What is Scalping

[Paulbot]

To me, Scalping is when you can't buy a hard to find item (TF, Concert tickets, whatever) because someone else has bought them solely to make a profit by selling them to people who missed out/couldn't find them.

Buying some toys for investment is fine but I wouldn't be impressed when it prevents others from buying them. For example, in the instance of the City Commander kit say there were only 10 available, and the first board member to see it bought 10, kept one and put the other 9 up on ebay and 9 other board members missed out. I would call that person a scalper. Fortuntely in this example the preorder requests came first to ensure there were enough kits to meet the demand.

[STL]

I do agree w/ the assessment that an intention to reduce to supply is a key component of scalping.

But I think what lies at the heart of the scalping though is the artificial inflation of prices. Scalpers are interfering w/ the market mechanism by constraining supply and creating a situation of excess demand. They do this to the detriment of not necessarily just the fanbase but the casual consumer as well. They manipulate the supply of the toy/good to their own advantage by profiteering off an artificial niche market that should not exist.

What Jay raises about buying a potentially valuable toy and holding onto it for future resale value is inherently different. This is not b/c it's speculative. This is because of the temporal nature of it. Three years, four years, five years later is beyond the control of a collector who holds onto a toy. It's value is not derived by a concerted effort to reduce the supply. The time that elapses before resale is uncertain.

The other critical aspect is there is always an element of detriment. Scalping exists to the detriment of fans. It is an artificial inflating of prices. For instance, if the price of City Commander appreciates tenfold in the next 3 years that is beyond my control. If I'm after one in 2 or 3 years, that's my problem b/c that is what the market has dictated for a toy that is no longer in production. There is no detriment. However, if I were to buy a heap of City Commanders now and then offer them up on eBay in September in recognition that they're so hard to find, that is scalping. That is exploiting hte market mechanism. There is detriment. This is b/c the usual channels I would've gotten the toy from have been deliberately bled dry.

The argument that most fans would want a toy shop to profit from their hobby in itself distinguishes it from the act of scalping. A toy shop exists w/ the primary objective of making a profit. It becomes then a business venture that is a direct outlet for people to make an informed decision. But can the line be crossed? In the case of stores that markup prices excessively like some do in Melbourne? Perhaps.

There is an argument run that all prices purely reflect what someone is willing to pay for it, that something should only be worth what you are willing to pay for it. That is indeed true. However, shops that mark up their prices so much are aiming for a different type of collector. A niche. The ones that want to buy in a certain store or avoid buying online. Or, in the worst case, one who is affected by information asymmetry. It is not scalping unless they are going out and buying from the other toy stores/online stores and then offering themselves up as one of the few alternatives.

Now i briefly touched on the issue of the argument that prices are only so inflated because consumers are stupid enough to pay for it. So it is not a scalper's fault. That argument is flawed and conceited. Scalpers are interfering w/ the accessibility of something and then selling it a severe premium. Consumers who would have wanted a chance to order/purchase it from theat source the scalper used now cannot. Grand Final tickets are an example of this. Why wait in line to buy them and then resell when someone else in line is there genuinely trying their guts to get a ticket? To turn around and then say, I'm not doing anything wrong - this dumbass wants to pay for it, let him/her do it. I camped out here all night to get these tickets so I can sell them as I wish. I cannot begin to express the disdain I'd regard an individual who is capable of that.

At the end of the day, the consumer is the one who is at the mercy of the seller b/c the underlying good is something that commands more than just monetary value to the consumer. They are in the position of power relative to the buyer. And thus should be held to a higher level of scrutiny and accountibility.

In the case of exclusives, the situation is much more sensitive. A quantity of 1 can be viewed as a significant reduction in supply. And really then it comes down to intent. I've seen several buyers offer 2-3 Botcon sets before. That might be small qty that on the mass market is hardly detrimentally or significant. In the case of an exclusve, there's a difference between ordering a set to see if you'll like it and then selling it on if you don't; and someone who is deliberately constraining supply and selling multiples. The act becomes that much more repulsive owing to the exclusive nature of it. I find such individuals disgusting and reprehensible. I think everyone accepts that exclusives will naturally command a higher price but scalping drives that to insane levels.

In summary, for me there are 3 elements that constitute scalping
1.) Intention to manipulate supply enabling them to
2.) excessively price to the
3.) detriment of the consumer

[kup]

What about Ebay Scalpers?

Playdia, Wheeljackslab and Dit138 have a habit of cornering the ebay market on a particular figure. Once they do, they charge obscene amounts for it.

