Pure Profit: A Look at Swoop post has been moved HERE due to high traffic.
(clicking either link will get you there)
Thanks for reading The Cake Scraps
This entry was posted on Thursday, September 25th, 2008 at 7:26 pm and is filed under Non-Web Analytics, Web Ideas. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
***disclaimer – I work for Swoopo***
I am based out of our newly created Cupertino, CA office.
By no means are we trying to pull the wool over anyone’s eyes. We try to explain exactly how our bidding process works, and what the costs are on our site. But, I am always open on how to make that better and more transparent.
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.
Rest assured though, we are no scam.
Chris – Thanks for taking the time to respond.
I don’t mean to imply that Swoopo is is scam in that it will only take your money. I even go so far as to point out that there are good deals on Swoopo. I guess my biggest issue is that at the end of the day it is more like gambling than anything else. You don’t really bid, you bet that you will be the last one to place a bet. If you are right you win, otherwise you lose your bet (money).
I also don’t doubt that you do lose money on some auctions. You count on the high profile auctions to bring in money. Same as a casino. Casino’s have to pay out at some point. A casino may lose to a single individual, but overall you know they are making money, and lots of it. Selling a $1,400 computer for $24,000 gets you a long way.
I perhaps frame the article a bit harshly, but that is only because of how easily people can get swept up into auctions and gambling. By writing about it, thus also promoting it, I feel that it must be framed this way so that the people that do use it know what they are getting into – I mean one guy spent over $2,000 in bids on a $1,400 computer. There are deals to be had, no question, (the $1,000 auction is a great example) but users should go in knowing they can lose all they put in with nothing to show for it. This is not eBay.
That said, best of luck to all you Swoopoers. And thanks again Chris!
Just to let you know that $1000 auction with $218 of bids was a “100% off” auction, meaning that the winner really did win $1000 for “just” $218.
Having looked at the site in depth I’ll agree that swoopo themselves will be making a lot of money, however if you bid well and have luck you can get some really good deals.
Of course when you consider the time spent waiting for the auction to actually end, and bearing in mind you can likely find the items cheaper elsewhere, and throwing in the delivery cost slapped right at the bottom of the page… whether they’re still good deals with those considerations thrown in is up for debate.
@ 2nd Chris
Thanks for the catch Chris. It is true that the ones I listed were 100% off auctions (though the winner of the laptop still paid over the laptops retail in bids) but many are not and I didn’t even mention the penny auctions -where the price only goes up by a penny with each bid thus looking even more deceiving to the eye because of the low price. Just another method of getting people to bid/throw away their money.
[…] (bids) + ,353.85 (auction) -,399.99 (retail cost of laptop, probably not their cost) = ,312.86 Pure Profit: A Look at Swoop (via Design with […]
[…] Pure Profit: A Look at Swoop […]
This is what is, in economic theory, known as a “dollar auction.”
And yes, it’s a scam.
You really should think about editing your post after having this “100% off” mess pointed out to you. It seriously effects most of your math and conclusions. I was all up in arms about Swoop until I took the time to read the comments and understand their implication.
I have made another post detailing the types of auctions Swoopo offers as well as re-worded part of the post. Note that not all auctions are 100% off and that while that 100% off may have swayed your opinion, Swoopo is still over $20,000 up selling a $1,300 laptop and also sold $1000 for over $2500 profit but you are entitled to your opinions.
[…] of Swoopo Auctions From my previous post on Swoopo I generated a small bit of confusion because Swoopo has several types of auctions. Here […]
I think the clear thing is that Swoopo is a gambling site, not an auction site. You said it, people are simply betting that their bid will be the last. It’s one thing to lose an eBay auction – you’ve lost nothing bit you time. Bit with Swoopo, every auction you lose, you lose money. You only save money of you’re lucky.
It’s gambling, plain and simple. You are betting on being the high bidder. It’s very likely that this makes the entire concept illegal so expect to see them shut down as soon as someone rats them out to the proper authorities.
swoopo is a flat-out scam. do not use it.
Scammy Scammy Scam. 🙂
Re: Comment 1: I just watched an auction for a Wii, and I’m baffled as to how you ‘lost money.’ It sold for $129.45, which means with a starting cost of 0.00, 863 bids would have been placed. Even if it had started at $65 and only have that many bids had been placed, you would have probably profited about 100%.
Besides, the only auctions you’re going to ‘lose money’ on are for piddly small purchases. I see that an auction of Metal Gear Solid 4 went for $1.35, and you probably did lose money. Like, $20-40. At the same time as a Wii made you $613 over retail.
