iPhones are a hot commodity, I wonder why I never have to play "beat the scalper" when I want to buy one? I don't wonder at all, of course, because when I order a iPhone that is in short supply I simply get placed in a queue. It might be three months before I get a phone, but at least I know I don't have to spend my days refreshing a web page. I order, I'm done with that task until it shows up.
But, yeah, blame the players and not those that could shut down the game any time they like.
Before iPhone's were as widely available as today, there were similar problems with scalpers buying them all. Apple even banned buying them with cash [1] so they could limit purchases per customer.
So, you're reinforcing their point that the producers can take actions to attempt to address the problem. Actions which Sony has not undertaken in this instance.
A simple "pre-ordering"-queue seems it would decrease scalper interest as well (?) as it would be much more risky to order a bunch, hope you get early in the queue and sell to people who might get their machine just little time later.
Let people put up a small deposit as well for getting a place in the queue, and it'll be deducted whenever you buy the machine. Keep the deposit if you cancel your place in line. Would incentivize less manipulation as well.
I've been trying to get a PS5 for 2 years now, and I refuse to pay some scalper 200USD more than market price, out of principle. (But I guess that is also why I still don't have one :) )
I wrote a quick bash/jq script that would query target's redsky API to find out when an xbox series was available at my local target. I dropped this script into Rundeck and set it to notify me on success (success being an available xbox). One random Tuesday I got an alert but it was also dinner time. I saw ~230 available and thought enough time for me to eat dinner and place an order. Well 15 minutes later it was sold out. Fast forward two weeks later, i'm hanging out on a Saturday and get another alert. ~300 available this time. I spent 5 minutes trying to download the target app and then realized i had to make an account and by that time the available count dropped to ~180. I grabbed my wife's phone (she lives at target) and immediately placed a pickup order for the Xbox. I picked it up one hour later.
Don't pay scalpers, just use technology as your friend :) An old coworker did something similar but he wrote a chrome extension to do the same.
I'm sorry if someone uses this knowledge to scalp nextgen systems.
>> Let people put up a small deposit as well for getting a place in the queue
Pre-ordering with a deposit is definitely a very creative/smart accounting hack that Tesla (and Amazon) has used pretty effectively. It creates a negative cash conversion cycle (get the money upfront from your customer before you have to pay your suppliers) - which is highly profitable - especially when there is known demand.
iPhones are profitable the minute they walk out the door - you buying music or apps or whatever is just gravy. Add to that the day-one markups (earbuds, charging cables, apple care), they have every incentive to put you in the hands of a caring, dedicated salesperson who can upsell you up to your capacity.
Your playstation, on the other hand, requires you to buy two or three games, and if the games aren't there yet for mass market appeal or sufficient genres, well, the console will still be there in four years when the games catch up, and your iphone will be out of date in six months.
In both the manufacturers and scalpers minds, nobody would bother scalping an iPhone - the margin was already sucked out of it and it has a shorter shelf life; In the case of a console, the margin won't be had for a few years, but none of it flows to the casual scalper, so it's a lot of work for 100$ - they'll do it, but it's a grind.
But either way, people are happy to wait in line for the latest fondleslab, and they get it when it's their turn
The steam deck has a queue system as well of course. While there's a risk that the buyer doesn't see the notification email that it's ready, the fact that you generally know that you'll get one within a year is very nice.
So without scalpers you have to wait until supply catches up, while with scalpers you can either wait until supply catches up or you can pay extra if you really want it now. How is the first scenario better?
because i can make my choice now and just wait for it to come in the mail
as is, Sony has been doing a "sign up to be notified" thing where by the time I see the notification they're sold out again. Just let me put in my order and get it to me when you can.
if enough people take that deal, scalpers have a smaller and smaller market
So the solution is to have Sony, Microsoft, and Nintendo sell directly to the consumer? Apple can do this because they don't have to keep third party retailers happy, they own the distribution chain from top to bottom.
I am baffled why this is not being implemented across the board. It is a solved problem.
It leads me to believe these companies do not really care enough to implement the systems to fix this or that they actually like the artificial scarcity as it fuels additional demand. The fact that they can figure out how to implement live lottery systems, sadly, makes me conclude it is the latter.
I personally flatly refuse to pay over retail price or lineup outside of a store for the “opportunity” to buy something. Nothing is going to change if people keep paying a premium for products be it an SUV or a PS5.
