The Crack Cocaine Of Auction Sites

   

This is such a brilliant business model.  It is a win-win for the bidders and the site.  The cost is so spread out that people don’teven realize they are spending money.  It’s the same psychology that makes slot machines such a success and what drives people to spend exponentially more on a plastic card than if they were dealing with cash.

   “Consider the MacBook Pro that Swoopo sold on Sunday for that $35.86. Swoopo lists its suggested retail price at $1,799; judging by the specs, you can actually get a similar one online from Apple(AAPL) for $1,349, but let’s not quibble. Either way, it’s a heck of a discount. But now look at what the bidding fee does. For each “bid” the price of the computer goes up by a penny and Swoopo collects 60 cents. To get up to $35.86, it takes, yes, an incredible 3,585 bids, for each of which Swoopo gets its fee. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.

  In essence, what your 60-cent bidding fee gets you at Swoopo is a ticket to a lottery, with a chance to get a high-end item at a ridiculously low price. With each bid the auction gets extended for a few seconds to keep it going as long as someone in the world is willing to take just one more shot. This can go on for a very, very long time. The winner of the MacBook Pro auction bid more than 750 times, accumulating $469.80 in fees.”

via | soupsoup

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