Swoopo Quietly Files for Bankruptcy

By  |  Friday, March 25, 2011 at 9:51 pm

The site that put the concept of pay-per-bid auctions on the map is now apparently in financial trouble, Technologizer has learned. Although the company’s front page claims “technical issues,” documents from a Munich, Germany bankruptcy court indicate its parent company — Shopping Entertainment AG — filed for bankruptcy protection on Wednesday.

The company is asking for protections from its debtors, and it has named a liquidator to start divesting its assets.

I’ve done  a little bit of research across the Web and it seems as if some Swoopo users have been waiting for their items for quite a while, and the site has been down for about a week now. But at least we’re finding out why: Swoopo’s run out of gas — not at all surprising since its business model is built on the willingness of bidders to lose money on lost auctions. If you don’t win, you still paid for every bid you made.

Swoopo caused quite a stir when it first burst onto the scene in 2008 with its promise of being able to get items on the cheap through its penny auction format. I first took a look at the company back in September of that year, asking whether the auction site was nothing more than a well-designed gimmick.

Although I just saw it your average story, that blog post has now become one of Technologizer’s most highly trafficked and commented posts ever. They would later return in October to attempt to explain their side of things. The European Commission said that the company’s business plan  was following laws governing online auctions.

I guess it may be time for us to add Swoopo to the deadpool of failed technology companies. I do have to say though, I’m really not all that sad to see this one go.

 
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34 Comments For This Post

  1. John b Says:

    My email is changing, sorry; new to the cheap phone web, 3 weeks or so. I really like your website a l ot.

  2. Max Says:

    Agree completely with your ‘Nothing more than a well designed Gimmick’ assessment. It’s heartening to know there aren’t enough suckers to keep them in business.

  3. Stilgar Says:

    Yeah, but clone sites have been popping up in the last year. I know there are at least two others, but the only one I can think of right now is beezid.com. I guess if Swoopo is going bankrupt consumers must be smart enough not to fall for this horrible business model.

  4. techman212 Says:

    There are so many auction sites that do just what they are doing with some even doing lots of advertising on talk radio (Beezid SP?) it's really sad some people go into those sites and waste not only time bidding but money too.

  5. Nate Says:

    "sad some people go into those sites and waste not only time bidding but money too"

    The thing is there's a lot of people that like spending their time and money on this. Just like there's a lot of people that like spending their money and time collecting Precious Moments. I don't get why, but they dig it. There's lots of people that spend their hours reading and writing comments on reddit/4chan/whatever, and I don't get the amount of time killed. There's a lot of people spending money and time on Zynga games like Cityville, Farmville. Or what about any console game on the Xbox, or PS3. I just don't get it.

    Just because I don't get it, doesn't mean it's sad. It would be sad if the people were blowing their rent checks on it. But using their disposable money to try and win a cheap iPad playing a game rather than playing another game on Facebook or going to a movie or a hyped up restaurant, is entirely their choice.

    And people are blowing their rent checks on all sorts of things that are really sad. Over eating. Over shopping. Over drinking. That stuff is actually "sad".

    And just because they choose one for, of entertainment over another doesn't make them suckers or the business model poor.

  6. Norm Says:

    I think you mean discretionary income, but I agree with you. :)

  7. Nate Says:

    Ah yes, that's the phrase I was looking for. But it looks like "disposable" is also often used.
    http://en.wikipedia.org/wiki/Disposable_and_discr

  8. Norm Says:

    Yeah, semantically speaking, disposable and discretionary income sounds/mean the same as in money I can blow off on anything I want.

  9. moto Says:

    Seriously, there was nothing wrong with Swoopo in the moral sense (any more than ebay) but the problem with the whole idea is that it’s tough to game (while ebay is easy to game – I once got a very difficult to get pokemon cartridge for a nephew – just by figuring out the best time to place a bid). But the problem is that Swoopo’s model subjects even the most successful user to multiple rounds of negative reinforcement. not a good way to keep customers. An interesting study in behavioral economics.

  10. Stymie Says:

    I for one enjoyed Swoopo. After a rough start I started to figure the system out and started to win. I also looked at it as a investment opportunity, in the silver and gold areas, items I was going to invest in anyways. I basically broke even; even after the poor start. And now those investments are paying off quite handsomely over the last year.

    I think were they went wrong was having to many free bid auctions with maybe only a couple dozens bidders winning all the time and then bidding up other items and only having to paid the auction price . Like bidding on a 1/2 oz gold eagle with say 400 free bids and then only paying $ 16 bucks plus shipping. So that auction wouldn't even cover the cost of the item even from the other bidders of say 800 bids == about $ 480 but some of the other bidders also had free bids. Not good for the bottom line.

    Anyways it was entertainment for me and I happen to make out. Now I'll have to figure out how to get the two items I have won but not received .

  11. Thomas Says:

    “The European Commission said that the company’s business plan was following laws governing online auctions.”

    This is bull***t and EC knows it. In reality you give money to company and if you were lucky, you could win a prize: A lottery. You had no possibility to know if you win before paying: i.e. a lottery, not an auction by any means: In an auction you pay only if you win and only then.

    Lotteries are tightly regulated in EU so Swoopo and numerous clones were, in reality, circumventing lottery regulations and taxation.

    Many national authorities took that position and declared clones illegal lotteries. Now to the point: How much Swoopo paid to EC to get that statement despite of the opinion of most of the regional authorities?

