Scalping Next-Gen Tech Products on eBay Has Generated $40 Million in Total Profit

[Random_Person1234]

Summary

According to a script written by Michael Driscoll, an Oracle data engineer, scalpers have generated a total of $40 million in profit from next-gen consoles, GPUs, and CPUs on eBay. The total sales amount is $82 million and counting. Paypal and eBay have also generated large sums of money through fees, with Paypal getting an estimated $2.4 million in fees and eBay getting an estimated $6.6 million in fees. These totals are for sales in the United States only. 

 

Quotes

Quote

To get an idea of how bad it really is, I wrote a script to scrape all of eBay's sold listings for the products and graph them to get some trends.

Some definitions/assumptions for how I analyzed the data:

Casual Scalper Break Even: The point at which someone who just bought some of the products at retail and listed it would likely no longer be profiting. Using an eBay fees calculator I assumed this type of scalper does not have an eBay store, is not a top seller, paid a 6.25% tax, and is paying the median shipping on the listings.

Sophisticated Scalper Break Even: These types of scalpers I assume have made a business out of scalping and through various means are a top eBay seller, have a premium or better eBay store, managed to not pay taxes, and found a way to get the items at a discount. This is the worst case scalper, who has bots set up to automatically buy items when they are released on Newegg, Amazon, Best Buy, etc... and auto list keeping their costs minimal. Edit: I have gotten many comments that this is a bit too unbelievable an outcome, which it very well may be. I will consider adding tax back in, but this was always meant to be a worst possible case, not the most likely case.

Scalper/eBay Profits: Sum of all sold prices - MSRP * number of sold listings

For Big Navi and RTX 30 series, I am just going off of the base MSRP for analysis, while I realize the real MSRP can fluctuate a few hundred dollars (e.g. base 3080 is $699 but an aftermarket one from ASUS is $850 MSRP), but using the baseline is easiest and represents a floor.

For each search I filtered for "US Only" and for each item set a min price cutoff, usually around 0.5 * MSRP and up to normally ~5 * MSRP to remove some false positives. See the code for specifics

Quote

In short, scalpers have made $82 million in sales, $39 million in profit since September on just these 14 products on eBay. But let's not forget eBay and PayPal, taking in $6.6 million and $2.4 million, respectively, in fees for providing the platform and payment options. With eBay's fairly high fees, I assume it's the place scalpers choose last as FB Marketplace, Craigslist, other forums/discords offer better profit margins, so this analysis can only be a proxy for the overall scalping market. I would conservatively guess the real scalping market is at least 2-5x larger (personally I think 10x+)

My thoughts

With these numbers, I see no reason for scalpers to stop scalping these items currently due to low returns. The $6.6 million in fees also explains why eBay aren't doing anything to try and stop this scalping.

 

Sources

https://dev.to/driscoll42/an-analysis-of-the-80-million-ebay-scalping-market-for-xbox-ps5-amd-and-nvidia-f35

https://www.techspot.com/news/87923-scalpers-have-generated-nearly-40-million-profit-holiday.html

https://github.com/driscoll42/ebayScraper

[WhitetailAni]

Set:
eBay is in a 99% soundproof room. A bunch of people (anti-scalper people) are banging on the door

 

eBay:

We make money, so why should we listen to the people begging us to stop? I mean, we have the "price gouging" report thing, but you can't actually use it and if you don't use it your report gets thrown out.

The thousands of people banging on the door: STOP SCALPING! STOP SCALPING!
eBay:

What are they saying? I can't make it out.

[Radium_Angel]

16 minutes ago, Random_Person1234 said:

$6.6 million in fees

Sky is blue, water is wet, corps are greedy fuckers. 

Same as it ever was.

[Kisai]

2 hours ago, Random_Person1234 said:

 

Quotes

My thoughts

With these numbers, I see no reason for scalpers to stop scalping these items currently due to low returns. The $6.6 million in fees also explains why eBay aren't doing anything to try and stop this scalping.

 

That's not how it works at all. I've worked there.

 

There are policies regarding not permitting presales, and "no item" rules, but that's it. As long as the seller has the item, there is no reason to cancel the listing. Even someone like myself who hates crap like this, would nitpick the hell out of these listings to find ANY excuse to pull them, especially at the last minute, because I know these trolls will flip out. Then I go to the email queue and send them the form email response.

