Swoopo — latest fascinating Web commerce venturethis article in the New York Times about Swoopo earlier this week. I can't figure out if the site is genius, evil, or both. Here's how it works, according to the Times:
This month, a new 40-inch Samsung TV, which normally sells for $1,500, sold for $67.92, and a white LG refrigerator with a price tag of $1,498 went for a cool $77.90 … But there is a catch, of course: Swoopo users are charged 60 cents every time they bid, and those charges add up quickly … Competing bidders spent a cumulative $2,337 in their losing effort to buy the $1,498 refrigerator, for example … Bidding starts at zero, and players can bid up the auction price only in small set increments, like 1, 2 or 6 cents. Swoopo also offers its own automated bidding tool on the site, called Bid Butler. There is no possibility that users can “snipe” an auction at the last moment, because a few seconds are added to the clock with every new bid.
I checked out the site and it is pretty wild. I found myself saying "I have to bid on this!" several times — especially when my eyes fell on the new MacBook.
Time for a story. When I was on my honeymoon in San Francisco a couple years ago, I played a game at Fisherman's Wharf where the object was to stack lights that move more quickly each round by hitting a "stop" button. If you reached the top, your prize was a Wii or PS3... not bad, right? Well, I kept getting close — within one or two levels of the top a couple times — but couldn't close the deal. A few minutes later, I was out $12 and facing a bemused wife.
This concept seems similar, and this is pointed out by its critics. The small amount of investment, combined with the seeming ease of the end result, makes it attractive — but after a while you could sick a decent amount of money into it, but still leave empty-handed. Ten bids is $6... enough for a good sandwich or a couple gallons of gas. If you do that five days a week, that's $30. I have to say, though, that I'm sticking with the "genius" camp on this. There are a number of places people can sink their money that can be more harmful — how long can someone sit there and click on these auctions before they just say "whatever" and go hang out on Facebook? For casual users, it seems like a little bit of fun with the chance for a tantalizing prize — like an afternoon at the Fisherman's Wharf arcade.