I don't think the sellers want to stop it at all, because it boosts more demand for their product by creating a perception of scarcity and value.

I've thought about this problem as a start up idea

The thing is, it's trivial to come up with fake card details. Stupidly trivial.

And the more intensive your verification, the lower your conversion rate from click to sale...

So the idea would have to be something like validating valid ID before the sale happens, since validating a real form of identification can take days in some cases.

Maybe you could become a household name in anti-scalping and get people to sign up before they ever buy something from a specific retailer, then provide an API retailers can use to verify a "real person" was registered on your site with a given set of info.

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The problem is convincing a retailer to let you get hooks in their checkout system for this. At the end of the day demand is so high for these things even taking dissatisfaction into account it really isn't costing the retailer anything at all...

If anything it's just driving demand even higher as it attracts speculators who otherwise wouldn't be interested...

> At the end of the day demand is so high for these things even taking dissatisfaction into account it really isn't costing the retailer anything at all...

Well, the retailer only cares enough to look like they care enough so that they don't garner negative press.

The retailer really only cares that they sell. Yes, the retailer would like to capture some of that scalper premium but doing so without also alienating the customer base is difficult. (see: Ticketmaster--whose almost sole purpose is to serve as a blame repository for egregious ticket prices)

> The retailer really only cares that they sell

In the space of limited special edition stuff, a retailer is not going to last long with that mindset. If a brand gets a reputation that they have lenient buying restrictions, and all their stuff ends up at resellers instead of true enthusiasts, that brand will swiftly become irrelvant.

This article may cause waves in niche for Jordans and Yeezys, and suddenly those products are no longer quite as cool or worth quite as much, simply because now you know it was just some dude buying up stock... it really kind of takes away part of the fun ownership of the stuff in way.

In this case if they create enough supply to match demand the price will fall as they are no longer "limited supply". They would far rather leave money on the table than push it too far and lose the value proposition entirely

Yea, if these sellers actually cared about allotment restrictions, they would invented some pre-registration account system that verified actual identification.

> the more intensive your verification, the lower your conversion rate ^ True, but selling through stock does not seem to be the issue for this segment of sellers.

To some degree the concert ticket sellers have already (finally) solved this, haven't they? I like your idea tho, that type of vetting costs money because it probably involves humans do some amount of work. I have never investigated what is available, but the fact that I would even have to investigate what is available tells me there isn't already some obvious choice out there.

If it's an item in limited supply that you know is going to sell out, does the conversion rate from click to sale matter?

no, but for seller reputation sake, WHO gets the sales matters a LOT. A limited brand that everyones knows 90% of stock is going to a reseller marking it up is going to quickly be done.

To the degree I'm describing it would

Imagine going to buy a pair of sneakers and the site asks for a scan of your federal ID. Do you even know if you have one? Where is it? Do you trust the site? It could take days to verify... maybe the scan was blurry and needs to be redone...

No retailer would add something like this to their checkout flow, it's a very extreme solution

Not extreme at all. You seem very out of touch with the reality of the enthusiast markets for such things. People line up for days for stuff like this. If all you had to do was provide ID online and wait 3 days at home... no problem at all.

I'm not out of touch with anything. I have a closet full of every almost every Yeezy 350 colorway ever released.

Just because some people will do something doesn't mean everyone will. Many people would protest having to provide government ID to buy sneakers.

Even if it scares off 1 person why does a retailer want to do that, pay the money it costs. and deal with the optics of being the ones asking for federal ID to buy shoes when they can literally just not instead.

Like I said above, demand is so far above supply it doesn't matter if 100% of sales go to scalpers anymore, they'll still sell out, and the aftermarket will still eat it up, no matter how bad they feel about not being able to get drops directly.

A good scalped can hit over 1000 shoes in a drop. The shoe sites do a pretty weak job protecting aginst vcc cards and small variation in shipping address fields. They could easily ship 1 per address but they choose not to, the scalpers are part of the business model

Look, scalpers are just underwriters for an efficient secondary market. The negative connotation is all pretend.

I mean its real to people that believe they can get those shoes for totally not flipping them and wearing them. But there is a reason there is no serious effort to stop them by the merchants.

