My Swoopo Experiment: Yes, This is Gambling

Yesterday morning I was questioning the legitimacy of Swoopo, and after reading up on it some more, my curiosity was so strong I decided to invest a bit of money to see if their system actually worked. So here’s how it played out:

  • I bought a “bidpack” for $27 CAD + tax ($27.30) which gave me 40 bids (that’s 68 cents per bid)
  • I picked a product that I wanted (a 32 GB USB Flash drive), and one that I figured there wouldn’t be a great deal of competition on (such as a laptop)
  • I waited until the last 10 seconds to place my first bid (the price was at 8 cents), and when a bid is placed it adds a few seconds onto the countdown clock
  • I spent about four minutes bidding against a handful of other people, and eventually won – the final price being $9.84 CAD
  • I used up 18 bids on this item, which cost me $12.24 CAD – more than the item itself
  • Shipping on this item is $5.90 CAD
  • So my total cost on this item is $27.98 CAD – almost three times the cost of the final bid price
  • The retail cost of this item if Iwere to purchase it from my favourite computer store (Memory Express) would be $89.24 CAD including tax (not counting the rebate – those are always a bit dodgy)
  • So in the end I’m saving $61.26 CAD on this product. Not bad, right?

…but everyone else who bid on this item threw their money away, and that’s the true “evil genius” in Swoopo. Let’s say there were five other people bidding (and there were at least that many), and that each person bidding dumped, on average, of 10 bids into the process. If they had the same basic cost as I did, each of them spent $6.80 bidding on this and in the end they walked away with nothing. Swoopo in the meantime, made $68.80. Assuming they got a good deal on the purchase of the 32 GB Flash drive, they would have made a bit of money on this transaction.

The real action though is on the hot items like Macbooks, where there are thousands of bids – this article has a great breakdown of the process, but the short version is that on hot items like this, Swoopo is making $13,000+ on a laptop that they paid perhaps $1300 for. You have hundreds, if not thousands of people, throwing money at the process and walking away with nothing.

That’s the real catch with Swoopo – it’s basically gambling, with a group of people throwing money into a pool and only one of them can walk away the winner. You have to go “all in” and be prepared to out-bid, and out-last everyone else in order to win the item. If you don’t committ enough money, you “fold” and give up. One person wins, and everyone else loses. It’s like eBay designed by Satan.

  • Janak Parekh

    Great post! Thanks for breaking it down, I wasn’t keen on spending $ on what looked to be a waste of money. I am envious of the folks who thought it up, though.

  • roppongi

    what is your opinion once Swoopo launches in US/CA what they have launched in Germany? Namely the ability to apply the total amount of the bids spent against the purchase price of the product with which one was trying to win? Still gambling?

  • roppongi,
    If they do that, it will reduce the cost for the winner, but everyone else still loses the money they spent on their bids, so ultimately it’s just as bad overall in my opinion – unless you happen to win.

  • chrisgohlke

    Sounds like a convoluted pyramid scheme to me.

  • roppongi

    Jason – actually it helps all the non-winners. Let’s say you are bidding on a MacAir worth $1299, you bid 500 bids (@$.60 ea = $300) but do not win. In Germany now they let you apply the $300 towards the full retail price (so it’s no longer “lost” money if you were willing to buy the original product at retail)

  • roppongi,
    That’s a very interesting twist – and you’re right, that would help, but what are the odds that everyone would buy the product at retail pricing? I bet you most people will walk away from the bids they placed and Swoopo keeps all that as profit. If people wanted to pay retail price, or could, they’d probably do it. And so long as it’s only in Germany, it doesn’t help me much. 😉

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  • Jimh5151

    I was bidding on a Nikon camera and was losing all the time. I went to ended auctions at the bottom of the page and found that one person had purchased many of that same item. Obviously to resell. They know they can spend hundreds of dollars to get it and still make a profit on reselling it. Meanwhile all the unsuspecting bidders loose all thier money. This is definately a scam!