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Summary:

Swoopo, the crazy “entertainment shopping” site where users buy bids to compete against one another and lengthen the time until an auction closes, has spread to seven countries, facilitated 200,000+ transactions, and inspired tens of behavioral economics academic papers over the last 4.5 years.

Swoopo, the crazy “entertainment shopping” site where users buy bids to compete against one another and lengthen the time until an auction closes — and often get absurdly low prices on consumer electronics goods — has spread to seven countries, facilitated more than 200,000 transactions, and inspired tens of behavioral economics academic papers over the last four and a half years. But in the face of increasing competition and slipshod copycats, the company named its third CEO, Frank Han, in February. Han, who came to Swoopo after founding eToys and running the Home Shopping Network’s online division, visited GigaOM this week to chat about where Swoopo is going next.

Han first shared with us the following facts:

  • Swoopo hosts 250-300 auctions per day, split between global and local.
  • The average final price of an auction is 71 percent off retail (of course Swoopo also makes money from the cost of bids).
  • In one third of auctions, the final price is more than 90 percent off retail.
  • The company loses money on 65 percent of auctions. “Our margins are nothing like Google’s, but better than Overstock,” said Han.
  • The U.S. is the company’s largest market by far after launching a year and a half ago (the company started in Germany and was previously called Telebid).
  • Swoopo has raised two rounds of funding, one led by Wellington Partners and one by August Capital. It has nearly 100 employees.

That the Swoopo model is so kooky has two bad side effects, said Han. First, that people assume it’s a scam. Second, that so many wannabes try to copy it. “Swipebids, Swoopee, Swoopuu, you name it,” said Han. And as a byproduct, potential customers sometimes expect the bad practices of some of those companies — such as “shill bidding,” when employees or robots compete against users to push up the price of and even win auctions. Other fly-by-night operations simply don’t mail out the products they get people to pay for. Han said he thinks the copycats and their alleged bad practices are significantly holding back his business. As a response, Swoopo this week launched a campaign called “Swoopo Naked” to try to educate its members and convince them it’s not ripping them off.

Meanwhile, Swoopo fits nicely into the current trends around impulse buying and commerce driven by gaming dynamics — Woot, Gilt Groupe, Groupon and the rest. Han indicated that the company may introduce products similar to those other sites. He said he expects Swoopo to split off into multiple brands and aggressively pursue partnership and distribution deals to extend its reach. The company, which has mainly focused on global expansion until now, also lacks all the extensions of the modern web service — mobile versions, widgets, applications on social networks — so you can expect those are coming, too.

Related content from GigaOM Pro (sub req’d):

What Twitter Airfare Sales Tell Us About Real-Time E-Commerce

By Liz Gannes
  1. Ah Yes, penny auctions. ”The average final price of an auction is 71 percent off retail…” – but what this didn’t say is the price to buy each bid, and the amount of cents the ITEM Auction price is raised is a big gap.

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  2. These services are dumb. They don’t make any sense. The novelty will wear off. People should be wary of scams because the model offers so much temptation to scam.

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  3. Dear Mr. Frank Han,
    I think it is a shame that you have nearly abolished the buy it now-feature of all auctions.
    What a pity!

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  4. I remember when Google was a copycat of Yahoo…. A lot of competitors are a sham, but acting like Swoopo is still on top of this industry is a little silly.

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  5. With 100 employees, you think they’d be a little more prompt with customer support emails.

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  6. Swoopo is such a crock! Do the math! The only winner here is swoopo and a few lucky people! Example: They sell a $1000 notebook for $150 lets say. EACH bid gets Swoopo 75 cents per bid, the price bumps up 10 cents. So in the end, Swoopo makes $2000 on the $1000 item and is the real winner here. Think it through! This makes no sense at all. And this assumes the site is legit which is a whole other ball of wax.

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