I just buy whatever is available. I've never noticed the difference between Samsung AXX and Samsung SYY. It takes calls, pictures, emails and texts, can auth, slack and alert me for meetings.
Apple is able to have a queue for iPhones because they control the iPhone supply - both in the sense that they are the OEM for the device and in the sense that they have very strong control over their own suppliers. Vendors are not going to treat everyone equally when Apple is a big fish that can wreck your business if you don't play ball.
Retailers do not have this kind of power. If Best Buy pre-sells more iPhones than they have inventory for, there's nothing obligating Apple to actually sell those iPhones to those customers through Best Buy. Apple could decide tomorrow to cut Best Buy's allocation because AT&T needs them for a big customer promo. Compounding this is the fact that almost all retail businesses are cash-flow limited. Their job isn't to buy things and sell them at 1% markup, it's to predict the future three months ahead of time so that products arrive on shelves exactly when they will be purchased. In other words, they're futures traders that take physical delivery. So every dollar they get needs to be spent on more inventory, or they run out of things to sell.
This means that, in the event of an iPhone shortage, Best Buy has two terrible options and one good one:
* Treat those iPhone orders as ordinary revenue and use it to order more stock of other products. If Apple cuts your allocation, then you have to refund your customers money that you don't have, meaning that you have to take out a loan on future revenue to pay back existing orders.
* Tie up your cashflow by holding that iPhone money in escrow until those orders are fulfilled. You don't take on the risk of not being able to refund orders, but now you are paying the opportunity cost of not being able to buy as much inventory three months down the line.
* Don't sell unallocated iPhones. Your customers will buy something else instead.
Now, could Apple extend their queue system beyond their own online store? Perhaps - but that requires a lot of coordination from other retailers who would rather just be able to move product quickly. The flip side of the cash flow problem I mentioned above is that, if a product doesn't move quickly, retailers want to get rid of it quickly to cut their losses and take a chance on something else. A good example of this would be the iPhone SE 3rd gen, which sold like garbage. Under the current arrangement of retailers getting allocation and buying inventory, Best Buy can at worst fire-sale iPhones nobody wanted. But with a queue system, they're either...
* Just drop-shipping iPhones from Apple to customers, which means they can't have in-store inventory
* Holding inventory they can't sell unless Apple lets them, which means they're letting iPhones live rent-free in their warehouse tying up cash flow.
The "just let me queue up" model is something that works out great for customers, but makes the rest of the business a lot harder, because modern supply chains are not designed for shortages.
I never understood why the retailers of these consoles don't adjust their prices to reflect the demand, so that there's at least some supply. When the PS5 first came out, for example, the price with retailers was like 1/4th of the price on ebay, and it was impossible to buy from the retailers.
Wouldn't it be better for everyone if the retailers adjusted the prices? At least then, the incentive to be a reseller/scalper would diminish to nothing, which means you don't pay for their premium.
I think it's for the same reason why car manufacturers don't like it when dealers sell over MSRP; it hurts the long term customer relationship. Higher MSRP means fewer buyers which means fewer services, repairs, etc.
More expensive consoles means fewer owners, fewer people buying console games and subscriptions.
Right, the console isn't the source of most of the revenue (or any, some have been losses). The point is to get them being used with newly purchased games/accessories. The scalpers are actually taking money away from the console manufacturer for the period of time the console is held by the scalper. They're also scalping revenue off the top of the console and having a negative income effect upon the end user/customer of the console - which definitely negatively affects how much the end user/customer winds up sending to the manufacturer.
They already de-facto did this. There were times where Best Buy and Walmart had supply, but you had to sign up for a subscription service like Walmart+ to be able to purchase. GameStop had a few "bundles" with a bunch of items that you wouldn't otherwise purchase, effectively raising the price. It just didn't make a dent when the actual eBay margin was $X00 over the retailer pricing
And the bad PR would be something along the lines of "company gouges prices to screw customers." Yeah, I think you're right. So it has to play out this way, with people paying a scalper's premium, and sometimes getting totally scammed. Really unfortunate.
- Consoles in stockrooms are not making money for the retailer or the platform/brand/manufacturer.
- Sales figures (units shipped) are a marketing point. A product being so in demand that it makes the news is a free marketing campaign.
- Retailer got so many units to sell at a margin/price they already decided on. The fact that the stock moved out the door is a win already. Customers coming inside to find out that there are no PS5s are customers inside the shop.
