PSA: Selling something at market value does NOT make you a scalper

[dilpickle]

Call this a rant and lock the thread I don't care but I just want to get this out there.

 

I see a lot of posts around the internet about people feeling guilty about selling their video cards and game consoles at "scalper prices".

 

Selling something at market value does not mean you are a scalper. It just means you are not an idiot.

 

A scalper is someone who buys something they don't need with the sole intention of selling it for a profit. If that was not your intention then you are not a scalper.

 

If you bought Action Comics #1 for 10 cents in 1938 would you feel guilty about selling it for $1 million today? Of course not because that is what it is worth. You would have to be a complete moron to sell it at its original price.

[Bad5ector]

11 minutes ago, dilpickle said:

If you bought Action Comics #1 for 10 cents in 1938 would you feel guilty about selling it for $1 million today?

You don't know what my level of dementia will be at 83... 

[Lurking]

Agreed. A scalper buys merchandise at a low price and sells it at a higher price. Sounds exactly like what bestbuy does. 

 

The fact that some additional sellers go into he chain just shows the manufacturer original pricing was wrong. Assuming they are in for a profit. Ideally the manufacturer would get the added price so they are motivated and rich enough to invest in more production. But several artificial market rules and laws prevent that and move that added $ to middle men. 

 

In a free market the original seller (or manufacturer) would just raise price to the market price. So for the end consumer, the price still would be the same. It is exactly what buyers are willing to pay - not more, not less. 

 

If you buy a GPU for $1K above MSRP, you proofed that the GPU was worth that amount (to you). If it wasn't worth that amount, you would not have bought. That is in a voluntary exchange (I bet most GPU are used for games or mining, so it isn't like life-saving insulin you really have to buy)

[WkdPaul]

8 minutes ago, Lurking said:

Agreed. A scalper buys merchandise at a low price and sells it at a higher price. Sounds exactly like what bestbuy does. 

 

Hum, no, that's not what BestBuy does, they're a retailer. How do you think stores make money ?

 

A retailer buy something from a distributor / manufacturer and sell that item at a higher price than what they paid.

 

Retailer ≠ Scalper

 

Scalpers will create a supply shortage so that they can raise the price. It's easier to do when there's already a shortage that even affects retailers.

[TetraSky]

Considering stores are basically selling at nearly the same price as scalpers now... Scalpers are not making as much of a profit on them anymore. Yet they are still buying all the damn stocks.

But yes, selling at "market value" as a store (caused in part by scalpers buying everything, among other things like the chip shortage) doesn't make you a scalper. It's the buying for cheaper with the intent to resell right away for a profit that does.

 

Shipped and sold by newegg, 

https://www.newegg.ca/xfx-radeon-rx-6900-xt-rx-69xtawbd9/p/N82E16814150863?Item=N82E16814150863

Selling for $2200.

Spoiler

 

 

Scalpers be like : 

Lets increase that price by $200~$300 and call it a day.

Spoiler

 

[Lurking]

14 minutes ago, WkdPaul said:

 

Hum, no, that's not what BestBuy does, they're a retailer. How do you think stores make money ?

 

A retailer buy something from a distributor / manufacturer and sell that item at a higher price than what they paid.

 

Retailer ≠ Scalper

 

Scalpers will create a supply shortage so that they can raise the price. It's easier to do when there's already a shortage that even affects retailers.

The whole GPU market may be millions or more units. Likely many more. A single scalper buying a hundred or less doesn't create a supply shortage. And I don't believe scalpers are in a big conspiracy where they meet and coordinate buying and selling. Each of them acts individually in their best interest. And since scalpers try to sell their merchandise fast at a price they like, they don't create a shortage. They only would create a temporary shortage if they would store the GPU for a year, hoping to sell at a higher price later. But that is unlikely in electronics since next year will be a new GPU model. So if a manufacturer builds 1 million units, all of them will be available for purchase. Some at bestbuy, Some from "scalpers". But all will be available at market price. 

