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[codinghorror] Profitable Until Deemed Illegal

post #1 of 44
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Quote:
Welcome to Swoopo, the home of exciting, fast-paced auctions on the internet.

Every day we sell brand new top-name products at incredibly low prices in auctions that start at just 15c with no reserve. Take a look at the items we're currently auctioning, and if one takes your fancy, why not buy some bids? They're only $0.75 each.

With each bid placed, the price of the item increases by 15c. When you bid, we also reset the counter back up to a maximum of 20 seconds - to give someone else the chance to bid too if they're interested. If no-one else bids and the counter reaches zero, congratulations: you've won yourself a bargain on Swoopo! .
Quote:
I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25.

So that $229 item ultimately sold for $1,125.90.

But that one final bidder got a great deal, right? Maybe. Even when you win, you can lose. Remember that each bid costs you 75 cents, while only increasing the price of the item 15 cents. If you bid too many times on an item -- or if you use the site's "helpful" automated BidButler service, which bids on your behalf -- you'll end up paying the purchase price in bids alone. For this item, if you bid more than 305 times, you've paid the purchase price -- and only raised the cost of the item by $45.75 total.

OK, so bidding a lot is a bad idea, so maybe we only bid one time, or a few times, and near the end of the auction? Great plan, except the auction is extended 15 seconds each and every time someone bids in those final seconds. There are absolute end dates for the auctions, but they're usually so far in the future that the auction will end through attrition long before they reach their end date. I've often wondered if eBay would implement this feature, as it would effectively end last second sniping, a huge problem for auction sites. Well, beyond the obvious problem with auctions, which is that the most optimistic person sets the price for everyone else.

There's something else at work here, though, and it's almost an exploit of human nature itself. Once you've bid on something a few times, you now have a vested financial interest in that product, a product someone else could end up winning, rendering your investment moot. This often leads to irrational decisionmaking -- something called the endowment effect, which has even been observed in chimpanzees. So instead of doing the rational thing and walking away from a bad investment, you pour more money in, sending good money after bad.

It's pretty clear to me that swoopo isn't an auction site. It bills itself as "entertainment shopping". I think it is in fact a lottery; the only way to win here is sheer dumb luck.

Or, of course, by not playing at all.

But wait -- it gets worse! Swoopo also offers

* Penny auctions, where each bid only increases the price of the final item by 1 cent, while still costing you 75 cents.
* FreeBids auctions, where the item up for grabs is Swoopo bids. Near as I can tell, this is swoopo printing their own money.
* 100% off auctions, where the "winner" (and I use this term loosely) pays nothing for the final item, regardless of what the final price is bid up to. Imagine the bidding frenzy on this one at 75 cents a pop.
* Cash auctions, where you win actual real money at the end. It's like they're not even trying to pretend they don't run a gambling site with these.

It's not clear that Swoopo even has the items they auction; they appear to sell first, then use the money they gain from the completed auction to buy and ship the item. Furthermore, they have a clause in their Help under Delivery and Shipping that lets them ship "equivalent" items:

On rare occasions we are no longer able to source the specific item detailed in the auction. When this happens, we will contact you and offer to send you an equivalent item of at least equal value. Many of the products we sell are high-technology items that have a short life-cycle, so often this will mean an upgrade to the newer version of the item.

There are also rumblings that swoopo silently pits users from the different territory websites against each other in individual auctions, such that UK users are unwittingly bidding against US users. This is done to ensure that there is around the clock bidding to extend auction end dates as long as possible.

In short, swoopo is about as close to pure, distilled evil in a business plan as I've ever seen. They get paid for everything up front, and as they drop ship everything there's no inventory or overhead to worry about. It is almost brilliantly evil, in a sort of evil genius way. You can't stop people from endowment effect fueled bidding when they have the individual chance, however small it may be, to win a $2,000 television for $80 -- while collectively sending the house $10,000 or more.

My admiration stops short of sites that prey on the weak and the uneducated -- and of business plans that are almost certainly illegal, at least here in the US.
Source

IMO that is pretty genius.
post #2 of 44
Dude that is AWESOME. I've GOT to hand it to them...

I so wish I could have done something like that...

I don't like the spin on the site themselves. They're not evil, they just really know how to work it!
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post #3 of 44
My GOD, AMD+Nvidia you idiot! Why didn't you think of that!

We could have been millionaires by now

*E-slap*
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post #4 of 44
This site has been around for absolutly ages. At least a year, maybe two.

Its a great idea for the business, I dont see how I can be illegal. Everything is explained properly, so if you dont get it your pretty dumb.
    
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post #5 of 44
Quote:
Originally Posted by IcedEarth View Post
My GOD, AMD+Nvidia you idiot! Why didn't you think of that!

We could have been millionaires by now

*E-slap*
What I mean is, I wish I could make a site similar to that!

Their idea is just so ingenious..
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post #6 of 44
Wow that is such a genius idea. I hope the User Agreement clearly states this stuff so no one gets too pissed off.
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post #7 of 44
this is GENIUS!!! I don't see how this could be illegal.
post #8 of 44
Trying it as of now, great deals but last min is hectic and the time just increases and increases with each bid so no sniping. Works and it does clearly states almost to annoyance that each bid costs money, of which you have to pay ahead of time.
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post #9 of 44
Q. What happens when mafia-minded entrepreneurs form an internet start-up?
A. Swoopo

I love it!
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post #10 of 44
Quote:
Originally Posted by Evostance View Post
This site has been around for absolutly ages. At least a year, maybe two.
lol
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