- It seems likely that Sony/whoever may have some control over the pricing. Whether this is a formal agreement or a gentle suggestion, ignoring or breaking that deal would presumably (at least) sour the relationship.
- Surely the retailer that moves first would lose business to their competitors. I guess at that point, the competitor/s run out of stock and now the first mover is the scalper?
- If we're assuming that the retailers have some altruistic motive, they could implement strategies to combat the bots / buying en masse. This does not appear to be something they are interested in.
> Wouldn't it be better for everyone if the retailers adjusted the prices?
The people who are already priced out will be in the same situation, except now it's the "good guys" doing price gouging. The scalpers will have lost their business to the retailer I guess.
Reading the article, this seems to be the core issue:
> “When your browser checks out an item on a retail site, it sends ‘requests’ to the site’s server. These requests are basically commands that tell the server what to do. Add this item to the cart, submit my order, and so on,” they wrote. “We send those commands associated with checking out to the servers of sites we automate without requiring a browser. Basically, we can mimic what a human does, stripping out the unnecessary lags and delays of a browser.”
> "The service is optimized for Target, Best Buy, Amazon, and Walmart."
This is hardly just game consoles, the whole baby formula problem is similarly gamed:
Basically, if you see a shortage anywhere in the consumer/retail goods market, you can use a pool of capital to buy up all the remaining product as quickly as possible - assuming you have access to a pool of capital. This is the same kind of thing that happens in wartime scarcity, the only difference between this and say WWII is the bot technology being used. Now you're the sole supplier and can jack up prices and earn huge percentages. The resellers are just little black market manipulators, in other words, and the bot writers are their facilitators.
However, the main sources of product are the big corporate retailers, Amazon etc. They can't jack up the prices themselves (well, they can to some extent as current 'inflation' price hikes are resulting in record profits), but do they really care if automated bots are placing orders? Are they going to write bot-detecting software that might reduce the amount of orders being placed online? Why would they, that would reduce revenue.
It's not too surprising that this situation has come about, it's basically monopolistic manipulation of markets throughout the whole supply chain. A deregulated neoliberal paradise has many similarities to a war zone economy.
What makes you think resellers are "monopolistic"? The barriers to entry are incredibly low: "$300 fee and monthly $50 payments" (less if you have basic coding skills), plus capital for goods, which don't need to be purchased at traditional wholesale volumes. No single reseller is buying up "all the remaining product" -- they're buying e.g. "nine freshly purchased GeForce RTX 3080s".
They can't be "sole suppliers" because they would need to beat out everyone else running a bot. As a consequence, they're not able to price goods arbitrarily high. (But, as usual, efficient price discovery tends to be viewed as evil by consumers).
> as usual, efficient price discovery tends to be viewed as evil by consumers
This is the whole story. You can tell that game consoles, baby formula, and GPUs are under-priced, because it is worth spending hundreds of dollars and hours/weeks of dev time /on top of/ the too low price, just to get your hands on them for resale.
I think people get confused, because the effect of a spike in demand or a decrease in supply can look the same, from a pricing standpoint, as collusion amongst multiple retailers - but we're not talking about gas stations across the street from each other agreeing not to sell below X price, this is a massively distributed phenomenon, which again goes to show that it is a genuine reflection of the mis-pricing of goods in the current market.
The real tragedy when it comes to shortages of goods with inelastic demand, like baby formula, is that the various price gouging laws that prevent traditional retailers from correctly pricing items in the face of shortages, do nothing to actually control the price - in fact, they introduce a lot of inefficiency, and opportunity for counterfeits etc. I would much rather pay triple/quadruple at Target or Walmart than pay 0 because I'm looking at an empty shelf, or pay quintuple to some rando on eBay who may or may not actually be selling a genuine product.
> It's not too surprising that this situation has come about, it's basically monopolistic manipulation of markets throughout the whole supply chain. A deregulated neoliberal paradise has many similarities to a war zone economy.
I actually tend to interpret it the opposite direction. This is clearly price gouging, which can hypothetically be regulated.
To me, the underlying issue is that near direct-to-consumer sales combined with public APIs and tooling like these bots has led to democratization of price gouging. Instead of being able to track the gouging back to a few businesses who are doing a lot of it, we now have to track a huge number of people who are individually doing a little of it.
