I think much of their frustration resulted from their expectation of being able to win an auction with only a few bids.

How frustrating for them. And for me. I try my hardest to teach good Swoopo principles and in this case…I failed.

I wrote a very long reply in the forum. But for you my dear Swoopers, I spent some time editing. Here is the trimmed up version of my response:

Setting Bid Expectations

You should make sure to bid on items that are priced relative to the amount of bids you have or can afford. My usual rule of thumb is 10%. This means you should be willing to spend up to 10% of the item’s value in bids on that auction.

Say you’re bidding on a Macbook Pro and you have 200 bids. That item is much too large for your amount of bids on hand.

If you wait until your research shows the auction is nearing a close and decide to jump in…you’re playing it too safe. Your 200 bids will not get you to the finish.

This strategy of carefully researching auctions is one I recommend in the Manual, and it’s the most consistent, but it’s also expensive. If you plan to go into an auction in that way, you’d better go with guns ablazin’ and be ready to invest what you need to win.

If You Have Few Bids

If you’re low on bids (or only care to purchase 100 or fewer), you should do either of these:

1. Bid on smaller items like a small bid pack. Or a video game or household item. With a smaller item, you can take the research-based approach I describe above. It’s a cheaper item, so you now have enough bids to do it right.
2. Bid on the large item anyway, but take a BidButler Early approach. With a large item, you can’t wait until the auction is stocked with people, no matter how favorable the stats are and how close the auction is to previous end prices. You simply don’t have the funds to see it through. But you can go into the auction early and hope to catch other bidders off-guard. You just might get a deal like our forum member mentioned: a $600 gift card for 53 cents.

Which Strategy Should You Choose?

The second approach above will be a low percentage play, but might pay off in the end. And of course the top approach is higher percentage, but there’s a lower reward (you don’t win a $600 gift card, you win a video game).

Whichever approach you choose is up to you, but I think this better explains how you should set expectations based on your purse.

A Placeholder Bid is simply a single bid cast in an auction. If you see an auction that you think you’d like to bid on, but based on your Swoopo knowledge decide that you should wait, you can cast a single placeholder bid. You can then continue to follow this auction, and if and when Swoopo closes it, you can return and begin bidding when the time is right.

Because the auction is closed, you no longer need to worry about new bidders Swooping in and outbidding you on the auction. And because no new bidders are welcome, the overall competition in that auction will steadily decline as the auction goes on. You’ll ultimately have a much greater chance of winning the auction and in a shorter amount of time.

Put simply, it’s a small fee to allow you access to the best, most profitable auctions.

Now you know the basics of Placeholder Bids and why you should use them. I explain this strategy much more in-depth in the Swoopo Manual. In the next post, I’m going to explain how Placeholder Bids are skewing our Swoopo Analytics statistics and why that matters to you.

If you win an auction and receive Free Bids as a result, you may value these bids differently. You didn’t pay for them after all, but more importantly, they cannot be used toward a Swoop It Now purchase.

Or what if you’re participating in an auction where you get “bids back.” These are infrequent Swoopo promotions where the winning bidder gets has all of the bids they cast returned to them at the end of the auction. What it does is essentially put the entire Swoopo model on steriods. Not only is it easy for users to ignore the concept of sunk costs, but now they’re financially incentivized to do so.

So How Much Is A Bid Worth?

I think a bid is still ultimately worth as much as you can consistently win with it. If you have a sound Swoopo strategy or a history of winning – a free bid will be just as valuable to you as a bid you paid for with cold hard cash. But knowing that Swoop It Now isn’t available for free bids, you’ll need to adjust your bid to price and understand that others may do the same.

I’ve handled a few emails from skeptical Swoopo bidders in the past few days. They are interested in Swoopo, but ask “Can you prove there aren’t shill bidders on Swoopo?”

Bad news: I can’t

No, I can’t prove their aren’t shill bidders on Swoopo. And I cannot prove that UFOs aren’t real and that aliens haven’t secretly been walking the earth for years.

Here’s what I can tell you…

Swoopo has existed for a few years now. They’ve had employees come in and out of the company and currently employ no fewer than a few dozen employees. They have offices in California as well as Germany. They received venture funding in 2006 in Germany and again in 2009 by a major venture capital firm in the United States.

With Swoopo Analytics, we track almost every single auction on Swoopo. We can see the bidding history of every single bidder. We’ve haven’t noticed a single thing in all this data that would suggest shill bidders.

I’ve read every single article and study written about Swoopo I can possibly find. They all have interesting conclusions regarding the Swoopo business model. But none has ever suggested with any proof that Swoopo does anything other than run auctions exactly as they describe.

I’ve won items on Swoopo’s site and received them exactly as described and in short order.

A healthy dose of skepticism is good for everyone. But at the end of the day, you need to rely on facts.

I am wondering how you work with telephone bids?  How are these placed?  Do you have any information on it that may pertain to the psyche of that bidder?

I would love to hear your thoughts.

Here’s what I replied to John (with a little more editing since the original was written in a hurry

Telephone bids are a relic of a by-gone Swoopo era when they were called Telebid and only took bids this way. They are no longer called Telebid, of course, but they continue to receive telephone bids into Swoopo auctions.

I would describe the phone in bidders just as I would the technique itself: relics of a by-gone era.

In my research VERY few auctions are won by phone in bids…and those folks are largely throwing money into the wind. I wouldn’t factor these people into your bidding strategy any more than I would a single bidder…and perhaps even discount their ability more. The real threat (and opportunity) on Swoopo lies with the BidButler and that will continue as long as the Internet works the way it does.

Hope that helps….and happy to hear you’re digging in!

So what are your thoughts? Have you had experience with phone in bids? Let me know in the forums…

What the deal with the free bids?  I see that they expire, but how can you use them instead of the paid bids so that I use them first and don’t risk losing them?

Here was my reply:

Jason,

Great question…FreeBids were a confusing subject for me when I first started in on Swoopo. Here’s how they work:

If you win FreeBids in a Swoopo auction, these will never expire. So these bids just get dumped into your general bid pool. Because they don’t expire, it really doesn’t matter whether or not they’re used first.

If you receive FreeBids from a Swoopo promotion, these typically expire in a week. When you bid on an auction, these expiring bids will be used first so you can be sure to get the most out of your FreeBids.

Thanks for the email,

- Matthew