 

And for economics it doesn't matter if bestbuy buys from a distributor. They buy at  lower price in the hope to sell at a higher price. The scalper just doesn't have access to the large distributor and buys from shady channels, or retail. So they actually pay more than bestby pays for a product. But every merchant tries to buy low, and sell high. That has been the case since merchants existed. 

 

A solution would be if manufacturers would sell directly to consumer at whatever price the market allows. But that doesn't solve the problem of supply being less than demand. But it would allocate more resources where production could be increased. Right now billions go to all the middle-men. All money that is not available to increase production. 

[WkdPaul]

7 minutes ago, Lurking said:

*snip*

I think you don't understand how distribution work and that these millions of GPU you mention don't go to one specific place.

 

I follow Twitch channels and Discords that use similar bots that scalpers do, when stock is available, you get a notification with a link to the GPU, and a report showing the amount of GPUs available.

 

The largest amount of GPU restock for one RTX 3000 series model for Bestbuy Canada was around 150 (model was 3060 IIRC) ... that's a VERY small amount for a country of 38 millions. The rest of the time, I see 5 to 10 GPUs being restocked ... that's not something that's hard to scalp when you get at most 100-200 items per week yet have thousands of people wanting to buy.

 

These were gone within seconds. Those GPUs were obviously bought through bots. The difference now, is that the retailers raised the price because as @TetraSky mentioned, that's what people are willing to pay apparently. Them raising the price doesn't make them scalpers, they're simply adjusting their price.

[Master Disaster]

30 minutes ago, WkdPaul said:

Scalpers will create a supply shortage so that they can raise the price. It's easier to do when there's already a shortage that even affects retailers.

They don't create shortages (at least not usually), they're simply opportunistic merchants who buy something they know is, or will be in the future, very popular then resell it at a profit.

 

Sure you could argue their actions create a shortage as a bi product of what they do but I don't think that is the goal. The goal is to simply make money and often they resell things that were short in the first place (see concert or sporting event tickets).

 

4 minutes ago, WkdPaul said:

I think you don't understand how distribution work and that these millions of GPU you mention don't go to one specific place.

 

I follow Twitch channels and Discords that use similar bots that scalpers do, when stock is available, you get a notification with a link to the GPU, and a report showing the amount of GPUs available.

 

The largest amount of GPU restock for one RTX 3000 series model for Bestbuy Canada was around 150 (model was 3060 IIRC) ... that's a VERY small amount for a country of 38 millions. The rest of the time, I see 5 to 10 GPUs being restocked ... that's not something that's hard to scalp when you get at most 100-200 items per week yet have thousands of people wanting to buy.

 

These were gone within seconds. Those GPUs were obviously bought through bots. The difference now, is that the retailers raised the price because as @TetraSky mentioned, that's what people are willing to pay apparently. Them raising the price doesn't make them scalpers, they're simply adjusting their price.

Honestly, I'd rather the retailers make the profit over the scalpers, at least they provide a service that's equal for everyone. The worry is that when stocks normalise the retailers will simply keep on charging the exorbitant prices anyway.

 

Also another word for adjustment out of the norm is a bubble and we all know how they usually end...

[WkdPaul]

7 minutes ago, Master Disaster said:

They don't create shortages (at least not usually), they're simply opportunistic merchants who buy something they know is, or will be in the future, very popular then resell it at a profit.

True, in the case of GPUs you're right, scalpers aren't the cause of the shortage, it's already there and they're simply profiting from it.

 

When I meant they create shortages, I had the "conventional" scalper in mind (at least locally) ; tour/show ticket scalpers ... these guys used to buy hundreds of tickets so that they could sell them in the front door of the even at 10x the price.

 

Still, thanks for the correction !

[tikker]

1 hour ago, dilpickle said:

I see a lot of posts around the internet about people feeling guilty about selling their video cards and game consoles at "scalper prices".

 

Selling something at market value does not mean you are a scalper. It just means you are not an idiot.

I agree. Scalping to artificially increase market value is bad, but there is no foul in you simply using the current market as a normal person selling your item. Selling it cheap would probably return it to a scalper anyway.