It creates two problems. The first is that we don't have the resources to investigate and prosecute all the people doing it. The second is that each individual does a relatively small amount of damage, but it causes a large amount of damage in aggregate. We usually prosecute based on damage caused, but it's hard to show the damage of price gouging $1,000 or $10,000 worth of goods. If they were the only ones doing it, it wouldn't even be a problem. Yet, there's also no obvious collusion. They aren't causing scarcity individually, but they are in aggregate. I don't think the laws consider that at the moment.
It also looks bad for regulatory agencies to go after fairly normal folks. I don't get the impression these people are generally rich.
Why should price gouging luxury goods even be illegal?
I can at least understand the motivation of such laws when it comes to essentials like food or water (although many would argue that such laws do more harm than good by erasing market signals), but inability to run the latest video games in 4K isn't an emergency.
> current 'inflation' price hikes are resulting in record profits
This is misinformation. Walmart's net income is down 25% year-over-year. Target's is down 41% year-over-year. Excluding the $7.6B Rivian Automotive loss, Amazon's net income went from $8.1B to $0.04B, down 99.5% year-over-year. That loss would have been larger if AWS wasn't doing so extremely well on growth - AWS operating income was up 57% year-over-year. North America retail went from $3.45B operating income to a $1.568B operating loss. International retail went from $1.252B operating income to $1.281B operating loss.
I think a lot of people look at revenue (which will go up with inflation) rather than income (which is what is left over when you take out the costs). As costs rise faster than retail can raise their prices, margins are getting squeezed. Consumers have an idea of what a product should cost in their heads and it takes time for that to get un-stuck.
There's a reason that retail stocks tanked 9 days ago - investors saw Walmart's earnings on the 17th and Target's on the 18th. They weren't raking in profits. Inflation was squeezing them.
This problem is easily solved by just flooding the market.
These companies have the advantage of scale, and huge amounts of pre-existing capital.
Sony could make 100,000,000 PS5s and send them all out to retailers and just flood the market so drastically that scalpers can't make a dollar. All of those consoles will eventually sell, and the real money in consoles is, and always has been, the game sales anyway.
PS5 market is definitely bonkers.
After sitting through some of the crazy queues on the playstation site and giving up on direct to consumer I did manage to score one, but it was tedious for a few days getting hammered by every twitter notification from a few of those accounts that watch and post when stock becomes available.
When I did land a unit, it wasn't without a price shock of its own as GameStop was selling as bundles. So, yeah I ended up with maybe a couple of games that I would rather not have bought up front and they were pretty close to full retail price.
This was all very, very frustrating. Sony knows I have years of history with them going back to PS3 era. They could throw me a freakin' bone and let me reserve a spot in a queue, even if it was in agreement with a 3rd party retailer - I'd be cool with that. They could manage this situation so much better.
//
Not to mention that once I got my unit, the storage evaporated almost immediately. PS5s hold about 5 or 6 "large games" at a time!
The total inability for anyone to get a PS5 is one of the strangest things I've seen in modern gaming. Sony have even basically stopped marketing it and resigned to defeat. It almost feels like we're going to skip this console generation.
You would think they would be incentivized to fix this problem, even though it has been going on for years now. People will lose interest eventually and spend their money elsewhere. A few years back I was going to build a gaming PC, with an RTX 1080. I could never find the card in stock. As the years passed that 1080 became a 2080, then a 3080, and finally a bass guitar.
Fundamentally, it's a mispricing issue. The consoles are too cheap. The manufacturers aren't producing enough to satisfy the quantity demanded at the prices they are charging. This allows scalpers to make money off consumers. They should probably raise their prices while the shortage lasts.
They’re priced against each other also, and they have a delicate balance to work with to make sure they don’t become “too expensive” in the minds of consumers.
Seems like HFT in the real world. What did hft defenders always say? That they are just liquidity providers, right? But no one says there is a need for this extra liquidity. I wonder whether regulators will ever target this.
> But no one says there is a need for this extra liquidity.
The fact that scalpers can sell the consoles for a much higher price shows that there is no market equilibrium with respect to the prices that the console vendors set. To achieve this, console producers could choose two strategies:
a) increase production
b) increase prices
a is impossible because of chip shortages, so b would be the way to choose to achieve "supply = demand" (i.e. everybody who is willing to pay the market price will get a console). Since console producers are not willing to do this move (perhaps for "marketing reasons" à la "our console is this cheap"), scalpers will make use of this market inefficiency, and ensure that the prices are those where there is a market equilibrium.