 

eBay's own corporate culture errs on the side of "if it's not reported, it doesn't exist", If you think something is a bad listing, report it, for anything. eBay staff are supposed to take listings down, for any possible reason if it's reported, even if it's filed for the wrong reason (other than fraud, which is not a listing violation, that's something else.) 

 

There are internal violations, that aren't written in policy that things can be pulled down for, but they're aligned with VeRO policies, not moral or ethical reasons. eg, a seller selling 10,000 Nintendo listings, is likely selling counterfeit's. A seller selling one GPU at 200% markup, is likely an idiot.

 

[xtroria]

It’s a simple supply and demand condition

 

People are still buying despite the jacked up price, so there’s simply no reason to lower the price

 

 It’s a shit condition but that’s just how it is

[Brooksie359]

3 hours ago, ragnarok0273 said:

Set:
eBay is in a 99% soundproof room. A bunch of people (anti-scalper people) are banging on the door

 

eBay:

We make money, so why should we listen to the people begging us to stop? I mean, we have the "price gouging" report thing, but you can't actually use it and if you don't use it your report gets thrown out.

The thousands of people banging on the door: STOP SCALPING! STOP SCALPING!
eBay:

What are they saying? I can't make it out.

I think the reason they have a price gouging report thing is for price gouging laws. Unfortunately gpus, cpus and game consoles are not protected under such laws so they wouldn't really need to take them down as they would for things like medical supplies or other such goods protected by such laws. 

[SpaceGhostC2C]

It's worth noting that the title presents as fact what is merely one guy's speculation, before reading too much into specific numbers.

 

With that in mind, his guesstimates for paypal and ebay fees would be essentially rounding errors for the revenue of either. 

[Mark Kaine]

seems a little low... depends on the time span I guess. 

 

Also how did they figure those numbers out? seems almost impossible 

[CTR640]

6 hours ago, Mark Kaine said:

seems a little low... depends on the time span I guess. 

 

Also how did they figure those numbers out? seems almost impossible 

Exactly. And if those numbers would be true, then perhaps, nVidia (and AMD) plays a role too in the scalping crew?

[StDragon]

12 hours ago, Kisai said:

eBay staff are supposed to take listings down, for any possible reason if it's reported, even if it's filed for the wrong reason (other than fraud, which is not a listing violation, that's something else.)

Is there a cooldown period to stop the game of 'whack-a-mole' whereby the scalper just created another free burner e-mail account and repost the listing shortly thereafter?

[Velcade]

15 hours ago, Random_Person1234 said:

The $6.6 million in fees also explains why eBay aren't doing anything to try and stop this scalping.

eBay doesn't need to stop scalping... it's not illegal. 

 

The only way to stop this is to exponentially increase production and flood the market or get people to stop buying at 2x MSRP.  Neither will ever happen. The hype is real.  

[Tristerin]

Back when I was younger, I used similar web crawler/scraper for making money.  

 

Step 1: Get wholesale account with said business through relationships (I didnt have 100k worth of sales per year lol)

Step 2: Direct scraper to move all products, descriptions, and replace with my pricing to my website.

Step 3: My website was backdoored and scripted to transfer the data straight over to, and order from, and drop ship to customer from my wholesaler

Step 4: Deal with returns, and customer complaints only

Step 5: Profit

 

First business my brother and I built to get where we are (BUDK was my first wholesale account...I get everything between 20-50% off what consumer pays).  To low of profit margins (selling other peoples widgets) to continue it versus what we do now (time is money).

 

Honestly seeing these numbers, I debate telling my brother (the genius, programmer) these numbers - because I think he would be able to make alot of money doing this lol.

[Kisai]

34 minutes ago, StDragon said:

Is there a cooldown period to stop the game of 'whack-a-mole' whereby the scalper just created another free burner e-mail account and repost the listing shortly thereafter?

eBay when it was connected with Paypal had access to every email, physical address, phone number, etc personal details, so if an account was banned for fraud, it was banned forever, and any attempt to make another one would fail.

