Swoopo: "Entertainment Shopping" or Scam?

There has been some rumbling about an auction site called Swoopo, suggesting that it is either money-making scheme on the part of the German parent company, formerly Telebid, or a new way to get gadgets cheap. Interestingly, it could be both. The auction is considerably different than other sites – EBay included. It works like this, if I understand it correctly: you “buy” blocks of bids for $1 each. Each bid costs $1 and increases the price by 15 cents and the auction time increases to 20 seconds in the last 20 seconds – if the auction time is 10 seconds when you bid, 10 seconds are added to the time. When the clock runs out the final bidder pays the auction price which is essentially the “number of bids” they entered, say 200 at $200, and the final price, say $400 for a total of $600.

While I’m totally down with saving money, I think there is a fatal flaw here for the consumer. Say I spend $500 in bids and at the last minute I’m sniped by a final bidder. Bloops! That $500 is gone and someone has your product for super cheap. The opportunity for abuse is rife here although Swoopo does bill itself as a “shopping entertainment” site and not really a formal auction house. Sadly, it’s cold comfort for those who lose.

Presumably that lost $500 goes towards buying more product for the site and increasing Swoopo’s revenue. They’re reporting about 50,000 users in the US right now so chances are strong that you’ll get to win something of interest. There are also “BidButlers” who can watch the bidding for you and bid automatically, further confusing the invisible hand of the market. Again, we all know what they say about fools and their money.