Why shopping — for everything from the PS5 to the Nugget couch — got so competitive.
In the affluent blocks and neighborhoods of cities and suburbs across the country, moms of young children spent the summer and fall of 2020 raging at the impossibility of acquiring the one item that could bring them happiness. They were stuck inside like everyone else, but with difficult-to-please toddlers who had nowhere to play — and the solution to all of their problems, the Nugget couch, was sold out again.
It’s impossible to predict what the hottest toy of the year will be, but in retrospect, it makes sense that this one doubled as furniture. Animal Cracker-addled tyrants — forbidden from local playgrounds due to coronavirus restrictions — could hoist themselves onto the fort-like designs and give parents a few minutes of solace.
Unfortunately, every restock to the direct-to-consumer business’s website sold out within minutes, assuming you were able to even get one in your cart before trying to check out. Moms were left delirious, paying over $500, or more than twice the retail price of the Nugget, on aftermarket platforms such as Facebook Marketplace. “I thought $229 was crazy expensive, so no way I was going over that,” says Pennsylvania mom Jessica DeRafelo. “But I know there’s some crazy Nugget people out there.”
Months earlier in March 2020, as America’s never-ending social-isolation era began, sneaker boutiques across the country were announcing they would no longer hold in-store releases of “hype” sneakers. For the uninitiated, these are the shoes — usually from brands like Jordan, Yeezy, or Nike SB, in collaboration with the latest high-fashion or sought-after streetwear label — for which people camp out and line up, thanks to the manufactured scarcity of each release.
Brands use that scarcity to turn people into animals, forcing them to scramble to grab one of the few pairs and then using that for publicity. But not everyone who secures a pair does so to fill out a personal collection or tie together a knockout fit: These shoes normally sell for a large profit on resale websites like GOAT and StockX.
Large gatherings aren’t especially good for airborne viruses, and the coronavirus has proven consistent with that assessment. As such, shops decided that forcing 50-some-odd people to wait next to each other on a sidewalk for a pair of shoes was bad for both the community and the brand. Hype sneakers are now raffled off or sold on e-commerce platforms, shipped from a centralized warehouse. No more lining up. No more teenagers in $2,000 outfits with mobile speakers listening to Playboi Carti and checking their phone for the latest on that day’s drop from 7 am until noon.
What Nugget-seeking moms didn’t know was that these kids, the ones they would walk by during an errand and scoff at — muttering “All this for some shoes?” or something to that effect — were the reason they themselves could not escape the third ring of hell.
Sneakerheads aren’t the only resellers around, but they had started to expand their business beyond footwear. They’d branched out into hawking other exclusive products that were all being released via e-commerce due to pandemic restrictions. Conveniently, e-commerce was a retail battlefield they’d already had a years-long head start on, gaining a competitive edge over retailers that weren’t used to managing massive product drops. Scarcity is not limited to footwear, and money spends the same. Those $500 Nugget couches weren’t being sold by other moms. They were being hoarded next to Yeezy sneakers and Funko Pop! figurines.
Desperation breeds markets, and both can be manipulated. That’s the basis of the US economy. We spend hours doing things we hate to acquire the things we don’t have time to enjoy. For the vast majority of Americans, there’s no floor beneath us; a living must be earned, never given. It’s impossible to measure what level of underlying damage that does to the psyche, but one way it appears to manifest itself is in competitive retail — the acquisition of stuff that other people can’t get. The reseller’s job is to diagnose that desperation and capitalize on it.
In the sneaker game, this has traditionally meant bribing local boutique owners or making friends to acquire extra pairs of the limited-release sneakers collectors lusted after. However, as major retailers, boutiques, and even Nike (via its immensely popular SNKRS app) began to emphasize e-commerce models for hyped releases, the resellers began to look more like software developers than street kids.
It started as Sneaker Twitter. Developers with an affinity for rare Nikes started to program product-monitor bots, looking to gain an edge on the people who camp out on sidewalks. Boutiques often release a certain portion of their stock online, and to get there first, developers just needed to know when specific product SKUs were loaded and programmed to go on sale. However, sneaker culture is tight-knit, so once they cracked the code, they began sharing it discreetly with people in the know.
Eventually, it spread to Twitter in the form of accounts that would notify followers of drop info. Individual collectors and resellers would congregate in the replies, swap secrets, talk about new bots that were working for them. Within months, casual Twitter interactions became more coordinated, and software development more sophisticated. Automated purchasing bots were created to bypass or expedite certain actions (automatically adding sizes to shopping carts, skipping steps in checkout by completing forms in milliseconds, etc.) during the buying process, allowing for accounts to purchase multiple pairs of shoes (sometimes dozens, at least in the early days), with online stock selling out faster than humanly possible.
Retailers have since invested in first- and third-party protections against bot traffic, analyzing metadata and blacklisting IP addresses with known bot activity. The problem, though, is that every solution they come up with is seen by the developer community as a new challenge — and the race to be the first to find the exploit begins. The allure is obvious: The reseller doesn’t need to actually do anything to make money, besides being fast. There is no product to manufacture, no marketing necessary to create demand. The brands do that for them. All they have to do is get there before the people who actually wanted the sneakers — and wanted them badly enough to pay a multiple on the retail price.
Doug, a reseller in the Pacific Northwest who asked to use a pseudonym for privacy reasons, said he was hooked from the first pair he sold. “Once I saw it was as easy as walking into a store, picking up a pair, and hitting StockX, it was only a couple days before I started thinking, ‘How do I do this at scale?’” he said. “Soon I was hanging out on Sneaker Twitter, learning about automation.”
