Wednesday, July 15, 2009

Swoopo lowers its price

Swoopo, one of the big names in penny-auctions, lowered the price of a bid from $0.75 to $0.60. Why did they do this and what does it mean for bidders?

My guess is that they did it because they are worried about their competitors. BidCactus most noticeably, but several other sites as well, have begun taking traffic away from Swoopo, and this is their idea of a counter-offensive.

This is certainly terrible news for Swoopo's current bidders. The average Swoopo user has pre-purchased dozens or hundreds of bids, at the old price, and now, those bids have been sharply devalued. I don't have an account on Swoopo myself but I'd be surprised if they were doing anything to make current bidders whole.

And it isn't terrifically good news for new Swoopo bidders either. True, they can make bids more cheaply, but the people they are bidding against are also getting cheaper bids, so that advantage quickly disappears. (Remember what I said before? Penny auctions are popular because they are unpopular.)

Overall, the lower the per-bid price, the more the auction resembles an eBay-style free-bid auction. If a bidder wants an eBay-like experience, my recommendation for him would be ... eBay.

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