What Is ‘Scalping’?
16th March 2022
In this insight, we look at what scalping is and why some people are looking to introduce legislation to stop it.
The term “scalping” refers to stockpiling popular products and reselling them at a higher price for profit (the secondary resale market). This being a tech insight, this article will look at how technology is used in scalping and how tech devices are often stockpiled and sold in this way.
High Demand and Scarce Tech Products
Products such as some games consoles (e.g. the PS5 in 2021 and now the PlayStation 5) are in short supply, partly because of a global shortage of semiconductor chips. This scarcity means that demand is high and higher prices can be charged. This makes them an ideal product for scalping.
Bots are used in scalping for buying gaming products and then reselling them at a higher price (scalping) because bots are faster and better at it than humans. This is because they can monitor websites for the moment stock is available and immediately complete the ordering process. The console scalping market is worth millions, and it is not unusual for consoles to be sold at many times their normal retail price. There have been reports of some scalpers using multiple computers operating 24/7 to maximise profits.
Some sellers have even set up their own reselling company that teaches others how to scalp, charging them subscriptions to learn.
Not Just Tech Products
There are many products other than tech products that are also part of the secondary retail market e.g., trainers and toys.
The run up to Christmas is a time when scalping particularly frustrates buyers, particularly parents, as those engaging in scalping have bought the must-have toys and are selling them online for high prices.
What Is ‘Sniping’?
Similar to scalping, but just on eBay is “sniping”. This is where a user waits until the last few seconds of an auction to make a winning bid. Just as bots are used in scalping, bid sniping software can be used to automate the process and get the edge on human bidders with last minute winning bids. Bid sniping software is allowed on eBay and examples include EZ Sniper, My ibidder, BidSlammer, GIXEN, Goofbid, and Justsnipe.
Seeking New Laws To Prevent Scalping
Some politicians, however, are seeking to protect consumers and are looking for a ban on the resale of electronic goods bought by automated bots. For example, Douglas Chapman, Scottish National Party MP for Dunfermline and West Fife tried to introduce a bill in March 2021 to prohibit the automated purchase and resale of games consoles and computer components, and for connected purposes. In his speech at the House of Commons, he said: “Scalpers manipulate and skew the supply and demand chain to create an unfair advantage in the marketplace, using bot attacks to use up basic supplies of coveted goods, such as the next generation of games consoles and computer components, then selling them on at hugely inflated prices”.
What Does This Mean For Your Business?
The arguments against scalping and sniping are that they are unscrupulous practices used for profiteering, a form of legal market manipulation, they put other sellers at a disadvantage, and they don’t benefit the consumer who ends up having to pay inflated prices or go without. Scalping is clearly very profitable but has been likened to ‘ticket touting’. In terms of technology, bots are a vital element in the success of those engaged in scalping and the rise of the use of bots for all manner of activities and services is a trend that looks set to continue.