It’s meaningless to say that you lose money on 70% of your auctions when those are undoubtedly the tiny ones, and the 30% profitable auctions are all big ticket items like Wiis and plasma screen televisions. After all, a game would only get bid up to $60ish dollars, but a television could go to $1k, easy. That’s 6666 bids, and that’s where your real money comes from, plenty enough to subsidize the tiny auctions.
Nice job preying on the ignorant there, Chris.
‘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.”
Wow, if you really work for the scam site Swoopo you just admitted that your site is a gambling site. That’s going to be bad when the authorities finally come down on you, though, you’ll probably get away without jail time, though you shouldn’t since your site is so manifestly illegal based on the fact it is nothing but a gambling site, a gambling site with a higher profit margin than traditional games of chance like Blackjack or Craps.
Not only is this gambling, but there doesn’t seem to be any safeguard in place to prevent Swoopo from bidding as well. In other words – Swoopo just needs a shill out there to place bids until everyone else gives up. Swoopo keeps the money earned by selling the bids. They don’t even need to buy inventory.
I’m not saying that this is what actually occurs. But I don’t see how they can provide any reasonable reassurance that this doesn’t happen on at least some of the auctions without violating the privacy of the buyers.
[…] + $3,353.85 (auction) -$1,399.99 (retail cost of laptop, probably not their cost) = $24,312.86 Pure Profit: A Look at Swoop (via Design with Intent) End of copied […]
Buy bids -> Choose product -> Place bids -> ??? -> Profit!
Without perfectly transparent oversight this type of system could be horrifically abused, but no more than any other type of “pay your money and wait” system. Gambling, raffling, internet purchases, etc etc. We depend on reputation and the legal system to snuff out fraud in these blind purchasing systems.
I doubt Swoopo is any different from eBay, but they’ve managed to convince people to pay for the privilege of bidding. Bravo, Capitalists!
If there really is a market for “entertainment shopping” then rest assured that Swoopo will make some money, but another company will copy their model with bids that only cost $.20.
We went to this blog thinking it had stuff to do with cake. We love cake, and we bet everyone on this blog likes cake as well. Mmm, just thinking about the frosting… But that’s not the point! We thought we would get all this inside info about cake (which cake is dating which cake, did that cake gain weight? etc.), but we get all this business crap! We want cake! Give us cake!
At the very least, we hoped we would get some stuff about Cake the band. “He’s going the distance!”
Brad has an excellent point.
This site *could* function as a legitimate, if dubious, gambling auction.
But given that they would make a huge profit even if they ended up buying the product from themselves, this system is a huge red flag.
Brad’s right–there could be no inventory at all, just some phantom last bidder paying phantom dollars for a phantom product, while the masses throw in pay to “play”.
That’s a cool idea.
I get back to you after I am elected president. Up to now I just have morons in my team for economy.
But you have to promise voting for me first.
In response to all of the above and JohnnyRnR there’s another site already out called Pennycave. Same idea and concept except there auctions usually end within $5.00 or less.
I have my reasons to believe that this kind of “auction shopping” was in the first place started by this Finnish site: http://www.fiksuhuuto.fi
Yes, it’s very controversial in Finland too. The officials haven’t really done anything yet.
More proof that this is really just a tax on stupid people: There is a set of auctions just to buy “Free Bids”. So they’re auctioning off the tickets that you need to bid on items. I noticed one of these auctions (for 50 free bids) was currently at $25.05, so at .15c per, that’s 167 bids! $117 of pure profit and counting. An auction for 300 free bids was at 111.30, seemingly a good deal, but if you do that math, that’s $742. And the bidding wasn’t even over yet!
[…] Cake Scraps blog has a decent anyalysis of the site’s mechanics. But the basic idea is that you pay $1 […]
I joined Swoopo.com on 9/25/2008, I must say I was a little intriqued as well as skeptical about the site. Regardless, I wanted to try this site. I bought a small amount of bids 20 bids for $20, I decided to try and win. So, I bid on a Nintendo Wii, needless to say, I won my bid on my very first try using there bidding butler. The winning bid was $20.55 + $14.80 for shipping. My only concern now is to see if I will actually receive this item. To check out the auction I won go to :
By the way name screen name is merchantguy.
