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The Pitfall of Entertainment Shopping

There is a new form of auction site catching hold around the world that is somewhat difficult to explain. Sites like Swoopo call themselves “entertainment shopping”. I call them a ripoff. Let me explain.

On the surface these penny auction sites don’t look all that unusual. You place bids in preset increments, usually somewhere between 2 cents and 15 cents. Whoever has placed the highest bid when time runs out buys the item at the price the bid.

That is where the similarities end. To place a bid – YOU HAVE TO PAY. That’s right, every time you place a bid, it costs you money. Right now, Swoopo is charging 60 cents per bid. The second, more perplexing twist is that with every bid, the auction end time is incremented by 5-20 seconds. That’s right. So if the auction ends in 5 seconds and you bid, the end time is pushed back by up to 20 seconds – giving more people an opportunity to bid. Below is a screenshot showing the truly bad deal of these auction sites. This one individual won the auction and paid $144.35 for a $900 camera. In order to win that bid, the individual placed 1852 bids at 60 cents each. In total, the person paid over $1500 for a camera he could’ve bought for $900 retail.

When you do the math, you will see that the site hosting the auction generally makes a hefty profit. Even when you see the camera below sell for $36, the site has covered its costs. For every time that the bid increases 2 cents, the host makes 60 cents. Entertainment shopping? Hogwash. Its a ripoff and you should avoid it.


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