 

However what people get confused by are the dozens of drop-shoppers which is basically some idiot taking the risk of selling counterfeit stuff on eBay without ever having the merchandise. It goes directly from China to the buyer. As soon as one of those drop ship companies pulls a fast one, eg swapping legit sandisk sdcards for fake ones, the drop shipper gets their strikes and they're gone.

 

The easiest way to take down a seller is to to leave feedback when the item is fake. Many of these counterfeit sellers, even on amazon have red flag language like "contact us before you leave feedback", because if they get caught by you, they will attempt to run out the clock on leaving feedback.

[jagdtigger]

12 hours ago, xtroria said:

It’s a simple supply and demand condition

Artificially limiting supply (scalpers sipping up most of it) is in no way supply and demand condition.

[unsorted]

Supply & Demand. Good on them. Buyers pay agreed price. No deception is involved. No intervention needed.

 

Sell that hard-to-get item for more than what you paid. Make as much debased currency as you can. This activity is wholesome compared to shall we say...government initiatives going on now, killing the middle-classes.

 

Even if the scalpers are causing the limited supply from other channels, the risk is on them. People are clearly prepared to pay more, so may they continue. Like any other business out there, they will charge what they can get away with.

[RejZoR]

Great, if it's not dumb cryptomining it's these assholes. We'll never ever be able to buy new graphic cards for gaming anymore on their launch. Instead we'll always have to wait till new generation comes out and these idiots lose interest in them. Wonderful.

[Unixsystem]

1) Assume every launch is 6 months away from product availability.

2) Never pay more than MSRP

3) Start complaining to AMD and Nvidia to stop doing paper launches and release new products with supply.

Congratulations, you solved the issue. Scalpers would stop overnight if people stopped buying their product. 

[Falkentyne]

15 hours ago, unsorted said:

Supply & Demand. Good on them. Buyers pay agreed price. No deception is involved. No intervention needed.

 

Sell that hard-to-get item for more than what you paid. Make as much debased currency as you can. This activity is wholesome compared to shall we say...government initiatives going on now, killing the middle-classes.

 

Even if the scalpers are causing the limited supply from other channels, the risk is on them. People are clearly prepared to pay more, so may they continue. Like any other business out there, they will charge what they can get away with.

 

You can't see the forest for the trees at all.

No one cares that scalpers are scalping cards for a profit, nor does anyone care about the stupid people buying scalped cards and wasting their money.

 

What people care about are the botters and the scalpers mass buying inventory, creating an ARTIFICIAL SHORTAGE that prevents normal users from buying cards, except from them, or suffering without a card.  This creates an artificial supply problem outside of the normal economic rules governing supply and demand, and THAT is bad news.  This isn't some mad rush to profit on a day 1 super high in demand item.  Those mad rushes usually subside within a week or two.  What we have instead is exploitation by filthy rich people just to get richer and to keep getting richer by screwing over the market.  And anyone who defends such a malicious, unethical and downright *evil* practice *WILL* be added to my permanent block list--because people like you aren't worth breathing the same air I breathe.  And I have plenty of room for more enemies.

[unsorted]

5 hours ago, Falkentyne said:

 

 

What people care about are the botters and the scalpers mass buying inventory, creating an ARTIFICIAL SHORTAGE that prevents normal users from buying cards, except from them, or suffering without a card.  This creates an artificial supply problem outside of the normal economic rules governing supply and demand, and THAT is bad news.  This isn't some mad rush to profit on a day 1 super high in demand item.  Those mad rushes usually subside within a week or two.  What we have instead is exploitation by filthy rich people just to get richer and to keep getting richer by screwing over the market.  And anyone who defends such a malicious, unethical and downright *evil* practice *WILL* be added to my permanent block list--because people like you aren't worth breathing the same air I breathe.  And I have plenty of room for more enemies.

I wish the scalpers the best (I'm not a scalper, btw).

 

They have risked a tonne of capital on hoarding consoles and video cards, etc. I hope they make the maximum profit possible on people who are not price-sensitive and who must save Christmas

 

This isn't a must-have essential item. It is an entertainment item and there are alternatives that will 'do the job'. Normal users with less money can wait.

 

There are multiple layers of abuse in the supply chain in virtually every industry I can think of, from raw materials to parts supply, to manufacturing to transport & final sale to end-user. This is just one of the more visible now. This doesn't bother me in the slightest.

