Online scalping doesn’t have anything to do with your hair. It’s the practice of buying and selling in-demand items to make a profit. Find out how it works and why it can be bad for regular customers.
What Is Scalping?
When it’s discussed online, scalping usually refers to the practice of making money by reselling something in limited supply. A scalper buys items online at retail price and then resells them for a profit elsewhere. This profit can be small, such as a few extra dollars, or it can be multiple times the original price.
Scalpers often take advantage of scarcity, purchasing items with limited availability and high demand. Many also use technology to their advantage with software designed to automate the scalping process.
Alternatively, scalping can refer to a financial asset trading strategy that involves rapidly buying and selling to make small profits on price changes. This practice is generally unrelated to item scalping and is often used in financial and trading circles.
What Items Get Scalped?
Scalping started with tickets to events, such as concerts and sports games. The practice of ticket scalping even predates the internet. Scalpers would stand outside event venues looking for people without entry tickets and attempt to sell the tickets at a high price at the last minute. With the digitization of ticket sales, this practice has largely moved online—although scalping is still extremely common in relation to events.
The tickets for popular events can sell out within minutes or even seconds. Scalpers will often buy as many tickets as they can and then upload them to popular ticket reselling markets or classified websites like Craigslist or Facebook Marketplace. Depending on the event and ticket price, these entry passes can be sold for multiple times what they originally cost.In recent times, scalping has also emerged in the electronics space. The chip shortage over the last year has led to a shrinking supply of computer hardware, particularly graphics cards and next-generation gaming consoles like the PS5 and Xbox One. During the initial release of the latest consoles, hundreds of scalped PlayStation and Xbox consoles flooded online marketplaces like eBay.
There are a few characteristics that apply to nearly every item that gets scalped. There is:
- a limited supply of the items.
- a simultaneous release or “drop” of the available stock.
- a high demand for the items, even on the resale market.
Rare sneakers are among the most frequently scalped items, as they are treated as valuable collector’s items. Shoe collectors, also called “sneakerheads,” often pay attention to the latest releases—especially special edition designs with limited runs. The website StockX has become one of the most popular online marketplaces almost entirely because of shoe trading. It provides current resale prices for different models, and most new models are immediately listed on StockX as soon as they’re released.
The most low-tech way of scalping is by simply acting as an average consumer and attempting to buy an item as soon as it’s available. This involves frequently refreshing a store page and immediately purchasing it right at the drop time. This has mixed success, as the item might sell out before the scalper buys one, but this method is less susceptible to anti-scalping measures by storefronts and sellers.
Another method is by using early releases. This involves leveraging personal relationships and insider information to purchase items before they come out on the market and then selling them when the item becomes publicly available. For example, if you have relationships with an electronics manufacturer, you might be able to obtain an item before its release and resell it soon after the initial drop.
However, most scalpers purchase items using scalping bots. These bots use targeted attacks to prevent regular customers from purchasing items and then snatch up large quantities of tickets as soon as they’re released. They then list them automatically at a third-party website and sell the tickets at a profit. This practice is prevalent in sneaker and ticket sales.
The Effect of Scalpers
Scalpers are bad for regular consumers. They cause prices to rise, sometimes to exorbitant levels that might be out of the price range of people who are saving up to buy the items in question. They also make it difficult for consumers to get the things that they want close to the release date. This is especially true of time-limited items like tickets.
They’re also bad for companies that initially sell the items. There have been incidents of events having large sections of a venue be empty because the tickets have been claimed entirely by scalpers. Gaming companies like Sony and Microsoft are losing out on potential game and subscription sales because consoles that should be getting played are sitting in the houses of resellers, waiting to be repurchased.
Fortunately, many companies are starting to implement anti-scalping measures on their storefronts. These solutions can range from better online security to allowing only one ticket to be sold per person and asking for identification. Some stores have even used randomized systems to allocate a limited drop of an item, raffling off the chance to buy a particular item to the winner.
In the future, we hope that these methods will help reduce scalping online, but as long as there are customers willing to pay high prices for in-demand items, scalping will still likely be with us for ages to come.
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