Swoopo Mini Cooper Sells for $3939.36

Swoopo's auction for a new 2009 Mini Cooper convertible with a street price of $24,550 ended minutes ago at a fraction of that price. The winning bidder, CaCO3, won with 2655 bids and will pay a total price (bids + ending auction price) of $5,532.96 + a $550 delivery charge.

32,828 bids were cast in the auction which started last Wednesday and stretched across Labor Day weekend. If Swoopo collected full revenue from each bid (they didn't) their take from bids would be just under $20,000 which when added to the final selling price of $3939.36 brings them pretty close to price of the car. While we don't know what Swoopo's purchase price of this car was we have no reason to believe they bought at a substantial discount, meaning they almost certainty lost money on this item.

I originally guessed the car would sell for around $18,000, which to me allowed for the winner to take a small margin that I perceived as sufficient compensation for the risks and efforts involved in acquiring the car. Boy was I wrong. Now Swoopo has a bit of a dilemma, do they put another car up because people saw what a great deal it is or do they never mention this day again? I expect we won't be seeing another car on Swoopo anytime soon.
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Here's an Honest Penny Auction Site

I've been using this lazy Labor Day to take inventory of all the penny auction sites out there. I want to see how many old ones are still active and how many new ones have sprung-up, at last count the field stood at 52. I'll post the full report later, but in the meantime I thought I'd share this landing page announcement from Hasteno, perhaps the last honest penny auction.

I don't know what it was about Hasteno that caused it to fail, the name and the color scheme are two obvious choices. However, if one thing is clear it's that in this industry there will have to be lots of losers. With more than 50 penny auction sites currently in existence and more starting-up all the time the market is simply too small to support all these sites. Economies of scale and credibility should allow the top few sites to dominate the industry while others fail and die out. Credibility might be the largest barrier to entry and if this is the case Swoopo should be just fine - I think the guys over at August Capital who plunged $10mm into Swoopo should breath easy - although, I really don't know what their exit strategy is. I can't imagine seeing SWPO on my Bloomberg Terminal anytime soon.

I'll post the full report later today, and FYI the Swoopo Mini auction is now at just under $4,000 with no sign of stopping anytime soon.
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A Post All Penny Auction Players Need to Read

Penny Auction Watch has an incredible story about shill bidding at new site Pardoo. They really did their detective work on this one. Nice job.
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Swoopo's Mini Cooper auction stopped being exciting hours ago, now in marathon phase

If one thing has become clear from Swoopo's auction of the red Mini Cooper convertible, it's that they need a better (quicker) format for selling expensive stuff. The Swoopo bidding model works well for moderately priced items, but a $24,550 car is going to take forever to sell. I understand Swoopo wants to minimize the risk of the car selling too cheaply (like the $1.24 Honda over at Rocky Bid) and so putting the Mini up in a 24 hour auction was smart. It increases the number of people who see the auction and gives them time to prepare to bid. However, as the auction approaches the 48 hour mark, with a price of just over $800, we here at Penny Auction Insider are starting to experiencing mental fatigue and wonder how much longer this thing will go for. I speculated earlier that I thought the car might eventually sell for around $18,000. Even if the car sells for $10,000 we've got a long, long way to go.

In the future I think Swoopo should tweak the auction format for expensive items like the Mini. A faster countdown or less time added to extend the clock with new bids might be a good solution.

The Mini has a current price of $806.40 with about 30 minutes on the clock. Last night we saw the time go to under one minute before spiking due to a BidButler war. Why anyone would exercise their BidButler so early in the auction escapes me. We'll continue to follow this auction and provide updates on the blog.
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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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SevenSnap: A New Take on Entertainment Shopping

SevenSnap is a new take on entertainment shopping, and no it's not a penny auction site, marking a refreshing change of pace for this blogger who is getting pretty tired of new penny auction sites popping up every day claiming to be the industry leader or exciting and new, when really they're just copying what's already out there.

Not so with SevenSnap, a truly innovative take on entertainment shopping. SevenSnap is an iPhone app (with plans to produce a web-based version later) where users purchase time credits and then use those credits to enter a virtual room with a featured product, such as a MacBook Pro, and other bidders. The price of the item starts falling as soon as someone enters the room (starting at retail) and the speed of decline depends on the number of people in the room - as fast as $100 a minute if the room has many users. The first person to buy gets the item at that price and then the price resets for everyone else in the room.

SevenSnap is a pure price discrimination model where the person with the highest willingness to pay in the room gets the product at whatever their threshold price is. This price must certainly be less than the retail price of the item or else people would just go to their favorite store to buy. I expect there could be some decent deals on SevenSnap but that really depends on the type of people in the room and all it takes is one person who is willing to buy at close to retail to ruin it for everyone else.

The SevenSnap app is not in the app store yet which has led some people to speculate on whether Apple would even approve the program. Apple has been notoriously cloistered about its approval process and created a firestorm of controversy this summer with its decision to block certain Google-developed apps as well as for its re-engineering of iTunes to block the Palm Pre from accessing that platform. I expect SevenSnap looked into the likelihood of Apple approving its app before it went to the trouble of developing it, but with the app store nothing is for certain.

SevenSnap has a cool video demonstration that you should probably watch once or twice.
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