The Biggest Enemy of Toy Companies This Holiday Season? Bots.
The second market for popular holiday toys can help scalpers make big profits after buying up must-have toys and there’s little toy companies can do to fight back.
PHOTO CREDIT: Getty Images
The fantasy of any toy entrepreneur is to create the holiday season's must-have toy. But being the maker of a hit holiday gift also has a dark side: As demand skyrockets in December, supply gets tighter and scalpers make huge profits.
Take, for example, one of this year's hottest toys, Fingerlings, a series of automated finger puppets. Fingerlings have a suggested retail price of $14.99, but scalpers on eBay and elsewhere online are charging as much as $1,000 per toy.
On Sunday, Senator Chuck Schumer (D-New York) announced he's gearing up to fight this, specifically those scalpers getting a high-tech boost from bots. The latest scheme, which he dubbed "Grinch bots," are cyber toy scalpers using the automated computer programs to buy up popular toys online and list them for double, triple, and even ten-times the suggested retail price, before regular customers have a chance to buy them.
During a press conference on Sunday, Schumer said he wants to expand the Better Online Ticket Sales (BOTS) Act, which was passed last year to fight concert and theater scalpers, to include all retail purchases. The BOTS Act makes it illegal to circumvent security measures on websites that try to enforce purchasing limits, and illegal to sell tickets bought with bots.
Since passing legislation is still a long way off, Schumer made a call for retailers to proactively "block the bots" in the near term. WowWee, the company behind Fingerlings, doesn't sell directly to consumers online and has no control over how retailers combat, or don't combat, bots. But, says the company's chief technology officer Davin Sufer, at least two of its retailers instituted a cap on the number of Fingerlings one person can buy per visit.
Even with new safeguards, Buy Box Experts' James Thomson isn't optimistic it will put an end to product scalpers. The Amazon retail consultant says product arbitrage explodes during the holiday season because it's an easy, lucrative business. "When there is a limited supply," says Thompson, "there will be someone who can take advantage of that scarcity to make money."