So, scalpers change the situation from "there is more demand than supply" to "supply = demand", making the market balanced.
Thus, the existence of scalpers is rather are sign that the console producers chose a price that is too low. The existence of scalpers is thus a mere symptom of the bad pricing decision of the console producers.
There is a third option, a queuing system similar to what Apple does for their product launches. It would not eliminate scalping entirely. But being able to put your money down today and see that your new iShiny will be delivered in 6-8 weeks helps mitigate FOMO and gives you a number that can actually be used to measure the "value" provided by premium scalper prices.
It's nothing specific to recent supply chain disruptions. The problem is that manufacturers have relatively inflexible capacity. Scaling foundry capacity isn't as easy as scaling cloud resources; they can't just decide to produce 10x as much product in a given month. Simultaneously, these are status goods for which consumers place a high premium on having the latest and greatest. Even with perfectly functioning supply chains, the market price for such goods is always going to be high on release and taper off as supply increases.
> The existence of scalpers is thus a mere symptom of the bad pricing decision of the console producers.
Alternate character interpretation: these companies understand that this is a reasonably sustainable price for their customer base, that moving away from those "bad pricing decisions" will alienate their customers, and that scalpers should be put in trash skips and rolled down steep hills.
Not every profit need be maximized immediately and without hesitation and scalpers need not exist. More than one thing is allowed to be true.
Consumers are seeing a need for the scalpers; their service is valued at $200-$300. Whether or not 20 people botted a single one for their own personal use, or one person botted 20 to scalp, you don't have one in the end. Pay $200ish over MSRP and all the headache of locating and securing one goes away. It would be nice if supply kept up, but it's clear at this point that it's not going to.
> Pay $200ish over MSRP and all the headache of locating and securing one goes away.
They create the headache in the first place.
Do you also think a protection racket provides a service? If you pay them for protection, all the headache of your business being firebombed goes away!
This is just arbitrage, and has very little to do with HFT. In a normal market, scalpers don’t exist because when products are flying off the shelves you either raise your prices or increase your production. Game console companies are for some reason unwilling to sell their consoles at auction (which would eliminate scalpers) or increase production so an arbitrage opportunity is born
I thought Microsoft's scalping mitigation was clever: for a long while now there has been no shortage of availability of the Xbox All Access bundle: you buy the Xbox Series X/S on time, bundled with a Game Pass Ultimate subscription, at a small discount over buying the Xbox up front and paying for 2 years of Game Pass Ultimate, so effectively negative interest.
What's more important is that it sets a ceiling for scalpers profit.
This is lower than the XBox+bundle price, even if you wouldn't buy the subscription, because you do get the subscription, no one will pay the same price for just the XBox, my guess would be a small market for half the subscription price, which is barely worth scalping over.
I'd imagine most purchasers do want it. I didn't and eventually was able to get a series X through Costco but another few weeks of missing out and I might have bit the bullet and paid for the subscription.
And yeah, I'm pretty sure the sub was tied to the Xbox itself, so you'd have to resell everything.
Readit News
But, yeah, blame the players and not those that could shut down the game any time they like.
[1] https://www.wired.com/2007/10/the-iphone-cash/
Sony has been selling PlayStations for 23 years and still can’t figure out how to meet demand?
Sony is only expected to produce 18 million units this year. Reports are that Apple is going to “limit” iPhone production to around 220 million (https://www.bangkokpost.com/tech/2316406/apple-to-keep-iphon...).
Why can’t Sony produce as many PS5’s in a year as Apple produces iPhones in a month?
Let people put up a small deposit as well for getting a place in the queue, and it'll be deducted whenever you buy the machine. Keep the deposit if you cancel your place in line. Would incentivize less manipulation as well.
I've been trying to get a PS5 for 2 years now, and I refuse to pay some scalper 200USD more than market price, out of principle. (But I guess that is also why I still don't have one :) )
Don't pay scalpers, just use technology as your friend :) An old coworker did something similar but he wrote a chrome extension to do the same.
I'm sorry if someone uses this knowledge to scalp nextgen systems.
Pre-ordering with a deposit is definitely a very creative/smart accounting hack that Tesla (and Amazon) has used pretty effectively. It creates a negative cash conversion cycle (get the money upfront from your customer before you have to pay your suppliers) - which is highly profitable - especially when there is known demand.
