Our original post on Swoopo generated a lot of interest, and a good deal of it was negative. In the interest of fairness, we invited Swoopo to give its side of the story on our pages, as well as explain parts of its business that may have caused some initial criticism.
Chris Bauman is the company’s business development manager here in the US, whose job seems now to include educating the public on the company’s auction practices. He argues that our view of online auctions has been shaped by the rise of eBay.
“It’s the biggest problem we have found,” he told Technologizer. “In a real auction, the auctioneer calls out the price, not the bidder automatically bidding the maximum amount he or she wants to pay.”
The timer for auctions works in a similar way. When somebody makes a bid, no matter how close it is to the end of the auction, the time goes up, usually by fifteen seconds. This is similar to giving people a last chance to rebid as is done by auctioneers.
Bauman said that these and other misconceptions about how Swoopo works has led the company to develop a new section of the site which would offer a “beginners auction.” Participants would be able to use this area to learn what is obviously a drastically different online auction format.
“Believe it or not, we really want more people to win,” he added, saying the company was hiring to help support more auctions over the coming months. “My job is to get people to understand it better.”
I did notice that a lot of our commenters in the original post did bring up the issue of the pay-to-bid model that Swoopo uses, and in some cases allows it to make quite a bit of money. I made sure to ask Mr. Bauman about this.
He did acknowledge that the auctions we all pointed out were correct, and that the company does make a healthy profit on some of them. But overall, Swoopo claims it is currently losing money on about 70 percent of auctions.
Bauman says the most common items it can’t cover usually are items such as DVDs, watches, and flat screen televisions. However, other items through the pay-to-bid system allow it to profit, and thus stay afloat.
Appropriately using a baseball analogy (it is the playoffs), he said “Some look like a home run, but those cover when we strike out.”
On the company’s performance in the US market, Bauman could not give specific user numbers, although said that the site went from practically nothing at launch about three weeks ago to 20,000 site visits per day, about half of them coming from returning users.
That’s not too bad, although we must also consider that Swoopo has siginficantly ramped up its advertising efforts: in fact, the company’s ads have even begun to appear more frequently here on Technologizer.
(I wonder if that may be a direct effort by Swoopo to combat what it may have seen as negative coverage, but i do digress.)
Before we parted, Mr. Bauman was sure to point out that the site is for real. “It’s not a scam,” he said in response to Swoopo’s critics. “We are incredibly legit. You control your outcome.”