EricEwe.com

I was browsing one of the tech sites and I stumbled upon this company – Swoopo.com. Pretty interesting and lucrative business model  – NO DOUBT!!!

Basically, they are an auction company which sells directly to consumers. Swoopo started in Germany and is making an impact in US. They focus on electronics like LED TVs, SLR Cameras, laptops, ipods, top end cell phones like the Nokia N97, etc

This is how their business model works.

1. Like eBay, you need to bid and be the highest or last bidder when the auction closes.
2. The highest bidder will pay for the item price at the close of the auction.

Simple and straight forward huh? So what’s the catch?

1. The bid increments are predetermined by Swoopo. I have seen mostly increments of $0.06 per bid.
2. In order to place a bid, you have to buy credits at $0.60 per credit.
3. As opposed to having the auction end at a predetermined time, it is always a moving target as to when the auction will close. See # 4 below for moving target details.
4. Every time somebody submits a bid, it will add 15seconds (sometimes 20 seconds depending on the item) to the auction closing time.
5. The key to winning is to be the last person bidding on the item when the countdown timer is zero.
   i.e. Assuming that I am looking at bidding on an Apple iPhone 3Gs. The countdown timer to the auction is 7 seconds when I submit my bid, it will add 15 seconds to the countdown timer making the timer 22 seconds. The goal is to be the last bidder when the timer is zero. It will cost me 1 credit which is $0.60 per bid.

Here is how it gets super duper lucrative: -

I was observing an auction for a Nokia N97 cell phone. Retail price on Nokia.com is $571, with the retail price of $699 but who pays retail.

The last bidder who won the item was Racer13 with 432 bids plus $119.76 for the item.

Auction ended on Oct-28-2009, at 12:34 PDT

By their calculations which I verified, Racer13 paid $373.56 for the phone (@ $0.60/bid X 432 bids  + $119.76 for item). He got a pretty decent deal as you can pick up a Nokia N97 for about $400 on eBay.

On the flip side, Swoopo made a killing selling this auction.

When I was looking at the auction, there were about a dozen people actively bidding on it. This is based on my unscientific observation.

If Racer13 paid 432 bids to be the winner, it would be safe to say that those other dozen or so bidder might have utilized 1/2 of the total # of bids that Racer13 used.

Total bids for that item:
=Racer13′s bids + 12 other competitors bids which is half of Racer13′s bids*
=432 + 2592
=3024
*Avg 216 bids per bidder X 12 bidders = 2592 bids

Total amount collected by Swoopo for the Nokia N97
=Item sold + (total bids X $0.60 per bid)
=$119.76 + (3024 X $0.60)
=$119.76 + $1814.40
=$1934.16

I would think that if you buy the N97 phone at wholesale the price, you might be able to get it for $270-$300. Making $1934.16 from $300 item, that is a 6X return and that ain’t too shabby.

Now, eBay would be kicking themselves while saying “Why didn’t I think of that?”

If you think that Swoopo is for you, you can sign up and test it out with 3 free bids, expiring 12/31/09. CLICK HERE