Not long ago Playdia and Wheeljackslab were the sole sellers of the original Beast Wars Rattrap and as a result it cost like $70 (without weapon) on average. Thankfully that is no longer the case but the supply is now almost non existent. Rattrap isn't exactly a new toy as its over 10 years old but Scalping of old high demand toys is very common on Ebay with people trying to corner the market.

[STL]

The starting-at-99c auction is an interesting point as well. Since it is the market, not the seller, inflating the price, if there is insane market demand and the product fetches 2-300% the seller's cost, does this in itself make the seller a scalper?

I'm inclined to say so. We cannot hide behind the veil that we started the auction at 99c. If you are fundamentally aware of the significant shortage of the product and its desirability, you are still profiting on it. The market supply has been reduced, the price becomes excessive by its own nature. The same goes for concert or sporting tickets. If you were genuinely not a scalper you'd be offering it at cost, covering your own costs and charging a small mark up. I saw one or two Botcon 2008 sets sold at very close to what it would've cost to get from Fun Publications w/ buy it now prices. While I wasn't all that interested, I do respect those sellers cos they are very rare.

[STL]

What about Ebay Scalpers?

Playdia, Wheeljackslab and Dit138 have a habit of cornering the ebay market on a particular figure. Once they do, they charge obscene amounts for it.

Not long ago Playdia and Wheeljackslab were the sole sellers of the original Beast Wars Rattrap and as a result it cost like $70 (without weapon) on average. Thankfully that is no longer the case but the supply is now almost non existent. Rattrap isn't exactly a new toy as its over 10 years old but Scalping of old high demand toys is very common on Ebay with people trying to corner the market.

For me that satisfies all 3 elements to make out scalping
1.) they clearly are attempting to constrain what market supply would otherwise be
2.) excessive pricing
3.) detriment of genuine collectors

I came across a Rattrap last year and paid about $40 all up for it in an auction. So if you wait, you'll get it good. But I do hate those eBay names you mention. Playidia I particularly hated when we used to be able to see the name of bidders. He would often be bidding on stuff I wanted and it often encouraged me to put in an extra bid b/c i really wanted him to hurt a bit more. He's a conniving, opportunistic prick.

[kup]

I also had a mega hard time with BW Dragon Megatron because Robozone and Playdia had cornered the market. I remember 2 pages filled with with the toy and they were all Playdia.

[jaydisc]

I'm inclined to say so. We cannot hide behind the veil that we started the auction at 99c. If you are fundamentally aware of the significant shortage of the product and its desirability, you are still profiting on it. The market supply has been reduced, the price becomes excessive by its own nature. The same goes for concert or sporting tickets. If you were genuinely not a scalper you'd be offering it at cost, covering your own costs and charging a small mark up. I saw one or two Botcon 2008 sets sold at very close to what it would've cost to get from Fun Publications w/ buy it now prices. While I wasn't all that interested, I do respect those sellers cos they are very rare.

If you, as a would-be-scalper, are not constraining supply, why is profiting so bad or wrong? I'm starting to think that our own selfish desires to acquire what we want as cheaply as possible is causing us to morally attack those running a business.

What makes someone who buys 4 Starscreams and sells them on eBay any different from a Toys R Us that buys four cases and sells them in their physical store? Why can a company exist for profit and not an individual?

The other major issue as I see it, is the unfortunate situation of the chicken and the egg. Who sets the exorbitant prices first? The consumer or the seller? Once this price has been set for whatever reason, why should the next seller not be entitled to make the same profit as his predecessor?

Why is someone that ordered three Botcon box sets more evil than one who ordered three City Commanders?

Why should an ethical seller sell his box set at only a slight margin when a scalper is only going to come in and sell it at triple the margin only to fund further scalping?

[Pulse]

Are you saying that a collector that suddenly decides to move on, possibly due to the birth of a child, or a higher interest rate on their mortgage, should be selling their toys at cost??!?!

Pulse, you also say that markup to cover costs is acceptable, but unnecessary markups for no reason becomes scalping. I don't understand this. Every goods-based business is all about markup for profit.

Why is profiting off Transformers such a no-no? Why can used car lots by cheap used cars and mark them up? Why can a supermarket by cheap groceries mark it up? What makes markup on these toys so different?!?!

Jaydisc, Where did this topic originate from? Are you thinking about becoming a Scalper? To me, all Scalpers are scum! I'm sure all people who buy toys (be it either collectors or Mum's/Dad's searching for a gift for their child's Birthday/Xmas) have encountered a Scalper at some stage & have nothing good to say about them.

[jimoinj]

I think it's true that some shops have a similar mindset to scalpers in that they set exorbitant prices that people are willing to pay in person when they can see something, but less likely to pay over the Internet. Shops have a certain amount of legitimacy for people psychologically compared to an individual, particularly selling through the net. But doesn't that just make it legalised extortion? Maybe some people know they are buying things that they could get cheaper, but they simply can't wait to get it through the post - impulse buying. I think some shops really capitalise on that.