 

Bots are doing most trading in the financial markets as we speak. Real people are competing against them. It's a very similar situation. It won't last forever. Bravo to the scalpers for risking so much capital. The supply could loosen up at any time.

 

 

 

 

 

 

[divito]

15 hours ago, unsorted said:

They have risked a tonne of capital on hoarding consoles and video cards, etc. 

How have they risked their capital? There is almost no situation where they will lose money. 

[unsorted]

50 minutes ago, divito said:

How have they risked their capital? There is almost no situation where they will lose money. 

If I were buying any newly-released hardware in bulk at retail prices, I'd consider it risky...until of course I found out that the desire to save Christmas among the less price-sensitive customers would allow me a nice window to make a lot of money. You just never know what's going to happen, though. I think there's always risk. There is also risk in other areas like storage, the possibility of hardware faults (RMAs), theft, damage, etc.

 

Though the risk might be small...it's still a bit of a gamble.

[randomperson_234]

On 12/10/2020 at 2:57 PM, Random_Person1234 said:

 

 

[Blade of Grass]

20 hours ago, unsorted said:

Bots are doing most trading in the financial markets as we speak. Real people are competing against them. It's a very similar situation.

It’s really not the same, the depth of liquidity in exchange traded products is orders of magnitude larger, even for individual listings. Listed markets also have much strong rules regulating them, and the behaviour of a CLOB market is quite different from that of a scalping market  plus, no NBBO protection with scalpers. 

EDIT: you’ll also note that most of the algos that you’re talking about are actually liquidity-providing, so they actually help with market efficiency and aid in price discovery, unlike scalpers who provide no efficiency (some may argue they help the market clear, but I don’t believe this is a benefit to the functioning of gaming console markets).  

[SpaceGhostC2C]

43 minutes ago, Blade of Grass said:

you’ll also note that most of the algos that you’re talking about are actually liquidity-providing, so they actually help with market efficiency and aid in price discovery, unlike scalpers

It actually applies one-to-one to "scalpers" as applied in the context of consoles or GPUs.

 

43 minutes ago, Blade of Grass said:

who provide no efficiency (some may argue they help the market clear, but I don’t believe this is a benefit to the functioning of gaming console markets).  

Well, imagine a stock exchange where Apple comes and announce a new issuance of shares at $40 per share (or, for an even closer example, some shareholder with 1% of the company announces it is selling at that price), what would happen? The algorithms you are talking about would perform the exact same arbitrage as in the current consumer electronics markets. "Scalping" arbitrage opportunities, even if only for a few seconds, is the main job of everyone at a hedge fund.

The reason why you don't see phenomena of comparable magnitude (in terms of price differentials; in terms of gross volumes and gross profits it's much, much higher than what you see in consoles or GPUs) in financial markets is because it's inconceivable that someone representing such a large share of a market as Nvidia represents for its own GPUs and publicly announce it will sell the asset at a severely below-market price. The situation everyone is complaining about is a direct result of the huge inefficiencies in the consumer electronics markets, on of the most important being the absolute lack of an atomized and competitive market

In a truly functioning competitive market, the equilibrium price is what it is, and if it's that high compared to the cost it sends the signal to produce more consoles, leading to more manufacturing, increasing demand for console inputs and potentially also their price, which leads to a higher production of inputs, and eventually if some input is fixed then it becomes more expensive, reflecting its value to society. But here almost every deal is a direct B2B deal outside of any market, there are barely 2 or 3 players in almost every link of the chain and their production and input pricing plans are too rigid for any meaningful response to price signals. So it's either the manufacturers making abnormal profits, or for long-term PR reasons passing it on to arbitrageurs ("scalpers"), who replace the rationing lottery with efficient market allocation (yes, market clearing is en essential part of market efficiency, and the market economy is founded on the principle that allocating goods to the highest bidder is the efficient thing to do - something "scalpers" achieve but MSRP does not). We are basically facing capitalist corporations handing us soviet rationing coupons...

[weez]

All this proves is that people are dumb. If people don't buy stuff over msrp then scalping wouldn't be a thing. Too many people support scalping so nothing is going to stop them