March 2021 | by Lili
How do you feel when the product you’re looking for is suddenly out of stock on all of your favourite online marketplaces? You’re probably disappointed, frustrated, or even angry.
It’s bad enough when it happens once. But what if it keeps happening again and again? You may start to wonder if you’re the unluckiest shopper on the marketplace.
Or you (and many other people along with you) have become the victim of scalpers.
The word may be familiar from Wild Wild West stories or even the stock exchange. But in case of e-commerce, scalping means buying up the entire supply of a sought-after product on major marketplaces, and then offering them for a higher price in sketchy webshops.
The products can be anything. Sneakers, video game consoles, graphic cards, concert tickets, or, in early 2020, surgical masks, hand sanitizer and even toilet paper. The only criteria for a product to be scalped is a high demand in the general population.
With the coronavirus pandemic and the resulting boost to online shopping, scalpers got even more opportunities to prey on consumers. In fact, many shoppers first realized scalping was a thing once the coronavirus hit.
We all know regular product shortages. It happens, and it’s normal, especially if a product is highly sought after. But a telltale sign of scalping is when the product disappears from all marketplaces within minutes after it was released, and then reappears for a significantly higher price on less reputable webshops.
Just like scammers, scalpers are getting more sophisticated in their attacks too. Nowadays, instead of manually putting the products into their virtual baskets, scalpers use bots to scour the internet and buy up sought-after products. Bots can do the checkout process much faster than humans; no wonder they get the job done within minutes, or even seconds after a highly anticipated product hits the market.
Like the PlayStation 5.
Even though the new console has been released in November 2020, it’s impossible for gamers to get one for a regular price. As soon as a new batch hits the market, scalper bots gobble it up and offer it to consumers for as much as three to four times the regular price.
Offers on the market go up to 2000 € while a standard disc-drive PS5 costs ca. 500 €. This is very unfair on customers since humans can’t fight bots for speed and at the end of the day, it’s the customer who suffers.
At first glance, scalping doesn’t seem to pose a big problem for online marketplaces or even brands. After all, purchases are made, money is exchanged, and everybody got what they wanted.
Except for the customer. Because scalping leaves customers vulnerable, disappointed, and angry. Who wouldn’t be angry when after a long wait for a desired product, they had to wait even more and pay triple the original price?
And in the long term, an angry customer may take it out on the marketplace, or even the brand. Because if a branded product is never available at a reasonable price, customers may simply lose interest in the brand. And who could blame them?
The lasting success of brands ultimately lies with the satisfaction and hard-earned loyalty of its customers. But scalpers come between brands and customers, preventing the latter from accessing the desired products of the former. If brands act unsympathetic and do nothing against scalpers, they risk alienating their customers.
So in this regard, scalping is very much the problem of brands.
As online brand protection experts, we can essentially view scalpers as a version of grey marketers. They are unauthorized sellers who create unfair conditions, albeit not for the authorized distribution network but for customers. After all, in a regular grey market scenario, branded products are offered at a reduced price, harming authorized sellers and the entire price structure in a market. In the case of scalping though, sellers do sell their stock at market price, only it never reaches the customer.
Nevertheless, the result is the same. A dishonest seller interjects itself between your brand and your customers, basically representing your brand without any legal relationship to you. And much, much to the fury of customers.
As brand protection experts, we can help our clients track and uncover scalper offers on the marketplace. Also, we can educate marketplaces about the dangers of scalping and how to better serve their human customers.
While scalping is usually frowned upon, it’s currently not illegal in many countries. Luckily, this doesn’t mean we can’t do anything about it.
In the UK, for example, a petition was launched asking the government to act against video games scalpers. In response to that, Scottish lawmakers have already tabled a proposal for a bill to outlaw the scalping of games consoles and computer components. If passed, the bill could set a huge precedent in the fight against scalpers in general.
For online marketplaces, the purchase of a scalper may not be easy to distinguish from a regular purchase. While the quantity of the purchase may tip marketplaces off, the whole transaction is over so quickly that there’s simply no time to act. For a human, that is.
The best chance of fighting scalpers is introducing technical barriers that prevent scalper bots from getting to the products. And that can be done by marketplaces and webshops.
Just like with fake reviews, AI can help marketplaces recognize bot scalpers and block their activities. However, it’s not exactly easy: bots can change or mask their IP addresses and use tons of fake usernames, so marketplaces have to up their game if they want to cut off scalper bots.
One method that already works well against bots is using CAPTCHAs. Clicking on a box or selecting images with cars/buildings/etc can help filter out bots from humans. Unfortunately, they also tend to annoy shoppers, which is why some marketplaces are hesitant to use them.
Besides, with CAPTCHAs it’s usually all or nothing. To protect a single item with a CAPTCHA would require a specific plugin or feature that webshop-providers first need to develop.
Interestingly, scalpers don’t seem to understand the outrage over their activities. In fact, they see themselves as middlemen who help people get their hands on desired products. According to a scalper interviewed by Forbes, “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.”
Unfortunately, we can’t quite agree with this sentiment. Middlemen are needed when there are gaps between producers and consumers. In this case, there are no gaps. Online marketplaces are perfectly suited to get the goods from sellers to buyers, there’s no need for additional middlemen who charge triple the regular market price.
As consumers can’t do a lot against scalping attacks, it’s up to brands and online marketplaces to step up and protect their customers from scalpers. With the right attitude and software tools, this should be an achievable goal.
If you need advice on scalping or any other brand protection issue, reach out to globaleyez and let us know about your concerns.