The people making bank selling PlayStation 5’s, Xbox Series X, various types of footwear, and both Nvidia and AMD GPUs believe they’ve been misunderstood. If you think about it, scalpers are really just providing a service. They’re not parasites, they’re just economically savvy.
Forbes recently spoke to some of these charming go-getters to get their opinions on the recent console shortages.
“There seems to be A LOT of bad press on this incredibly valuable industry and I do not feel that it is justified, all we are acting as is a middleman for limited-quantity items.” said one individual named Jordan, who co-founded a group known as the Lab. The Lab is what’s known as a “cook group,” a private organization that advises paying users on how to bypass site security systems and order multiple consoles at once.
A bot in action. Image by Janhoi McGregor, Forbes
According to Jordan, buying 25 PlayStation 5’s and reselling them for £700 (base retail price: £450) is no different than a retailer buying milk from a wholesaler at a low price before reselling it at a higher price. Another scalper, Regan, defended The Lab’s actions on the grounds that it donated most of its earnings to an unspecified local food bank.
The “scalpers are really just another form of reseller” argument would hold up better if the business relationship was voluntary. Much of the Forbes article is concerned with the various ways scalpers bypass website security and subvert ordering systems. It’s hard to imagine Walmart trumpeting the availability of Fruit of the Loom underwear while the manufacturer briefed the press on its efforts to prevent sales.
Retailers continue to insist that they’ve closed these loopholes and that they are taking every precaution possible against bots. Somehow, bot authors also keep talking up their successes, and products keep showing up on black markets. Based on what we know about the bot market structure, most of these products use a subscription model, implying that customer churn is fairly high — most people, presumably, subscribe to the service for only as long as they need to score a desired product.
The people using bots to bypass website security systems and order products before they’re even supposed to go on-sale aren’t just scalping. These people are abusing point-of-sale systems to artificially restrict supply and inflate the value of their own inventory. Third-party analysis has suggested scalpers are accounting for 10-15 percent of Xbox and PS5 sales. That’s enough to meaningfully constrict supply when manufacturers are already having a difficult time keeping systems on shelves. In some cases, there are knock-on effects to these shenanigans. PC component prices have been all over the map, making it cheaper, in a lot of cases, to buy a machine rather than build one. Scoring 10-20 Nvidia GPUs may earn the buyer a nice chunk of change on the black market, but the only value they’re providing is to themselves.
For the rest of us, this is an unwelcome, unwanted change. People should not have to subscribe to bots to have a chance at scoring products at MSRP, and we wouldn’t count on a sympathetic response any time soon.
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