I do work for Swoopo.com. Nice to “meet” you all, my name is Montana. First and foremost, I love the debate, and we here at Swoopo appreciate everyone’s opinion.
mbhunter: yes, our site has complete disclosure! We are hiding nothing, and in fact, we want people to win.
Everyone has a choice to bid or not.
For an up close and personal look at our company follow us on Twitter (you can see pics of all of my practical jokes on others here at the office!)
By John Galt on Jul 10, 2009 | Reply
It is only the natural order of things for there to be winners and losers. By preventing anyone from losing, you effectively prevent anyone from winning. There are many of us who believe it is not the government’s job to pad the corners of life. The negative feedback loop of people becoming dependent upon the government for protection and becoming less able to protect themselves thus needing more protection is truly tragic.
Unfortunately, due to today’s “please protect us” populous, it is likely that this brilliant business model will be the subject of a witchhunt and shut down.
By Steve on Jul 11, 2009 | Reply
I did not listen to you and guess what I lost alot of money ALOT and did not win an single thing.
By Regret on Jul 24, 2009 | Reply
Unfortunately I read your article too late, after I had already signed up and bid 12 times at .60 cents each. I feel foolish, simply because I usually research everything before spending money, but in this instance I was sucked in by the low prices and the promise of a new ipod touch for little of nothing as long as I got in on the bidding w/i the last 5 minutes, because the clock was ticking. Little did I know the clock would not actually be ticking to a conclusion for quite sometime. I searched their website for more info, before buying and bidding, but the information is fague to non-existant. You find better info googling, but my auction, so I thought was ending so I made a move w/o any research. Right now I can’t even get the site to cancel my membership, so I can try and salvage this really, really bad decision. I’m only out 7.20 at this point and expect a refund for my unused bids. I should have known. I’m not a gambler. Once I figure out that I’m losing I walk away from the game. I’d advise anyone, unless they have the time and money to sit at the PC 24/7 to do the same.
Koodos to anyone who is winning on this website and especially those that are winning w/o spending much money.
By JimmyDaGeek on Jul 26, 2009 | Reply
In case anyone misses the green button on the front page marked: HOW IT WORKS, here’s the link: http://www.swoopo.com/new.html
Because Swoopo resets the auction expiration clock to 20 seconds after each “final” bid, you can’t snipe. You have to hope that either no one is looking or that everyone who is interested is tapped out.
By Regret on Jul 27, 2009 | Reply
I got the turning back the clock concept after a couple of bids, but note that with my auction the clock was turned back 13 seconds, not 20. My friend was also monitoring another auction and I bleieve it was 10 on their clock. The problem with the website’s info is that it is not consistent with what is occurring in the various auctions. Example: they post info about penny auctions, but then they also have 2 penny auctions. At any rate, my time as a member is over. I don’t have the time or the money to play the swoopo game. On the auction that I was bidding for, the clock was backed up about 2 hours at one point, so I had to sit there another 2 hours to see what would happen. Of course I had already learned by that time not to bid and to try and let the time run down until no one else would bid against me. The kicker is there was a little note with next to the clock icon that said the 10 second countdown would begin when the price for the item reach 144.00. I assumed by this that there was a minimum price they had set up, which is why the auction clock had not run down even though people had stopped bidding, but low and behold it sold for 141.00. I don’t care what anyone says there are better ways to set this up, so that everyone is happy, the players and swoopo. The way it stands now, it’s obvious there are a lot of unhappy or disillusioned players/buyers. I consider my self to be internet savvy and have been shopping online since before it was common practice (when people ridiculed me for taking the risk). I’ll give anything a chance, but if it doesn’t benefit me, i.e. spending money and getting nothing, I will stay clear. People have to understand the extreme risk they are taking with swoopo and they do not, and I repeat do not make all of it clear on their website, so those that say otherwise, either work for swoopo, or have time and money to sit on a 24hr vigil and play their auction game. This far exceeds what an average person could do that’s just trying to get a good deal. I don’t begrudge swoopo for wanting to make money, but I feel like I have a right and responsibility to let people know about my experience, so that they don’t make the same mistakes I did and can make an informed choice before spending their money.
By LessThanJake on Jul 29, 2009 | Reply
You guys should really look around a bit before you get completely turned off by the concept. Check out some other sites that aren’t so busy as swoopo. A site I’ve come across (and actually won on) is bidfire.com I wanted a nintendo wii and I saw they were selling. I got into it with this one other bidder so I thought I would be there all night.. Just when I was ready to say forget it, (I had put $20 of bids into the game) The auction ended and I won the wii for less than $5. So, there ARE ways to get great deals, maybe just not on swoopo anymore.
By AJ @ acoustic guitars on Aug 16, 2009 | Reply
The thing I really hate about Swoopoo is that it makes people think they are getting a good deal because people are so bad at math. It’s like in politics when they start talking about saving millions and increasing spending by billions. They sound the same, but they are really making things worse. Swoopoo sounds cheaper until you realize it’s more expensive. It’s such a ripoff.
By swooper on Sep 13, 2009 | Reply
its kinda cool how it works but its seriously only “safe” if you dont go trigger happy and keep bidding and bidding and bidding on an item. you can even bid vouchers which if done right, you end up getting free bids anyways. The absolute most important thing to realize is you are not throwing away your money because you can purchase the item even if you dont win the auction, and theyll even put your bids toward the purchase. So in general, if you are planning on buying something, you can try it and see if you get a good deal and if you dont win, you can still purchase what you wanted and have your bids applied to the purchase price… This easily translates into ~ you’re not throwing away your money if done appropriately
I was lucky enough to pick up a canon t1i for around 60 bux plus only 23 bids. so guess what, I DIDNT GET BURNED!