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.
Jonah Lehrer ponders why this website is attractive:
I think the real appeal of the website is the sheer uncertainty. As an item nears the end of bidding, a big countdown clock appears. At any moment, someone else can come up in and bid on the item, which then resets the clock to twenty seconds. The process repeats and repeats, until the price gets to a point that discourages other bidders. (It's probably less discouraging to you, since you've already sunk $50 in bidding fees.) But here's the dirty secret of the site: after placing a bid, you're forced to wait and watch. You have no way of knowing if your bid will win, or if someone else will swoop in and bid on the laptop at the last possible second. In other words, it's just like a slot machine: you put in a quarter and wait for the wheels to whirr. With swoopo, the random number generator is other people.
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