18 minutes ago, Master Disaster said:

They don't create shortages (at least not usually), they're simply opportunistic merchants who buy something they know is, or will be in the future, very popular then resell it at a profit.

But they don't typically buy one, sell one, buy one, sell one do they? I'd buy as much as you can for price X and then over tiem sell them for price Y. While not creating the shortage, it may amplify it a bit.

19 minutes ago, WkdPaul said:

The largest amount of GPU restock for one RTX 3000 series model for Bestbuy Canada was around 150 (model was 3060 IIRC) ... that's a VERY small amount for a country of 38 millions. The rest of the time, I see 5 to 10 GPUs being restocked ... that's not something that's hard to scalp when you get at most 100-200 items per week yet have thousands of people wanting to buy.

One local store listed the exact shipments they got or expected every week and it was the same depressing news, especially in the beginning. You'd get excited your model's restock was expected next week and then you read they got a single one lol. The waiting lists were many hundreds, so after a couple of months and ever since (also with certain models getting cancelled) they simply stopped taking pre-orders completely and wouldn't accept anyone to the waiting lists anymore. I should've bought that 3080 Ti when it was "only" €1700, now it's back to 2300

[LogicalDrm]

-> Moved to Off Topic

[Lurking]

46 minutes ago, WkdPaul said:

I think you don't understand how distribution work and that these millions of GPU you mention don't go to one specific place.

 

I follow Twitch channels and Discords that use similar bots that scalpers do, when stock is available, you get a notification with a link to the GPU, and a report showing the amount of GPUs available.

 

The largest amount of GPU restock for one RTX 3000 series model for Bestbuy Canada was around 150 (model was 3060 IIRC) ... that's a VERY small amount for a country of 38 millions. The rest of the time, I see 5 to 10 GPUs being restocked ... that's not something that's hard to scalp when you get at most 100-200 items per week yet have thousands of people wanting to buy.

 

These were gone within seconds. Those GPUs were obviously bought through bots. The difference now, is that the retailers raised the price because as @TetraSky mentioned, that's what people are willing to pay apparently. Them raising the price doesn't make them scalpers, they're simply adjusting their price.

I used "best buy" as a catch-all for all the official distributors. I realize there are hundreds of bestbuy locations, Newegg, Amazon etc. and each may only receive a few GPU (or any other merchandise).

 

But if a "Scalper" can buy a GPU from one of those retailers, and sell at a profit, this just means the original seller priced it too low (below market value).  And that GPU the scalper bought is still available assuming no one in their right mind stores consumer electronics for years hoping no more modern products appear. Due to shipping from bestbuy to scalper and then shipping to the end-consumer some days may be added, though. 

 

How the specific distribution channel looks like (how many middle-men etc.) isn't really relevant for economic analysis. As an example, if the market value (price a scalper can achieve) is $1,200 and bestbuy  sell it for $1,000 and the manufacturer sold it to bestbuy for $600 it means the manufacturer only has $600 motivation to invest in new production capacity. If the manufacturer would sell directly for $1,200 (let's guess $200 distribution cost), they would have $1,000 per GPU and consequently more motivation and money to increase production compared to $600. So if they can sell a GPU for $1,200 ($1,000 after distribution cost), The manufacturer could be able and motivated to build more. But with the current distribution model, they only get $600 and that may not make them to produce more. 

 

The more middle-men, the higher the end price and the less money for the actual producer to increase production. the latter again is likely to limit production and increase end user prices.

[WkdPaul]

25 minutes ago, Lurking said:

*snip*

My point still stand ; retailers aren't scalpers.

 

Yes, they can raise the prices close to scalper prices, but that doesn't make them scalpers, it only means (as you seem to agree) that they're matching what the market is willing to pay.

 

Selling for a profit doesn't mean the seller is a scalper, is what my point was.

[Dillpickle23422]

2 hours ago, dilpickle said:

Call this a rant and lock the thread I don't care but I just want to get this out there.

 

I see a lot of posts around the internet about people feeling guilty about selling their video cards and game consoles at "scalper prices".

 

Selling something at market value does not mean you are a scalper. It just means you are not an idiot.