It's not pretend, they're rentiers offering no value. If instead of spending $200 on a scalped ticket and attending 1 concert, a consumer might spend $200 on four legitimately purchased ones and attend 4. In fact, it doesn't matter if they spend $100 and see 2 instead, you can quite clearly see it means that there's less money to go to the actual artists, the producers of actual value.

It's a net loss for everyone involved in the production of actual value.

So economically it might be neutral, but in terms of social value it's a massive loss.

if scalpers are consistently making money, it implies that the original seller has mispriced their product. if the venue has room for n people and tickets are sold for $50, but there are n people willing to pay $100 to attend, it's the artist's/label's fault for pricing the tickets too low. either way, the scalpers aren't taking money from the artist/label. they get the same proceeds whether or not the tickets end up getting scalped.

plus, scalpers do arguably provide some social value. they offer people who aren't willing to religiously track product drops the opportunity to actually buy something popular and scarce.

To first point. Bit more complicated imo. The venue would have to tier pricing (which many do via vip) to not exclude the m people who won't pay $100. But does require more effort on venue part.

I simplified it so the example would fit in a single sentence. there are also more entities than just the artist+label organizing the tour/show. the fundamental point remains though: if scalping is a profitable business, the seller is seriously mispricing their product. I'm sure there's a good bit of variance in ticket demand show-to-show, but in total it looks like they are leaving a huge amount of money on the table. I'm not sure why, but I suspect they feel it is "uncool" to have very expensive tickets and worry that it might hurt the artist's image. maybe so, but the pricing is the original problem that is hurting fans and limiting the proceeds. arbitrage is merely a symptom, and the tickets would still be just as scarce without them.

There are many things in life where the main objective is not to extract the maximum possible level of profit.

The artists/bookers/venues choose ticket price levels based on a number of factors. They want to fill the venue and be profitable, but they also want to maintain a relationship with fans, which is going to get soured if the fans feel ripped off. There is also the factor of drinks sales, if you pay a ton for the ticket, you'll probably buy fewer drinks, and venues make a lot of money on drinks.

If they priced the tickets as high as the market could possibly bear, only the people with enough disposable income could go. That makes all of the fans who cannot afford the tickets angry that they cannot go, you really don't want to do that if you want to maintain a fan base.

Scalping is illegal in many countries for good reason. Here in Denmark, you can resell tickets all you like, but only at or below face value. It works and the artists/venues get to set the prices at levels that match their fan bases. Scalpers who don't care about the bands, but only about profit, don't get a say, because they they shouldn't have one.

And so you've answered your own misunderstanding of the problem.

It's not a symptom. It's necessary to have those lower prices to keep your image and your fans and impacts your long-term earnings, and so we're back to scalpers being nothing more than parasites and a net loss.

It's the same thing with the shoes, if they prices the shoes at their 'true' value, they alienate their customer base and the shoes lose value. The scalpers are actively harming the market.

I guess my concern is I don't think simplifications are terribly useful, since it's not a simple topic, and can change wildly depending on the specific circumstance.

Which is why we have people who are experts in marketing and economy, and specialize in specific product areas.

price discovery is price discovery, secondary market is telling you if you mispriced something. mispriced doesn't mean "we should have maximized profits", it just means something was underpriced, its simply acknowledging that the market would have paid more, its just simply the term for it. it seems like that's been lost in the "rebuttals" here, as in I don't think you even need to react or give counterpoints but for some reason you and others feel wired to.

the next thing is overweighing an idea of "artists don't want to piss off their poor fans over the long run". huge assumption. it doesn't matter how an artist stops filling venues eventually. if it happens it happens. "ack! its because I priced my Red Rocks performance too high on April 30th 2016" mmmm, no.

When an artist/booker/venue says "this is how much we want to charge people to attend this event", that is the price they want to charge. They make this choice based on wanting to draw fans in, fill the venue (for drinks sales) and not be seen as fleecing their fans.

The artist/fan relationship is everything.

For a scalper to jump in and say "I can extract more profit by buying all your tickets and fleecing your fans" is parasitic, it is rent-seeking provides literally no value to anyone besides the scalper. And the scalper doesn't care about the artists or the fans, just rent-seeking profit.

There are laws against scalping in many countries for good reasons.