Assuming the scalpers are able to sell their supply, what they're charging is the market price.
(But I guess that is also why I still don't have one :) )
Yup.
If it's been 2 years I think you have been underestimating the market price of a ps5.
Your playstation, on the other hand, requires you to buy two or three games, and if the games aren't there yet for mass market appeal or sufficient genres, well, the console will still be there in four years when the games catch up, and your iphone will be out of date in six months.
In both the manufacturers and scalpers minds, nobody would bother scalping an iPhone - the margin was already sucked out of it and it has a shorter shelf life; In the case of a console, the margin won't be had for a few years, but none of it flows to the casual scalper, so it's a lot of work for 100$ - they'll do it, but it's a grind.
But either way, people are happy to wait in line for the latest fondleslab, and they get it when it's their turn
Source? This has not, to the best of my knowledge, been true in console production for a very long time.
So without scalpers you have to wait until supply catches up, while with scalpers you can either wait until supply catches up or you can pay extra if you really want it now. How is the first scenario better?
as is, Sony has been doing a "sign up to be notified" thing where by the time I see the notification they're sold out again. Just let me put in my order and get it to me when you can.
if enough people take that deal, scalpers have a smaller and smaller market
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There are plenty of retail outlets that are more than happy to sell Apple products while Apple also sells...
It leads me to believe these companies do not really care enough to implement the systems to fix this or that they actually like the artificial scarcity as it fuels additional demand. The fact that they can figure out how to implement live lottery systems, sadly, makes me conclude it is the latter.
I personally flatly refuse to pay over retail price or lineup outside of a store for the “opportunity” to buy something. Nothing is going to change if people keep paying a premium for products be it an SUV or a PS5.
Who cares about everything else?
Retailers do not have this kind of power. If Best Buy pre-sells more iPhones than they have inventory for, there's nothing obligating Apple to actually sell those iPhones to those customers through Best Buy. Apple could decide tomorrow to cut Best Buy's allocation because AT&T needs them for a big customer promo. Compounding this is the fact that almost all retail businesses are cash-flow limited. Their job isn't to buy things and sell them at 1% markup, it's to predict the future three months ahead of time so that products arrive on shelves exactly when they will be purchased. In other words, they're futures traders that take physical delivery. So every dollar they get needs to be spent on more inventory, or they run out of things to sell.
This means that, in the event of an iPhone shortage, Best Buy has two terrible options and one good one:
* Treat those iPhone orders as ordinary revenue and use it to order more stock of other products. If Apple cuts your allocation, then you have to refund your customers money that you don't have, meaning that you have to take out a loan on future revenue to pay back existing orders.
* Tie up your cashflow by holding that iPhone money in escrow until those orders are fulfilled. You don't take on the risk of not being able to refund orders, but now you are paying the opportunity cost of not being able to buy as much inventory three months down the line.
* Don't sell unallocated iPhones. Your customers will buy something else instead.
Now, could Apple extend their queue system beyond their own online store? Perhaps - but that requires a lot of coordination from other retailers who would rather just be able to move product quickly. The flip side of the cash flow problem I mentioned above is that, if a product doesn't move quickly, retailers want to get rid of it quickly to cut their losses and take a chance on something else. A good example of this would be the iPhone SE 3rd gen, which sold like garbage. Under the current arrangement of retailers getting allocation and buying inventory, Best Buy can at worst fire-sale iPhones nobody wanted. But with a queue system, they're either...
* Just drop-shipping iPhones from Apple to customers, which means they can't have in-store inventory
* Holding inventory they can't sell unless Apple lets them, which means they're letting iPhones live rent-free in their warehouse tying up cash flow.
The "just let me queue up" model is something that works out great for customers, but makes the rest of the business a lot harder, because modern supply chains are not designed for shortages.
Wouldn't it be better for everyone if the retailers adjusted the prices? At least then, the incentive to be a reseller/scalper would diminish to nothing, which means you don't pay for their premium.
I think it's for the same reason why car manufacturers don't like it when dealers sell over MSRP; it hurts the long term customer relationship. Higher MSRP means fewer buyers which means fewer services, repairs, etc.
More expensive consoles means fewer owners, fewer people buying console games and subscriptions.
But if you're selling them faster than you can make them, this isn't really true.
Which isn’t quite as bad as pure scalping but what they add is often high margin product.
What would be nice is to see more “proceeds over retail to charity” type deals.