 

A scalper is someone who buys something they don't need with the sole intention of selling it for a profit. If that was not your intention then you are not a scalper.

 

If you bought Action Comics #1 for 10 cents in 1938 would you feel guilty about selling it for $1 million today? Of course not because that is what it is worth. You would have to be a complete moron to sell it at its original price.

Agreed. To me, a scalper is someone who maliciously goes out and buys obscene amounts of goods to inflate the price of said good- with no intent to ever even open the box, much less use it. A normal user, however, who bought one or two, used it, and decided that they didn't like it, and resells it at whatever the market price is, isn't. It's all down to motives and ethics to me. 

[airborne spoon]

I sold my old RX480 8gb for $325 a couple months ago. Before the shortage it was worth like 50 bucks, but being a savvy seller i sold at market value because never forget rule of Acquisition #2 The best deal is the one that brings the most profit.

[FRD]

Nobody does it, but I wonder. Does it make you a scalper if let's say you buy a lot of Xbox SXs/PS5s and sell them at retail price to people?

Actually I often see people selling Xbox Series Xs at prices like $510/515/525. That's such a low profit I wonder why people even bother scalping those. They're not going for $600 or higher anymore, unlike PS5s. European marketplace prices by the way.

[Jeppes]

I bet people in Soviet Union had similar excuses. Or even in allied countries during WW II. If you need flawed logic to make your behaviour seem acceptable, you already know you are in the wrong. Just live with it.

[whm1974]

22 hours ago, TetraSky said:

Considering stores are basically selling at nearly the same price as scalpers now... Scalpers are not making as much of a profit on them anymore. Yet they are still buying all the damn stocks.

But yes, selling at "market value" as a store (caused in part by scalpers buying everything, among other things like the chip shortage) doesn't make you a scalper. It's the buying for cheaper with the intent to resell right away for a profit that does.

 

Shipped and sold by newegg, 

https://www.newegg.ca/xfx-radeon-rx-6900-xt-rx-69xtawbd9/p/N82E16814150863?Item=N82E16814150863

Selling for $2200.

  Hide contents

 

 

Scalpers be like : 

Lets increase that price by $200~$300 and call it a day.

  Hide contents

 

To be fair these are very high-end dGPUs the very Gamers will purchase in the first place at Retail or MSRP. However I do agree that the Pricing is out of hand.

[tikker]

9 hours ago, FRD said:

Nobody does it, but I wonder. Does it make you a scalper if let's say you buy a lot of Xbox SXs/PS5s and sell them at retail price to people?

Actually I often see people selling Xbox Series Xs at prices like $510/515/525. That's such a low profit I wonder why people even bother scalping those. They're not going for $600 or higher anymore, unlike PS5s. European marketplace prices by the way.

Typically scalping is about exploiting demand and thus selling for a relatively large profit. There's no real point in (hypothetically) buying an Xbox at $500 and reselling at $510. It might be easier to flip, but you'd also need to sell 50 of them to earn one unit's worth of profit. It might be scalpers that missed the boat and are now forced to sell their remaining stock at whatever profit they can still get, if any.

[whm1974]

3 hours ago, tikker said:

Typically scalping is about exploiting demand and thus selling for a relatively large profit. There's no real point in (hypothetically) buying an Xbox at $500 and reselling at $510. It might be easier to flip, but you'd also need to sell 50 of them to earn one unit's worth of profit. It might be scalpers that missed the boat and are now forced to sell their remaining stock at whatever profit they can still get, if any.

The number of Folks willing and able to pay Scalper Pricing are actually few. It just enough of them to cause problem for everyone else.

[Lurking]

On 12/17/2021 at 12:37 PM, WkdPaul said:

My point still stand ; retailers aren't scalpers.

 

Yes, they can raise the prices close to scalper prices, but that doesn't make them scalpers, it only means (as you seem to agree) that they're matching what the market is willing to pay.

 

Selling for a profit doesn't mean the seller is a scalper, is what my point was.

