Auction with ingenious system of making money

[Shadowcliff]

(not a promotion)

I found this auction site called Swoopo.
They pretty much sell electronics for less, sometimes significantly lower than retail cost.

They have this ingenious system of making money!
Each bid costs one dollar. Bidding raises the final price by $0.15, as well as resets the timer for the bidding expiration. If you are the last bidder (you bid and the timer runs out), you pay the final bid + the amount of bids you made + (I think) shipping. All the money goes to the site, but I think all the products are bought by the site.

Here is an example.
Say you are the final bidder on a Wii. The final price was $140, so that's what you pay, plus the amount of bids you made on it. See? You're already saving money. But each bid leading up to $140 costed a dollar.
Here's the ingenious part: The site gets the money used to bid, plus what you paid. So, 140/.15 = $933.33. + $140 = $1073. You paid $140, but they actually "sold" the Wii for $1073.33.
Now, if you don't control yourself, and end up bidding, say, 50 times, you're spending $50 more than the final bid. If you're not careful, that can add up to significantly more than retail cost. You have to be smart.

I question if this site is legal, so I wouldn't reccomend buying from it, yet I think they're an excellent business model! (I haven't bought from the site, but I've looked into its system)
Go to the site and take a look at some of the sales. Do the calculations, and see how much money Swoopo is making. This is the formula: (Final Bid) divided by (.15) , which gives you the money made off bids. (Bid money) plus (Final Bid) = Total profit made by Swoopo, maybe throw in shipping. Then compare that to retail, which is listed with the item on the site. Sometimes it's lower, sometimes higher.

So, is this ingenious or what?

[MDMAngel]

Are you implying that the starting price is $0.15?

[devonin]

So let me get this straight.

Bid opens at $0.15
Every person who bids raises the price by $0.15
And at the end, the winner pays the final price and one dollar -per bid that was made- or -per bid that they made-?

If as you later suggest, "You bid 50 times you'll pay 50 more dollars" then in the Wii case, your 50 bids plus 140.00 is only 190.00, which is nowhere near the 1073.00 you quoted.

If you end up paying 1 dollar PER BID TOTAL that ANYONE makes regardless of whether it was you that made it, what you're looking at is a scam to catch the unwary, such that they can add in any number of fake bids, hoping a given person didn't read the fine print and doesn't realise that they are on the hook for 1 dollar per 15 cents of the final price, and make their money by screwing over someone who didn't read closely enough.

If the starting bids are all 0.15, and increment by only 0.15, I don't see why any given person would ever bid more than once or twice and try to catch an auction at the low end.

[sumzup]

This is most likely legit.

Apparently they lose money on 70% of auctions, but the 30% they make money on covers for that.

[devonin]

Let's math this out shall we?

Take an item that retails for 24.99

At 0.15, the total cost to you is $1.15
At 1.50 the total cost to you is $11.50
At 3.00 the total cost to you is $23.00
At 4.00 the total cost to you is $30.00

So it seems to me that bidding on anything past 12% of its retail value loses you money. This seems like a crappy auction to take part in. And that again, it seems like they "win" on auctions being bid on by people who didn't read the fine print, rather than by people who willingly pay more than the going retail price for things for some bizarre reason.


Edit: Okay...I'm starting perhaps to understand. You really didn't explain this clearly in your post. I'm liking this auction system even less.

Let's try again:

Auction starts at $0.15
Each bid costs the bidder $1.00 and raises the price by $0.15
At the end, the high bid pays the final total. They don't pay anything else, since they've -already- paid their $1.00 per bid as they went.

So something they won for 40.00 on which they made 10 bids costs them 50.00

HOWEVER, To get to 40 dollars, there were 266 bids, from which they made 266 dollars, which also means that other people paid out 255 dollars TO GET NOTHING WHATSOEVER

[GuidoHunter]

So basically they collect money for bids then limit the raises so that more people will be able to bid.

As such, I could make a hundred bids, spending $15 (EDIT: or however much more it costs; I looked over the FAQ and didn't see anything about the $1 charge, so I assume bids cost $0.15), and still never win anything.

This sounds like a horrific ripoff to me, unless you manage to win something for cheap, which seems highly doubtful.