Doug found himself on the ground floor of the automation boom in sneaker reselling. It wasn’t long before he was invited into a highly selective and exclusive community of people, known in the game as a “cook group.” The group would pool resources and subscribe to the best automation bots in existence, provided by a high-level developer who acted as the organizer. The exclusivity is by design: Though it may limit the developer’s short-term upside to allow only a few hundred people into a cook group, it also reduces the number of times that developer’s bot is used on retail sites, which are constantly trying to detect (and subsequently block) it.
Regardless of the self-imposed revenue ceiling, resellers we spoke with for this story indicated that cook-group owners are assuredly raking in six-figure salaries just for the organization of a group. When slots open up, invitations are competitive to acquire and usually cost a few thousand dollars, and that’s only to gain the privilege of paying a subscription fee that’s normally around $1,000 per year. Assuming a cook group of a few hundred people (a size that’s not only manageable but also pretty standard), these developers can bring in hundreds of thousands of dollars — not accounting for any product they themselves may be acquiring for resale.
And for those grinding through it as full-time resellers — subscribing to cook groups, driving to shops in person to check for stock, always keeping a line to the internet in case a product monitor announces a new drop — six figures is within reach. The only limit is how much stock they can secure. And that’s where frustrated moms trying to get their hands on foam couches that double as forts come in.
As the sneaker resale market becomes more prominent with the launch of companies like StockX, interest has subsequently exploded, flooding the market with new sellers. Allen, a reseller in Los Angeles (and also an alias), said StockX “changed it completely.”
“It’s way easier now,” Allen explained. “I used to always meet people in public at the food court to sell shoes, to be safe. People got scammed all the time.”
“The wealth of knowledge is out there. The secret’s out,” Doug said. “There’s, like, guys on YouTube with public-facing channels showing you how to set this stuff up.”
But with increased access comes more competition for stock and gradually shrinking slices of the pie. The developers and resellers used to making better money started expanding into other categories with manufactured scarcity and cult followings. This meant foam couches that moms across the country were fighting over. Or, trading cards like the ones that are likely sitting in various basements or attics collecting dust. Art prints, collectible figurines. If it has a fanatical following and manufactured scarcity, it’s now a commodity.
“The Nvidia graphics card drop is the first one that was like, ‘oh, wow, okay, this is really spreading,’” Doug says. A recent September drop of the company’s coveted RTX 3080 was raided by resellers, who turned the $699 graphics card — which enhances frame rates and performance for serious gamers and is therefore hotly coveted — around for an average sale of nearly $1,200 on StockX. Walmart and Target checkout bots have also popped up, helping resellers acquire exclusive games or collectible toys from retailers that had never had to deal with the onslaught of automation that Nike and footwear retailers had been developing against. And once 2020’s biggest electronics launch came in the fall, the Sony PlayStation 5, the chum was irresistible.
Sony has sold nearly 5 million units of the PlayStation 5 worldwide to date. According to StockX sales figures as of January 28 of this year, roughly 49,000 and 28,000 units of the Standard and Digital versions of the console have sold on the platform at an average sale of $846 and $789 on the $499 and $399 MSRP, respectively. That’s more than $63 million (at more than 50 percent profit) in the pockets of the people who exploited their way to the front of the line, and 77,000 people desperate enough to pay the ticket.
Since the pandemic and subsequent desire to avoid crowds during a deadly plague has forced all exclusive and high-demand product retail to move to the same e-commerce platforms that resellers have been exploiting, the resale market has exploded, with PS5s only representing one small slice of the expansion. “We keep saying it’s not a pandemic, it’s a bandemic,” says a reseller in Pittsburgh, gratingly adopting “bands” (slang for large sums of money) from the drug-dealing lexicon. Sometimes, even the words are someone else’s.
“I don’t feel guilty about it,” says Doug when asked whether he ever regrets his side gig. “I’m selling luxury items. What I sell, nobody needs, they just want it and they can afford it. There are lines I don’t cross.” For Doug, those lines are drawn at necessities. But there’s always someone willing to hoard the things people need to survive, like cretins who snapped up the hand sanitizer and toilet paper at the start of the pandemic. “What I worry about is like when the vaccine becomes available and people are booking slots online, people botting that and like selling appointment slots,” Doug says. In Chicago, Walgreen’s bots have already been developed.
And why wouldn’t they? There’s someone out there willing to pay, and there’s always the possibility that the bottom could fall out from under any one of us. If brands and retailers who invest millions of dollars in fighting bot automation can’t beat the reseller community, what hope do the neglected state infrastructures that have already botched the vaccine rollout possibly have? There will always be someone desperate or heartless enough to take advantage of even the markets whose consequences are life and death.
Vaccine reselling would get shut down eventually, just like the price-gouging did, either via supply chain fixes or software patches. The UK is even looking to ban automation software, the effectiveness of which seems dubious. But how many will get in before the ban? How many will find a workaround? At the front of the line for the vaccine, there’ll be a kid in clothing and sneakers you don’t recognize that were purchased for more than your monthly income. Behind him wait the rubes, some of them unwitting customers — of a PS5, an autographed piece of memorabilia, a pair of Jordans — all tolerating the indignity of American life, just so long as they can still pay the ticket to get theirs.
Author: Casey Taylor