    My opinion is clear: EC is throrougly corrupted: They do whatever they are paid to do. Anything.

  12. Rob Says:

    This is interesting timing because apparently Swoopo acquired Oohilove.com recently. Not sure about the legitimacy of that rumor anymore.

  13. Scot Says:

    report your experience http://pennyauctionsripoff.com/
    help others.

  14. mayo211 Says:

    gimmick indeed. it may only be a few pennies here and there, but still annoying after a few hundred of them.

  15. Clayton Says:

    It will be interesting to see if the other places follow them in stopping operations. There was a lot of these bid sites that popped up and my guess is Swoopo got out before the FTC cracked down on them. These sites lie, people think they can get expensive electronics for pennies and when consumers get ripped off they complain…then the FTC comes in.

  16. The_Heraclitus Says:

    I'm used to seeing any number of would be millionaires come up with wacky ideas. What gets me is, what investor in his right mind would fund something like this?

  17. Doug W Says:

    I too am trying to figure out how to get the items i won also.

  18. tippythoummarath Says:

    Swoopo did aquire Oohilove. Now, the oohilove facebook page is gone, and they are not returning emails. I am still trying to get more items while people who don't know about the bankruptcy are still spending and buying bids on oohilove.

  19. PAW Says:

    Hey, We reported on this just last week on http://pennyauctionwatch.com, however have not yet seen that Swoopo US Entertainment Shopping, Inc. has. yes, they did acquire oohilove. If you're interested in penny auctions free free to join our free forum http://pennyauctionwatch.com/forum We're following developments with Swoopo and Oohilove and all other penny auctions. The good, the bad and the ugly.

  20. reminder Says:

    "The site that put the concept of pay-per-bid auctions on the map…"

    I would like to remind everyone that Swoopo was just copy-cat which started as "bidster" clone. Swoopo copied the idea from a finnish site called Fiksuhuuto.com which was the worlds first cent auction at the time.

  21. Alex Says:

    This is seriously a sad day, I am very upset to see Swoopo go, but I also heard they purchased OohiLove recently so the whole thing doesn't make any sense. I'm wondering if they're just going to operate under a different name?

  22. guest Says:

    The problem is collusion, and that's difficult to beat, programmatically. I can't imagine they aren't making money on a transaction that involves 23000 bids at .60 per on a $1000 item. There are lots of cheaper/less profitable transactions, but lots of high-return ones. My guess is they bailed to avoid accusations of fraud.

  23. Rich Says:

    Bye Swoopo & there is also a pending lawsuit naming another top 5 penny auctions for allegedly operating as illegal online gambling. So I wonder if this is the end of penny auctions? I'm not sure but we built GetInToo.com because of bad experiences and bad press from sites like swoopo & others – we wanted a more fair but still entertaining auction site that was completely different but also gave bidders a chance for penny auction like savings.

    When we first lauched we used a percentage guage meter and were accused of all sorts of stuff so we quickly changed to an open disclosure and revealed everything we could but still keep integrity to the sealed bid process. I hate to see any business go under or close shop without notice, but we welcome swoopo customers to visit us for a refreshing change and still have some fun.

  24. solon Says:

    I'm a bit cheesed off (to say the least) as I had some remaining bids & now swoopo is no longer operating & wants protection from any liability. H'm, I may be a mug – but even mugs don't deserve to get stolen from. Don't agree with the smug comments from the 'what kind of mug' brigade. Very doubtful morality that!

  25. Phil Says:

    The only business model that could have kept swoopo open today, has been adopted by these people at http://zeekrewards.net

  26. Fred Says:

    I am too still waiting for the items I won. Do you know where can I report these guys ?

  27. liz Says:

    IS there a way to actually get what was bid on AND "won"??
    Tx.

  28. Var Says:

    No offense, but you're wrong about this being a lottery. There is no random winner. You can call it a borderline skill, but its really the last man standing wins. Its no different then eBay accept eBay allows you to place a bid for free.

    By allowing free bids, eBay gets closer to the actual MSRP, since there is nothing to lose on the bidders side. This is not a lottery nor illegal. Its not illegal for a car dealer to charge you $50 to test drive a car. Its just not common practice. This falls in the boat.

  29. Swooposucks Says:

    If you type http://www.Oohilove.com into your web browser and hit send it takes you straight to http://www.swoopo.com home page thus the legitimacy of this rumor is accurate!

  30. Mike Says:

    Ya I am one of the suckers that starting using swoopo just prior to them filing chapter 7. I won 4 auctions and only recieved 3 of my Items. Then low and behold I recieved chapter 7 paper work to file for items i did not recieve. Just got those papers last week but I wont even bother filling them out cause I wont see anything from it anyway.

  31. Alex Says:

    Some companies fail, some companies succeed. Call the concept what you will, but the reality is that its a sound money making venture for the companies, and enables consumers to get cheap goods.

  32. Calvin Fox Says:

    :jawdrop: I’m speechless… I can’t beleive you pulled this off. In conclusion I think this is great!

  33. Accountants Says:

    I am kind of glad to see this site go. A lot of people loose money and its pretty much like lottery. It can take only one bid to win the auction.

  34. Penny Auctions Says:

    Despite Swoopo's shut down there are still other penny auctions online that I have been able to bid and win items at.

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