Swoopo.com auctions are a bid for the poorhouse

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Bad ideas are as common in the internet world as Brittany Spears photographs, so to stand out in this company an idea has to be truly execrable. Swoopo.com rises (or sinks) to that level.

At first blush, the site resembles the typical auction site, where customers vie to snatch up bargains by competitive bidding. The difference with Swoopo, however, is that all items are put up by Swoopo, not individuals as on Ebay, and the bidder pays $.75 for each bid. Think about that for a moment.

Let's pretend that we are intent on bidding on the Samsung LN37A550 37" LCD HDTV currently on auction as I write this. While the site lists the retail value at $1,199.99, Amazon sells the set for $879.99. Suppose a dozen people start bidding. Of that dozen, at least a few are going to be caught up in the auction frenzy, as the price climbs slowly, but still tantalizingly cheap. By the time the set sells, one bidder might walk away with a bargain, but the other eleven will have nothing in return for the money they spent to bid.

The insidious part of the Swoopo model is that items could routinely sell for well beneath their market price, the difference funded by the money collected per bid. In essence, all the losers are helping to cover the cost of the winner's prize.

The only way Swoopo can hope to retain bidders is to provide bargains, and since in every auction all but one of the participant will end up out of pocket with nothing in return for the money they spent on bids, I can't imagine people hanging around long.

Thanks, Techdirt

Also read: Ebay changes turning off customers

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