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- Sales figures (units shipped) are a marketing point. A product being so in demand that it makes the news is a free marketing campaign.
- Retailer got so many units to sell at a margin/price they already decided on. The fact that the stock moved out the door is a win already. Customers coming inside to find out that there are no PS5s are customers inside the shop.
- It seems likely that Sony/whoever may have some control over the pricing. Whether this is a formal agreement or a gentle suggestion, ignoring or breaking that deal would presumably (at least) sour the relationship.
- Surely the retailer that moves first would lose business to their competitors. I guess at that point, the competitor/s run out of stock and now the first mover is the scalper?
- If we're assuming that the retailers have some altruistic motive, they could implement strategies to combat the bots / buying en masse. This does not appear to be something they are interested in.
> Wouldn't it be better for everyone if the retailers adjusted the prices?
The people who are already priced out will be in the same situation, except now it's the "good guys" doing price gouging. The scalpers will have lost their business to the retailer I guess.
They have - you could buy a console bundled with a game, headset and a tshirt for huge markups.
> “When your browser checks out an item on a retail site, it sends ‘requests’ to the site’s server. These requests are basically commands that tell the server what to do. Add this item to the cart, submit my order, and so on,” they wrote. “We send those commands associated with checking out to the servers of sites we automate without requiring a browser. Basically, we can mimic what a human does, stripping out the unnecessary lags and delays of a browser.”
> "The service is optimized for Target, Best Buy, Amazon, and Walmart."
This is hardly just game consoles, the whole baby formula problem is similarly gamed:
https://www.forbes.com/sites/laurendebter/2022/05/13/baby-fo...
Basically, if you see a shortage anywhere in the consumer/retail goods market, you can use a pool of capital to buy up all the remaining product as quickly as possible - assuming you have access to a pool of capital. This is the same kind of thing that happens in wartime scarcity, the only difference between this and say WWII is the bot technology being used. Now you're the sole supplier and can jack up prices and earn huge percentages. The resellers are just little black market manipulators, in other words, and the bot writers are their facilitators.
However, the main sources of product are the big corporate retailers, Amazon etc. They can't jack up the prices themselves (well, they can to some extent as current 'inflation' price hikes are resulting in record profits), but do they really care if automated bots are placing orders? Are they going to write bot-detecting software that might reduce the amount of orders being placed online? Why would they, that would reduce revenue.
It's not too surprising that this situation has come about, it's basically monopolistic manipulation of markets throughout the whole supply chain. A deregulated neoliberal paradise has many similarities to a war zone economy.
They can't be "sole suppliers" because they would need to beat out everyone else running a bot. As a consequence, they're not able to price goods arbitrarily high. (But, as usual, efficient price discovery tends to be viewed as evil by consumers).
This is the whole story. You can tell that game consoles, baby formula, and GPUs are under-priced, because it is worth spending hundreds of dollars and hours/weeks of dev time /on top of/ the too low price, just to get your hands on them for resale.
I think people get confused, because the effect of a spike in demand or a decrease in supply can look the same, from a pricing standpoint, as collusion amongst multiple retailers - but we're not talking about gas stations across the street from each other agreeing not to sell below X price, this is a massively distributed phenomenon, which again goes to show that it is a genuine reflection of the mis-pricing of goods in the current market.
The real tragedy when it comes to shortages of goods with inelastic demand, like baby formula, is that the various price gouging laws that prevent traditional retailers from correctly pricing items in the face of shortages, do nothing to actually control the price - in fact, they introduce a lot of inefficiency, and opportunity for counterfeits etc. I would much rather pay triple/quadruple at Target or Walmart than pay 0 because I'm looking at an empty shelf, or pay quintuple to some rando on eBay who may or may not actually be selling a genuine product.
I actually tend to interpret it the opposite direction. This is clearly price gouging, which can hypothetically be regulated.
To me, the underlying issue is that near direct-to-consumer sales combined with public APIs and tooling like these bots has led to democratization of price gouging. Instead of being able to track the gouging back to a few businesses who are doing a lot of it, we now have to track a huge number of people who are individually doing a little of it.
It creates two problems. The first is that we don't have the resources to investigate and prosecute all the people doing it. The second is that each individual does a relatively small amount of damage, but it causes a large amount of damage in aggregate. We usually prosecute based on damage caused, but it's hard to show the damage of price gouging $1,000 or $10,000 worth of goods. If they were the only ones doing it, it wouldn't even be a problem. Yet, there's also no obvious collusion. They aren't causing scarcity individually, but they are in aggregate. I don't think the laws consider that at the moment.
