Friday, December 5, 2008

Swoopo: Bargain or Rip-off?

I recently came across a site called At first glance, this site leads you to believe that items are selling on auction for a small fraction of retail. So what's the catch? Knowing that things that sound to good to be true, usually are, I dug a little deeper.

Here's the scoop. They charge you to bid -- $0.75 per bid. That doesn't sound too bad until you realize that bids are only in increments of $0.15 and done automatically by their system! That means that both the bidders who win the auction and those who do not are paying just for bidding. And before you ask -- no, you don't get your bid money back if you don't win the item!

This model is different, that's for sure. I'm not sure whether to be impressed by their ingenuity or disgusted by the fact that they are obviously getting (i.e. tricking) people to pay mountains of money either for products they "win" -- or even worse -- paying money for the right to bid on products that they don't win. Of course none of this is spelled out clearly. Only after reading through a few pages of the "terms and conditions" would a user be aware of this.

Let's create an example, let's say they put a laptop up for auction that sells for $499 at a normal store. They start the bidding at $.01.

After the first 6 bids, the bid stands at $.91 and the site has collected $4.50 (6x$.75) in bid fees. After 100 bids, the bid stands at $15.01 and the site has collected $75.00 in bid fees.
After 2000 bids, the bid stands at $300 (a seemingly good deal for this laptop), but users have paid the site $1500 for the privilege of bidding on the laptop!

In this case the winning bidder would be in for $300 + all of his bid costs (likely several hundred dollars). The losing bidders would have nothing to show for there efforts except empty pockets.

Are there deals to be found on this site? Maybe, but it is a gamble if there ever was one. In my estimation, you are much more likely to come out ahead in Vegas than on Swoopo.