In Defense of Ticket/Product Scalpers

This is one of those moments where I realize I’ve come to a conclusion even I think is slightly off the rails. People snatching up high demand items and reselling them at much higher prices are widely disliked, especially by those who would be the ordinary consumer of said product. While I think I was already halfway to my conclusion, the item that brought it to mind and forced me to process it was a recent episode of the Paint Bravely podcast. (2hr runtime)

In a relatively capitalist society, there will always be individuals who exploit a product with high demand and low supply. Like it or not, that isn’t a bug but a feature. It’s quite similar to the buy low/sell high seen in traditional arbitrage, though not without risk.

The mystery I really keep coming back to is why the opportunity exists at all. It means that the company producing the product could extract additional sales or value and either doesn’t see it or deliberately chooses not to. I’m willing to allow for the former case to happen, but suspect it to be rare. Corporations that cannot accurately gauge demand for their product typically don’t fare well in the long run.

This leaves us with the assumption that most of them are knowingly shorting supply. That for logistical or strategic reasons they are going to market with a product understanding or hoping that supply will be insufficient. This is especially true in a somewhat hype-driven market where demand has been intentionally pumped up ahead of launch.

There are plenty of good logistical reasons why you would want to do this. I’ve always heard that margins on major gaming hardware are extremely narrow. That’s a situation where you would want to be extremely careful not to over-produce. It may also simply be that we’re operating in an environment where component availability necessarily throttles production. Many of the manufacturers in my area are running non-stop overtime struggling to keep up with unheard of levels of demand.

I struggled for a while to grasp any good strategic reasons to do this though. Why would any company intentionally pass up first day/week/month/quarter sales for a major product? I feel it’s a bit of a stretch, but keeping the product slightly hard to obtain gives it the appearance of being “hot” or desirable. Does this lead to an increase in sales? It’s hard to say. Logically it shouldn’t. In the economic sense it would simply lead to a higher price, which the company cannot ask without losing face. Those with the proper foresight and capital, however, can exploit the difference between the MSRP and the true price and extract the value that the corporation cannot.

In the end, I have a hard time saying that there are really any “bad guys” here. I think that by and large the companies would do their best to maximize unit sales and for logistical or financial reasons cannot reach true demand. The scalpers are simply evidence that supply and demand theory is “working as intended.”

However, for those that would see them fail, the only real option is simply patience. You must wait until the supply catches up or otherwise be lucky enough to catch one available at MSRP. They only succeed because a small portion of the market is willing to bear the much higher cost. Especially around the gifting season. The emotional weight of giving others, especially the young ones, that thing they want seems to carry a fairly thick wallet.

Either way, I’ll go practice my necromancy somewhere else for a while. Y’all take care.

One thought on “In Defense of Ticket/Product Scalpers

  1. It goes so far back I doubt anyone could put a date to it. Be it Cabbage Patch kids craze, or limited edition artwork. There has always been a marketing strategy to most anything really.

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