Swoopo
 | |
Type of site | Online auction site |
|---|---|
| Available in | English, German and Spanish |
| Owner |  Entertainment Shopping AG |
| Revenue | €20 million in 2008 ($28.3 million) |
| Employees | 50 |
| URL | http://www.swoopo.com/ |
| Commercial | Yes |
| Registration | Required |
Swoopo is an online auction [1] where purchased-credits, instead of symbolic offers, are used in bidding.
Mechanics
In order to participate in an auction, registered users must first buy bids (called credits, and hence forth referred to as "bid-credits") before entering into an auction. Bid-credits cost $0.60 apiece and are sold in lots (called BidPacks) of 30, 50, 100, 300, and 700. Each credit is good for one bid. Auctions begin with an opening price $0.12. Every time someone bids, the price increases by 12 cents, unless it's a special penny auction, in which case the price increases by a single cent. The auction ends when time runs out. However, because each bid extends the length of the auction by 10-20 seconds, the auction could theoretically continue on indefinitely, but Swoopo prevents this by giving each auction a definite deadline (that is rarely necessary in practice).
Controversy
The method of selling employed by Swoopo is controversial and has been criticised.[2][3] The company claims that winning auctions involves skill and is not reliant upon chance.[4] Ted Dziuba writing for The Register stated that Swoopo "doesn't amount to a hustle, it's simply a slick business plan," and that while it might be close to gambling, "the nondeterminism comes directly from the actions of other users, not the randomness of a dice roll or a deck of cards."[1] Ian Ayres writing for New York Times blog called Swoopo a "scary website that seems to be exploiting the low-price allure of all-pay auctions".[5]
Speaking to the BBC, Professor Mark Griffiths of Nottingham Trent University, stated that "penny auction" sites should be regulated by the Gambling Commission. However the Gambling Commission said that it "was not convinced that penny auctions amounted to gambling."[6]
In addition, concern has arisen because there is no transparent way to ensure that company insiders (or bots) are not bidding on auctions, inflating prices and increasing profits. This sort of insider bidding has the potential to be extremely lucrative due to the auction type used.[7]
Financing
Swoopo has received financing from two venture capital firms: an undisclosed amount in December 2006 by Wellington Partners[8] in Munich and $10 million in April 2009 by August Capital in Silicon Valley.[9]
See also
References
- ^ a b Swoopo - eBay's (more) evil twin
- ^ http://technologizer.com/2008/09/17/is-swoopo-nothing-more-than-a-well-designed-gimmick/
- ^ http://www.codinghorror.com/blog/archives/001196.html
- ^ http://www.blnz.com/news/2009/04/06/Entertainment_E-Com_Webs_Retail_Stage_0796.html
- ^ [1] "An All-Pay Auction", Ian Ayres, 12/16/2008,
- ^ Penny web auctions under scrutiny
- ^ [2]
- ^ http://www.wellington-partners.com/wp/port_swoopo.html
- ^ http://augustcapital.typepad.com/news/2009/04/august-capital-invests-in-swoopo.html