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Sunday
Oct052008

Swoopo: Unique Auction Model

I'm in the market for a netbook for use as a lightweight, secondary machine. In the process of searching for the features I wanted, I discovered a very different kind of auction site called Swoopo and learned very quickly that things work a bit errr, differently.

In about 45 minutes, I blew through $40 with nothing to show for it.

In all fairness to the folks at Swoopo, I didn't RTFM.

Now that I've felt the pain, here's my understanding of their model:

  • Items start at just 15 cents with no reserve price.
  • Each bid costs $1.
  • The price only goes up by 15 cents when each bid is placed.

If you win your auction, Swoopo is great.

Let's do the math on the Acer Aspire One that I lost, but someone named "Mom09" won.

List Price: $399.99 (actually $329.99 on Amazon)

Placed Bids: $177.00

Final Auction Price: $59.25

Savings: $163.74 (~40%)

Bottom Line: "Mom09" got herself a netbook for $93.74 less than Amazon's best price. That's a great deal.

But let's be clear - bidding is an expensive process - and can be really expensive for the losers. Think about it: What if I continued to bid and only spent one dollar less than Mom09? I would have thrown away quite a bit of money and had no netbook.

Oh - and Swoopo? They collect a dollar for every bid made by every participant. I'd have to run the numbers on a typical auction, but they can potentially earn much more than the MSRP of an item.

Kudos to Swoopo. I think it's an interesting business model, but not one that I'm willing to gamble on. My Acer Aspire One will arrive on Wednesday from Amazon, shipped free thanks to my Amazon Prime account.

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