[griffin]

Scalping is excessivly profiteering off an item, through limited availability at its regular price. The most obvious toy scalpers (usually in America) are those who go around to stores buying up short-packed or exclusive items, with the sole intention of re-selling them way above retail. When they remove from the general market a product to re-sell immediately or within a short space of time, they are scalping the product by artificially inflating its value.

Great example TDD. Thanks for your honesty.

The starting-at-99c auction is an interesting point as well. Since it is the market, not the seller, inflating the price, if there is insane market demand and the product fetches 2-300% the seller's cost, does this in itself make the seller a scalper?

A seller doesn't have to be directly inflating demand for an item to still be a scalper, they can inflating the price of it instead.
Listing a rare (current/recent) item as an auction instead of a Buy-it-now is inflating the price by forcing the market to fight over items that have been removed from a (public) retail source, either by that person or by some other cause (limited release or short packed). Due to such a smaller demand for TFs toys in Australia compared to America, I think there is very little actual toy-scalping happening here (someone going around to every store, buying up limited or exclusive items to resell on ebay). I just think there is the occasional person taking advantage of the odd rare or hard-to-find item from time to time (like Battle Jazz, Classics Jetfire, Ultimate Bumblebee, MP Starscream, 08 Bumblebee).
The stories I've read about US toyscalpers, and toys like Star Wars and the recent MOTU, make our toyscalping seem rather insignificant.

Here's an example of what I think best describes a toy scalper, from my own experience.

Alternator Rodimus.
It was limited to about 20 Toyworld stores in Brisbane, making about 200 of the figures released in this country for $40 retail. I aquired about 50 of them. This mass acquisition of a rare item is only half of the procedure for a toy scalper - limiting availability to the general public. The result is that it becomes even more sought after by those who know about it, because if I hadn't bought them, there would be 50 less people fighting over the ebay Rodimus Primes. That's the 'demand' factor, inflated by the toy scalpers, but rarely monopolised by scalpers acquiring all stock***.

The difference between me and a toy scalper though, is the second part of the process - re-sale price.
A toy scalper would resell them at a hugely inflated price (most on ebay were $80). I sold them for $40 (or $45 if you bought a second one, or if I listed it on ebay), which in itself doesn't cover all the costs of fuel and credit card fees/interest (and ebay/paypal fees). But that's the thing a toy-scalper doesn't care about - making sure real collectors get the items without paying more than they would if getting the items themselves from the store.

But then the last Rodimus I had available, I took the toy-scalper approach, by listing it as an auction on ebay. Even if you list a rare item at a tiny start price, and the seller (me with the Rodimus) knows it is a rare item that now has an increase in demand on non-retail sources (due to it no longer being available at retail, either intentionally by scalpers or unintentionally by short supply/short packing), the high final ebay sale price is not the fault of the buyers. Just because they are prepared to pay that much, it makes no difference if it sells at an inflated buy-it-now or at an inflated auction price. The best way to prove that you aren't scalping a toy on ebay, is by selling it at a buy-it-now that is close to what you paid for it.
I didn't do that with my last Rodimus figure I listed on ebay, because I listed it as an auction (the other 19 all had BIN prices). Even though I listed it with a small opening bid price, I was taking advantage of the market, by getting them to fight over a figure I had removed from retail sale (it ended up selling for $56). Sure, most of those who bought my Rodimus toys were out of state anyway, but that doesn't justify taking advantage of them by making them pay more for an item, by listing it as an auction instead of a buy-it-now at what it cost me. It made me feel good to have so many fans out there getting their hands on a rare toy for about half what it would have otherwise cost them.

Even if I did end up losing a little money over it, hopefully at least, I didn't lose the respect of people buying them off me by not listing them as auctions or hefty buy-it-nows.

Hope that example helps distinguish the difference between a toy scalper and toy collector helping out other collectors.

*** The one exception to this for TFs was Beast Machines Battle Unicorn. Bigbadtoystore acquired an almost exclusive supply of the toy when the line was axed before BU was released. It was a basic sized toy, which would have retailed for about US$5. BBTS price was US$50. They fulfilled the first part of a toy-scalper by inflating demand of their stock (couldn't buy it elsewhere), and as such fulfilled the second part of a toy-scalper by inflating the price (fans had no choice if they wanted that toy). BBTS was taking advantage of the desperate or completist collectors, excessively profiteering off those willing to pay that much for a rare TFs toy. Fortunatly after about a year when demand for that price died, they were selling them off for about US$5, which allowed for more collectors to get one at a more reasonable price.