I'm not really differentiating between what many people here call retailers (bestbuy et al) and what people here call scalpers. They all buy from someone, and sell to someone else at a profit. There is nothing unethical assuming these are voluntary transactions. The "scalper" is just an added market inefficiency or added layer of middle-men. They are a sign that the price asked for by the retailers is too low. So they are a market correction. Similar to professional traders. But since all GPU that are produced ultimately will end up in an end-user's hand, they don't cause a shortage. 

 

I'm not sure why "scalpers" have a bad rep. They see an asset priced below actual value and buy it in the hope to sell it for more. They also take a risk. Everyone who ever bought an investment (stocks, crypto, retirement plan etc.) is doing the same. And retailers like Newegg and bestbuy actually should be happy since those "scalpers" buy many units per transaction compared to a single unit a normal gamer buys. Alternatively Newegg or BestBuy could just raise the price. 

 

The only thing that would help with the shortage and high prices would be direct-sale since that leaves more money (and motivation and investment capital) with the manufacturer to increase production. But in the current system of multiple layers of retailers, it doesn't matter to the manufacturer if the last seller is bestbuy or an ebay guy. 

 

FWIW, I don't have a dog in this fight since I'm not a gamer or seller (except items I actually used for years and sell). But the economics are pretty clear and government regulation won't do anything to lower prices for end consumers. If anything they will add red tape (cost), limit multiple retail channels (less competition) and will leave huge loop holes. 

 

If you are against people who you call "scalpers", the best course of action would be not to buy from them. I have several outdoor hobbies and the situation is similar that prices are higher and supply much shorter now. Some items out till 2024, and don't count on discounts. All I can do is be happy with the shit I already have and stick it out for 2 years, buy lesser equipment, suck it up and pay the price, or cry into my pillow. My best tactic so far is to buy things in opposite seasons. On the upside I was able to sell some of my old stuff at a relatively good price.

 

[Arika]

On 12/18/2021 at 5:37 AM, WkdPaul said:

Selling for a profit doesn't mean the seller is a scalper, is what my point was

This is something that a lot of people on this forum and elsewhere seem to forget. it current going sentiment seems to be

"YoU'rE a ScAlPeR iF YoU sElL aT aNyThInG aBoVe MsRp!!!!!!!"

[Rune]

48 minutes ago, Arika S said:

"YoU'rE a ScAlPeR iF YoU sElL aT aNyThInG aBoVe MsRp!!!!!!!"

As someone that works for Microcenter, this mentality is absolutely fucking insane to me. Why are you getting mad at us for having cards in stock?

[YellowJersey]

To me, this is not about whether a product is sold at or above MSRP; MSRP is and always has been the suggested retail price, but market factors can raise or lower that price. MSRP should be seen more as a guideline than a hard and fast rule. 

 What makes a scalper a scalper is whether or not they add anything. Manufacturers, distributors, and retailers all add something of value. The manufacturer produces the product. The distributor gets the product from the manufacturer to retailers. Retailers provide the products to end-users. Each step in this chain provides something. Yes, distributors and retailers might seem like pointless middlemen, but it is often cheaper and easier for a manufacturer to use them instead of building out their own distribution and retail networks.

 

Scalpers, on the other hand, contribute nothing of value because all they do is buy the product from a retailer and then resell it at a huge markup as well as create or exacerbate scarcity. Scalpers are parasitic in this regard while the manufacturer-distributor-retailer relationship is more symbiotic since each one provides a critical service that gets the product into hands of end-users that the others can't or won't do themselves.
 

[wasab]

On 12/30/2021 at 12:22 AM, YellowJersey said:

 

Scalpers, on the other hand, contribute nothing of value because all they do is buy the product from a retailer and then resell it at a huge markup as well as create or exacerbate scarcity. Scalpers are parasitic in this regard while the manufacturer-distributor-retailer relationship is more symbiotic since each one provides a critical service that gets the product into hands of end-users that the others can't or won't do themselves.
 

That is a very good point. Scalper is just an extra and unnecessary middle man between the manufacturer and the end consumers who charge an extra middle man fee for no extra utilities and functionalities. This inefficiency would not be possible in a normal market with normal level of supply and demand curve.