[…] on TheeCakeScraps (via BoingBoing), this guy gives us the rundown on how much profit is likely turned by a single […]
[…] my previous post on Swoopo I generated a small bit of confusion because Swoopo has several types of auctions. Here […]
[…] An auction for a laptop that says on the auction page, and I quote, “Worth up to $1,399.99″ The winning bidder, as stated on the site, placed 2020 bids. That is $2,020!! And the auction page proclaims “Savings: 0%” when it really should read negative! So Swoopo made like $600. BUT WAIT! The auction started at $0.00 and finished at $3,353.85. Now read that again. They were already up $600 from the winners bids alone. The winner sucker still had to pay $3,353.85 because that was the price of the auction. Okay, so Swoopo walks away with a cool $4,000 pure profit. (Like a bad TV commercial) BUT WITH THERE’S MORE! Remember that bids are placed in 15 cent increments. That means that if the auction finished for $3,353.85 you take that divided by $0.15 which equals $22,359 in bids!!!! That brings total profit to $22,359 (bids) + $3,353.85 (auction) -$1,399.99 (retail cost of laptop, probably not their cost) = $24,312.86 Pure Profit: A Look at Swoop […]
A sucker born every minute.
its all about the GREED
Your stupidity,thinking you,and you alone might win something Dirt Cheap,actually forces you into bidding more and more,in a DESPERATE attempt to win……only problem is,theres a 1000 other people in the exact same boat on the exact same auction….they r screwed too….so THINK before you bid,or buy any bids..this is a SCAM and you wont win a damm thing…..
ask yourself this,if Alllll these auctions Supposedly have winners,WHERE ARE THEY????!!!!
o,but wait..approxiamately 3 people so far have won something..( supposedly )
out of what,a million,ten million,what?
in fact,im sure you r thinking you can win,right?..because of course,You are the Fastest clicker in the world,right?
well,do what i did and GOOGLE the swoopo…see just how many people actually won,versus the number of people who have lost tons of money on this site.
THEN of those people who won,how many Actually Recieved Anything!!
Bidder Beware!!…and,for a parting shot,isnt it odd,no matter how hard you try,theres Always someone beating you out?…hrmmm..possibly because the swoopo company employs FAKE bidders to keep on driving that price up,and sucking down YOUR loot..
they just keep those timers a rolling,cause sooner or later everyone runs out of money,or walks away..and THATS when the company Ends the Auction..thereby leaving themselves Tons of profit and not have to give away a damm thing,eyh.
cmon people,i Love a great deal,just like yall do..BUT THIS AINT IT !!..
just go ebay and try your luck..at least you wont get cleaned out Just For Bidding,eyh….
o,and heres how you win at ebay…ill give this to you for free,instead of charging you lmao.
before you EVER bid on anything,Always check the Sellers Feedback Rating..if its less than 80% Dont Bid,you are taking Chances…find another item sold by a Good seller.
First off,Time Does Matter..
example..i live in the usa,so what i want,is to be bidding when Everyone is in sleep mode.
figure out what your sleep time is for where you live,and make your plans.
find what you want,now go to the center top and hit Bids ending Soonest.
the list will reset and NOW you are in the right area.
pick a cheap likely candidate,and note the time..hopefully,you have LESS than 5 minutes remaining….now,Watch it,but Dont bid on it yet.
when you get down to the last minute,get ready..at 45 seconds out,make your first,and hopefully only bid…
make that bid a WEIRD number…like 44.67…or 31.79.you get the picture..
(for example,i won an xbox 360 for 21.91 dollars and 15 shipping two days ago in the dead middle of the nite…yes,you are reading that right…total was just shy of 40 bucks)
ok now,you should have around 20 second left….are you high bidder?..if not,this is your last chance..make another bid,and Stay Sane,dont go nutty just cause theres 20 seconds left..theres Always gonna be more stuff on ebay.
be prepared to get spanked at the very last second…..it happens to all of us,just shake your head and go find the next great deal.
keep in mind,most good ebayers all use this same strategy,and you must have a Firm idea of your top bid Before you ever place a bid..
i have been using ebay for over 5 year now,and have won Tons of stuff for me,my friends,family,and the only complaints i have is about lying sellers = broken xbox 360-s and people who bid on vehicles and dont pay…paypal has been Useless for getting money back..yay paypal…..loving that paypal guarantee..sigh.
otherwise,ebay really is the place to get good deals…..
heres wishing you luck,and hoping that you dont fall for the swoopo scam.
I got interested by an add on my Gmail. Prices seemed to good to be true so I decieded to Google and figure it out for myself. Cake’s elequant break down of how it all works was brilliant! This is a scam and you would be a sucker to bid knowing what I know now. Can’t believe I almost fell for it. Ponsy, Pyramid, and now this what will they think of next.
Thanks Cake for the scoop.
I thought it sounded to good to be true. My Mom taught me “if it sounds to good to be true…”, fortunately between my Mom and your site I didn’t fall victim to swoopoo’s scam. 🙂
Fill in your details below or click an icon to log in:
You are commenting using your WordPress.com account.
( Log Out /
You are commenting using your Google account.
( Log Out /
You are commenting using your Twitter account.
( Log Out /
You are commenting using your Facebook account.
( Log Out /
Connecting to %s
Notify me of new comments via email.
Notify me of new posts via email.
Create a free website or blog at WordPress.com.