With just under 4 hours to go Swoopo's Mini Cooper auction at $109

The price of the 2009 Mini Cooper convertible Swoopo put up for auction yesterday is at about $109 with just under 4 hours to go. Should Swoopo be concerned that the price of this $24,550 car has risen to just over $100 (910 bids) as time winds down on the 24 hour auction?

No. We observe two things about everyone who has bid thus far. 1. They are placing single bids, not using BidButler and 2. They're not seriously trying to win the car, at least not yet.

Any serious contenders for the Mini won't jump in until the auction approaches closing or until it goes into overtime. Once the auction nears close I think we're going to see a huge increase in bidding activity and see the price rise quickly from a few hundred dollars to several thousand. However, there is always the chance that bidders feel winning the car is so unobtainable that they don't try and someone scoops it on the cheap, but I find this outcome unlikely. I think bidders will be reluctant to use BidButler and that we're going to see a lot of single bidders in a very long, drawn out bidding war. But who knows, I could be completely wrong in my predictions. We have never seen an item like this on Swoopo before so it's hard to tell how bidders will react.

Also, I received an email last night from someone close to Swoopo who asked not to be named but who said my break-even estimates for this auction are too low. This person said I failed to calculate the cost of acquiring customers and that I should give it another shot. I'll scratch my head on this one for a while and post something later.
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Updated: Swoopo Auctions Mini Cooper

Update 8:08 pm EST:

We are watching this Swoopo auction for the Mini Cooper very carefully, as I am sure Swoopo executives are, and wanted to let everyone know what the magic number is. Assuming everyone paid full price for their bids and Swoopo paid full price for the car, the selling price of the car needs to be $4091 for Swoopo to break even. If 24% of users are bidding with FreeBids or bids subsidized through winning bidpacks, etc., the car needs to sell for $5168. Anything over that is pure profit for the company, and we do expect the car to go for well over $5168. However, this auction for the Mini Cooper introduces one dynamic not seen in auctions for less expensive products: the winner needs to be able to pay for the item. Most Americans do not buy new cars in cash, instead they finance or lease and most often trade in an old car. I speculate that most people bidding on Swoopo don't have $24,550 to buy a car with, or even $20,000 or $15,000, this will limit the number of people who are competing for the car. Of course, the winner could borrow money from the in-laws, but that complicates things.

My prediction is that this is going to be be a wildly successful auction for Swoopo and also that someone is going to get a great deal on the car - not a $1.24 great deal like at Rocky Bid - more like an $18,000 good deal.

End of update, original post follows



Today Swoopo put a red Mini Cooper convertible up for auction. The auction lasts 24 hours and each bid raises the auction price by 12 cents. As of 4:46 EST the price was $6.60. This is the first time Swoopo has offered such an expensive item, valued at $24,550, and the second time (to our knowledge) a penny auction site has auctioned a car. The first was Rocky Bid which sold a Honda Insight for $1.24 back in June. Rocky Bid lost some serious money on their auction, but tried to use the event to generate strong PR for the site. How Swoopo's Mini Cooper auction goes is anyone's guess, but they have much stronger site traffic than Rocky Bid did in June - that site said there were just two bidders when the Honda Insight auction closed for $1.24.

We will watch this auction closely and update the blog accordingly.
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