Swoopo – Probably the best business model ever
I click on a lot of ads… sorry ppc guys I rarely buy stuff but I click all the time to see what other marketers are up to. So I was cruising a tech deals site, and saw an ad for this site Swoopo. The ad had like 3 products on it for ridiculous discounts:
Great deals right? Clicky clicky. On the homepage there are a ton of auctions going on, everything for amazingly low prices. You can see the bids in real time, so bids are updating all over the place and its very exciting. Clicky clicky. So I signed up, and got the normal verification emails and blah blah blah. I also got a strange email with their terms and conditions attached. Usually when things come with too much cover-your-ass type material there is a good reason.
So the way Swoopo works is you buy “packs” of “bids” for $0.75 per bid. You then use these bids to bid on products. Each “bid” increases the price of the product by $0.15 and pushes the end time of the auction back by 20 seconds. This enables other people to bid and push the end time back, and the vicious cycle continues. Here’s where it gets really good. So assuming all the suckers get bored and someone finally wins the auction after spending bid after bid after bid, YOU STILL HAVE TO PAY THE PRICE OF THE ITEM!!!
So lets run this back with a lil test case. I just saw a Playstation 3 go for $126.15. With an MSRP of $399.99 this may seem like a heck of a deal. Let’s do the math. They state that every product starts at $0.15 and every time someone spends one of their $0.75 “bids” the price goes up $0.15. So that would be 840 “bids” that cost $0.75 each or $630 to Swoopo. Then the person who “wins” has to pay $126.15 + “shipping” however much that is. Lets give them the benefit of the doubt on this one and assume they only charge $10 for shipping. That is $766.15 in revenue to Swoopo for a PS3 they probably got in bulk at a steep discount.
The terms break all this down, anyone who is into internet marketing HAS to at least admire the hustle on this one.
Nice break down dude. I’d seen their ads but never thought about it long enough to realize what’s going down. Thanks.
Nice! I’m stopping all other work and building a clone right now. But then I might have to hire a body guard for the poor bloke who spent $300 on bids and still lost. Hmm… decisions, decisions.
Great explanation! I hope more people will come to read this blog as it is educational in a way, especially for those people that will try to participate in the bids so that they wont blame the site for losing that much money without winning something.