For those interested, an employee from Swoopo responded to a critical post here:
http://thecakescraps.com/2008/09/25/pure-profit-a-look-at-swoop/#comment-18
But, FYI… Swoopo loses money on about 70% of the auctions. So, we take a bit of a gamble in hopes that the remaining 30% of the auctions cover the costs of the products and our overhead.
Each auction is basically a miniature ponzi scheme. I don’t think it’s really relevant whether some or all of the people in a ponzi scheme know that they are playing chicken with the other participants. It should still be illegal. If this is gambling–and at best it is–it should be clearly labeled and regulated as such.
This kind of sites was found to be a lottery in Sweden and was banned, but the owners just moved to UK and runs it from there nowdays.
Most of them got hacked and people noticed that the owners had tons of fake accounts making bids so there was no winners on it except the owners that took in the cash.
So, these kinds of sites are really more or less just scams!
/Marcus
There doesn’t seem to be any way to prove that the owners of the site themselves are not bidding on items, which would cost them nothing and drastically inflate the bid total.
Meanwhile, Dubli runs the same racket, but the bids go down instead of up. Is it less evil?
Meanwhile, Dubli runs the same racket, but the bids go down instead of up. Is it less evil?
That is so brilliantly predatory that I’m truly envious.
I mean, seriously, I’m watching the bids and mentally calculating how much money they’re raking in per minute…
Yeah, it’s predatory and probably morally grey - at best - but at the same time, it’s brilliant.
As far as it being any kind of lottery - it’s not. A lottery is a game of chance, that is - the key factor in any lottery game is some form of stochastic process (card deals, ball withdrawal without replacement, spinning dials, roulette wheels, dice rolls, coin tosses) that makes it non-determininistic. Bets are an indication of a gambler or lottery participant’s confidence in their overall position versus other users’ positions (or the house’s position) based on knowledge that the eventual outcome is non-deterministic.
In these auctions, many of you seem to be missing the point - there isn’t an element of chance. It is fully deterministic - except that the most of the variables that determine the outcome are only known to those running the auction. Sure, there are human elements that make it essentially impossible to predict the outcome as an end-user, but on a mathematical basis? No way is this a lottery or gambling - there are no actual random processes that are intrinsic to the auction itself. The only random element is from the bidders themselves, which removes it from the definition as a game of chance.
So I think it is in fact a lottery that is JA expressing an opinion, but not one based on mathematical fact. Whether the only way to win here is sheer dumb luck is true? I guess you’d have to ask the end-users.
Jeff writes:
I’ve often wondered if eBay would implement this feature, as it would effectively end last second sniping, a huge problem for auction sites.
There’s nothing wrong with sniping! Sites like eSnipe etc. essentially turn ebay into a silent auction site, where the bidders figure out the absolute maximum they want to pay, and bid just once. Auto-sniping spares the bidders from falling prey to auction fever, and the price is set to the true value the bidders decide up-front that they are willing to spend.
Bidding early in an auction is a sure sign of an ebay newbie.
Great post, thanks for informing us Jeff.
Great post, thank you for show us the evil ones 
but… with more than 28 million dollars in revenue … there are a lot of crazy people out there in the web!!
friggan badass if you ask me…i got a tv for 30 bucks and only spent 6,000 at the site that week…what a deal i got
This place is risky for anyone’s money.
I’m staying away. Done.
Thanks for the heads up, I don’t go in for online bidding much,but, have warned friends and family.
Here is another good deal:
http://www.swoopo.com/auction/guitar-hero-world-tour-band-bundle-ps3-/127943.html
Savings:
Worth up to: $189.99
Placed bids (222): $166.50
FreeBids (0): $0.00
Final price: $79.80
Savings: $0.00
One other thing, if you look at the bottom of the auction they have a shipping cost of $19.90. Looks like this guy spent $266.20 on something you can get at the local electronics store for $150.
I’ve just watched a single bit on a Toshiba Notebook put up the auction time from around 10s left to 38m35s. Otherwise it would have gone for about $33.
I’ve also seen someone outbid themselves, and several bids go in at around the 10s mark which only add on 2s and a penny.
So this site is certainly a scam. This surprises me, because as Jeff’s already said, working to its own rules the site would clean up anyway, so why add fraud into the mix??
Swoopo is really good i think, I spent 50p worth of bids on an auction and won!!! The auction was for 40 cash and it actually came. To win you must not let yourself get carried away
I wonder if it is illegal in Australia? …
These guys discovered how to sell $1,000 items at $8,000 while the individual customer pays $175.
That’s really amazing. It is not illegal. If you think of it, it is the basis of the capitalist system, where a collective creates goods they can’t individually afford for the benefit of surviving.
In this case, a collective pays the plus-value to the capitalist for the benefit of an under priced good that each individual would not be able to afford at face value.
this is at least 50 year old game theory.
i suppose it’s funny that even with the answers out there, people still play.