Imagine for a second that you set out to come up with an online shopping site that would take advantage of everything we've come to know about consumer behavior to separate people from their money in as efficient a way as possible. What would you do?
Well, you'd probably try to lure buyers with bargain prices. You'd pit them against one another in an auction. You'd ask them to make snap decisions without taking much time to figure out just how much money they're spending. On top of that, you'd ask them for only very small amounts of money at any one time, letting payments of a few cents build up to hundreds of dollars.
Still trying to figure out how you'd put all that together? You can relax. Someone's already beaten you to it: the folks at Swoopo. It's an online auction site that fiendishly plays on every irrational impulse buyers have to draw them into what might be the crack cocaine of online shopping sites.
I discovered Swoopo, as many people do, through an online ad plugging its latest deal, a fancy desktop computer at more than 90% off. I don't actually need a new computer, but the words "90% off" have traditionally exerted a powerful pull on my family that no number of never-worn double-breasted suits has ever been totally able to alleviate. You say "90% off," and I click.
If you are already saying to yourself that surely there is a catch, you are right. Smarter people than me see a site that sells a MacBook Pro for $35.86 or a Nikon digital SLR camera for $16.03 and turn away, knowing that the bigger the "free lunch" sign is, the more it's going to wind up costing. Trust that impulse, because Swoopo, which bills itself as an "entertainment shopping" site, combines the addictiveness of auctions and the chance element of lotteries into what may be the most devious way to dig into your wallet yet devised.
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It started in Germany
At first glance, Swoopo -- which started in Germany as a phone- and TV-based auction site called Telebid, migrated to the Web and launched its U.S. site last year -- looks like an auction site patterned on eBay, with prices for most items starting at a penny and rising as members bid up the price. Like eBay, Swoopo has a full panoply of auction tools, such as comprehensive records of all the completed auctions and an electronic bidding system ("Bid Butler") that will put in last-second bids to keep you in the auction. Unlike eBay, however, on Swoopo you need to pay 60 cents each time you make a bid.Sixty cents? Sure doesn't sound like much when a $1,000-plus camera or computer is at stake. Delve into this a bit, though, and you might be stunned at just what that small charge for each bid leads to.
Consider the MacBook Pro that Swoopo sold recently for that $35.86. Swoopo lists its suggested retail price at $1,799; judging by the specs, you can actually get a similar one online from Apple for $1,349, but let's not quibble. Either way, it's a heck of a discount. But now look at what the bidding fee does. For each bid, the price of the computer goes up by a penny, and Swoopo collects 60 cents. To get up to $35.86, it takes, yes, an incredible 3,585 bids, for each of which Swoopo gets its fee. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.
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In essence, what your 60-cent bidding fee gets you at Swoopo is a ticket to a lottery, with a chance to get a high-end item at a ridiculously low price. With each bid, the auction gets extended for a few seconds to keep it going as long as someone in the world is willing to take just one more shot. This can go on for a very, very long time. The winner of the MacBook Pro auction bid more than 750 times, accumulating $469.80 in fees.
Some winners do wind up with good deals. A few, on the other hand, wind up paying almost as much in bid fees as the item they're angling for was worth in the first place. Meanwhile, the losers can shell out hundreds of dollars in bidding fees before throwing in the towel and end up with nothing. What makes Swoopo so fiendishly addictive is the tendency of people to think of the bids that they have already put in as a "sunk cost" -- money that they have already put toward buying the item.
Continued: Don't believe what you're seeing
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