--Guido

http://andy.mikee385.com

[sumzup]

devonin, you're neglecting to account for other people who are bidding. You only pay for your own bids, not someone else's.

edit: Guido: Just making it big on one item can account for all of your bids; you just have to be smart and not bid a million times.

[devonin]

Yeah, and not making it on any items just loses you many dollars for no gain at all.

Also, I can't seem to find anywhere on their website, any information pertaining to where these items up for bid come from. I can't see a way for users to list their own goods, nor does Swoopo seem to make a clear statement that they own these items either.

[sumzup]

I think that's the point of the auction system, though. At some point, you are bound to get a lot of savings which make up for the money spent before.

That said, it "feels" like a pyramid scheme.

[devonin]

Their selling point seems to be "Since you must pay for every bid you make, a given auction will get bid on less, and thus sell for less, so man, you could totally get something dirt cheap!"

I don't think that's a good enough selling point to make me pay money for the chance to pay more money to try and get something inexpensively.

I bet most of their money comes from "Well, the current sale price plus all the bids I made just came even with retail...but since I've -already- spent a bunch of actual money out of pocket, I have to keep going past retail and hope I win to justify the expense"

[mnnicol]

I was actually talking to a few friends of mine about this topic just the other day.

One of them told me about a site where you pay money for "points". Every time you bid, a certain amount of points is deducted from your account. Just like this site you have here, you can get the stuff dirt cheap, but the site makes money off all the bids people make on the items.

Really smart system I think, though I'd never pay to bid

[Shadowcliff]

Ah, let me answer this now so I don't forget; I'll edit in responses to other posts later.

And at the end, the winner pays the final price and one dollar -per bid that was made- or -per bid that they made-?

The winner pays the final price and have already spent the one dollar-per-bid during the auction. Basically, you buy bids before you bid. Sorry for not making this clear in the OP, but bids cost $1 each. You can get discounted packages, such as 300 bids for, well, less than $300. You use those purchased bids in auctions, and when you run out, you buy more.

Yes, bidding opens at $0.15.

'If as you later suggest, "You bid 50 times you'll pay 50 more dollars" then in the Wii case, your 50 bids plus 140.00 is only 190.00, which is nowhere near the 1073.00 you quoted.'

$1073 is what Swoopo makes. If each bid raises the final price by $0.15, then you divide the final price by .15 to find how much of this $1073 is made off of bidding. The rest is what the final bidder paid to get it.

Guido,
This site is a lot like gambling. You bid, and if you win, good job. You can try to bid while the dust is settling to increase your chances of winning, but most likely someone will be there to bid again.
Swoopo seems to be made of smart businessmen and dumb bidders.

Like I said before; I wouldn't buy from the site, but I think it's interesting.

[Devilution]

Very interesting, look how lucky this person is.. damn

http://www.swoopo.com/auction/sony-v...ta/133675.html

O.O

[Shadowcliff]

Holy ****, that guy got lucky!!

[Kekeb]

If I understand correctly, there have been 2226 bids for this auction. Therefor the total money made via bids by Swoopo is 2226 * 0.75 (per bid). Therefor they have made 1669.50 dollars and have profited from this auction. Yet if a user was to snag it when the voting dies down, they would only have to pay for each bid they've cast (bids are bought before they are used anyway) and then the total running cost (not nearly as expensive as the retail price).

It seems like Swoopo knows what they are doing.

EDIT: Look at the 'recently sold', that's almost 13 grand profit by Swoopo... ingenious indeed.

[Ryetta]

Doesn't sound very good for the people bidding (unless they get really lucky like that guy did o.o) but sounds like a great profit for the site.

[argo15]

it seems amazing, its like asking 1000 people to give you 75 cents so that you can buy something for $750 less.

Edit: Brilliant
http://www.swoopo.com/auction/-1-000-cash-/134919.html

[Shadowcliff]

Well now I see there are different kinds of auctions. I guess penny auctions cost less to bid on due to the $0.01 raise per bid. But I think a standard Swoopo auction costs $1 to bid and raises $0.15, like previously mentioned.

[Tokzic]

they've got a nikon d90 up for like $40 and it's a bidding war that's keeping the counter at 15 seconds remaining

if only they'd piss off so i can pick it up

[dore]

It's fun to watch the banner with all the people coming 3 seconds away from getting a $10 laptop as some ingenious businessman makes thousands of dollars of profit.