It also looks bad for regulatory agencies to go after fairly normal folks. I don't get the impression these people are generally rich.
I can at least understand the motivation of such laws when it comes to essentials like food or water (although many would argue that such laws do more harm than good by erasing market signals), but inability to run the latest video games in 4K isn't an emergency.
This is misinformation. Walmart's net income is down 25% year-over-year. Target's is down 41% year-over-year. Excluding the $7.6B Rivian Automotive loss, Amazon's net income went from $8.1B to $0.04B, down 99.5% year-over-year. That loss would have been larger if AWS wasn't doing so extremely well on growth - AWS operating income was up 57% year-over-year. North America retail went from $3.45B operating income to a $1.568B operating loss. International retail went from $1.252B operating income to $1.281B operating loss.
I think a lot of people look at revenue (which will go up with inflation) rather than income (which is what is left over when you take out the costs). As costs rise faster than retail can raise their prices, margins are getting squeezed. Consumers have an idea of what a product should cost in their heads and it takes time for that to get un-stuck.
There's a reason that retail stocks tanked 9 days ago - investors saw Walmart's earnings on the 17th and Target's on the 18th. They weren't raking in profits. Inflation was squeezing them.
These companies have the advantage of scale, and huge amounts of pre-existing capital.
Sony could make 100,000,000 PS5s and send them all out to retailers and just flood the market so drastically that scalpers can't make a dollar. All of those consoles will eventually sell, and the real money in consoles is, and always has been, the game sales anyway.
They cannot order that many parts from their suppliers. The chip shortage is ultimately quite real.
This was all very, very frustrating. Sony knows I have years of history with them going back to PS3 era. They could throw me a freakin' bone and let me reserve a spot in a queue, even if it was in agreement with a 3rd party retailer - I'd be cool with that. They could manage this situation so much better.
// Not to mention that once I got my unit, the storage evaporated almost immediately. PS5s hold about 5 or 6 "large games" at a time!
> The PS5 has been selling 80,000 units in 82 minutes, on average.
Whether they are scalpers or not, they ultimately end up in the hands of consumers.
https://www.forbes.com/sites/paultassi/2022/05/26/ps4-sold-6...
The fact that scalpers can sell the consoles for a much higher price shows that there is no market equilibrium with respect to the prices that the console vendors set. To achieve this, console producers could choose two strategies:
a) increase production
b) increase prices
a is impossible because of chip shortages, so b would be the way to choose to achieve "supply = demand" (i.e. everybody who is willing to pay the market price will get a console). Since console producers are not willing to do this move (perhaps for "marketing reasons" à la "our console is this cheap"), scalpers will make use of this market inefficiency, and ensure that the prices are those where there is a market equilibrium.
So, scalpers change the situation from "there is more demand than supply" to "supply = demand", making the market balanced.
Thus, the existence of scalpers is rather are sign that the console producers chose a price that is too low. The existence of scalpers is thus a mere symptom of the bad pricing decision of the console producers.
It's nothing specific to recent supply chain disruptions. The problem is that manufacturers have relatively inflexible capacity. Scaling foundry capacity isn't as easy as scaling cloud resources; they can't just decide to produce 10x as much product in a given month. Simultaneously, these are status goods for which consumers place a high premium on having the latest and greatest. Even with perfectly functioning supply chains, the market price for such goods is always going to be high on release and taper off as supply increases.
Alternate character interpretation: these companies understand that this is a reasonably sustainable price for their customer base, that moving away from those "bad pricing decisions" will alienate their customers, and that scalpers should be put in trash skips and rolled down steep hills.
Not every profit need be maximized immediately and without hesitation and scalpers need not exist. More than one thing is allowed to be true.
What service?
> Pay $200ish over MSRP and all the headache of locating and securing one goes away.
They create the headache in the first place.
Do you also think a protection racket provides a service? If you pay them for protection, all the headache of your business being firebombed goes away!
This is lower than the XBox+bundle price, even if you wouldn't buy the subscription, because you do get the subscription, no one will pay the same price for just the XBox, my guess would be a small market for half the subscription price, which is barely worth scalping over.
And yeah, I'm pretty sure the sub was tied to the Xbox itself, so you'd have to resell everything.