Swoopo: a lottery disguised as an auction?
Here's a good web business: sell products for 3x retail - and have people pay for the privilege. Cool!
The bad news: someone already thought of it. How do they get people - including me - to sign up for such a bad deal?
I've blown an afternoon and $24 learning about online scam "Entertainment Shopping" site Swoopo. Think "Las Vegas-style Wal-Mart" - you can't win.
A chump's game The site is alluring: high-end products like digital SLRs, notebooks, appliances, TVs and mp3 players with awesome auction prices. Like a 64GB iPod touch for $157.68 or a Nikon D90 for $1.33.
How can you lose? Easy.
The trick is that Swoopo sells bids for $0.60 each. Each bid increments the price by a few cents - sometimes as little as 1 cent on valuable items like a Canon DSLR.
To make it more exciting, there is a clock ticking down. Bid when it reaches 00:01 and you could be the lucky winner. But everyone else has the same idea - and each bid causes the clock to reset for at least 10 seconds and sometimes much longer.
So you sit and you click and you sit some more.
The math Let's say a $800 Canon DSLR sells for $100 with 1 cent increments. That means ~10,000 bids were offered at a total cost to the bidders of more than $6,000.
That could be a great deal - if you win - but that $6,000 came from you and people like you. And what if you spent $500 on bids to win?
That's like betting $500 to win $800 - at the risk of losing it all. A chump's game.
Update: but wait! There's more! I left 2 auctions open and this morning they had both frozen with 00:20 seconds to go. The D90 site only had 2 bidders, but when I hit reload the servers were down. If you get mad when your free Gmail goes down, you'll love Swoopo. End update.
The Storage Bits take Humans aren't good at judging risk - which is why people don't back up their data. Swoopo makes their site look like an auction, but because you pay to bid it is more like a lottery.
Like weight loss ads on TV - "results not typical" - Swoopo and sites like it need truth in labeling. "You are highly likely to lose more money than you might save" would be a good start.
Do yourself a favor: stay away!
Comments welcome, of course. I bought my bids with my own money and even if I do happen to win an auction the fundamentals remain the same.