If sneaker fans want to buy the coveted shoes online immediately after the release, the webshop is often sold out in seconds. Why is that? Resellers use bots to purchase all goods from the shop and resell them at overpriced prices. For retailers, this hurts their customer relationships. Because the customers quickly lose confidence in the online shop, they have to buy from the reseller for exorbitant prices, for better or worse, since the online shop does not protect them from this fraud. Intelligent solutions are needed to anticipate resellers.
After extensive advertising campaigns, brand-name shoes and, above all, sneakers are often presented and sold in a limited edition on the company’s website.
The hype around the launch is vast, and loyal customers are eagerly waiting to place their orders as soon as the product is released. But when this moment comes, the webshop is usually sold out in seconds. Many customers feel overwhelmed when attempting to snag a pair of coveted shoes and increasingly see the only option is to pay a premium to buy the shoes from a reseller. The demanded usurious price disappoints the customer, and he possibly loses some trust in the brand.
In recent years, this scenario has become more common as organized resellers use increasingly sophisticated methods to buy popular trending items from reputable retailers and resell them at inflated prices. Fashion, technology, concerts, and travel are just some of the sectors proving extremely attractive to resellers.
The COVID-19 restrictions have accelerated this trend – especially in the fashion and technology industries. With consumers unable to visit physical stores, resellers stepped in to meet demand. According to a 2021 study by enterprise marketplace SaaS platform Mirakl, the top 25% of sellers contributed 88% of gross merchandise volume on enterprise platforms. Resellers also outperformed “traditional” retailers in customer service. As a result, these marketplaces have grown twice as fast as digital commerce over the last year.
At first glance, the rise of resellers doesn’t seem to pose much of a threat to retailers. After all, the companies can sell the expected amount of their products, and the service that the third-party providers offer their customers makes sense at first. However, this sales and the profit-oriented view is too simplistic and short-term. The actual risk posed by resellers becomes apparent when considering the methods and their impact on retailers’ relationships with their customers and overall brand perception.
Shopping With Bots
The key to the most sophisticated operations is bots to monitor and automate purchases on retailers’ websites. Automated systems often operate here, competing with regular consumers for the most sought-after items. Bot-based monitoring systems and reseller collaboration in online communities alert when new releases are due. The bots are then tasked with making bulk purchases when the product launches.
The programs can circumvent traditional fraud detection systems by allowing users to enter multiple email addresses and shipping addresses—typically by making many small changes to the actual address. The bots use proxies to prevent retailers from detecting that multiple orders came from the same IP address. Technical anti-bot solutions such as CAPTCHA are also bypassed.
What follows is pretty straightforward. Once the reseller receives the goods, they set the price and advertise the availability of the desired product, often on marketplace sites. Some bots are configured so that the activity is even less risky for the reseller, and they do not even have to handle and store the goods physically. Bots automate the buying process by providing the shopper with the credentials for the shopping cart that the bot secured on behalf of the reseller. Once they have sold access to the shopping cart, login details are submitted, and the shopper has a 10-15 minute window to log into the retailer’s website and complete the checkout process.
The reseller market is so mature that the tools themselves have become mass-produced. Bots are available for hire, and step-by-step instructions are provided on how to resell—good news for private one-person entrepreneurs successfully, but bad news for retailers.
Retailers Risk Losing Relationships With Resellers
When retailers see resellers buying products en masse, it has several negative impacts on the customer relationship. The loyal customer is very disappointed when trying to buy a product that runs out of stock within a few seconds or minutes. The disappointment is even more significant when he sees the product being offered for sale by third parties at an inflated price. In addition, when buying on third-party marketplaces rather than directly from the brand, there is a risk that the product purchased may not be genuine but a counterfeit.
All of this severely damages the brand’s reputation and gives the impression that the brand doesn’t care about protecting its regular customers or the quality of its products and services. The customer can decide to buy the product anyway and accept that high demand means higher prices. However, this means he is entering into a relationship with the reseller and not the brand, resulting in potential lifetime value for the reseller rather than the original retailer. This represents a huge missed opportunity.
Retailers are prevented from creating personalized customer experiences and rewarding loyal customers with special offers. Given the amount of marketing and promotional resources devoted to developing customer incentives, resellers’ increasing abuse of this customer relationship represents a significant loss to the brand. Ultimately, in today’s retail environment, the quality of customer experience provided and rewarding loyal customers is critical in the battle for relevance and reputation.
Effects Of Automated Bulk Purchases On The Web Presence
Abuse by resellers can also have operational implications. In a digital world where customer expectations for speed and ease of use are extremely high, even a second delay in website loading can hurt conversion rates. In extreme cases, bot activity can have an effect similar to a DDoS attack, slowing down websites or even taking them offline, resulting in immediate loss of revenue and reputation.
In addition to website issues, the brisk activity of resellers makes it difficult to assess actual product demand and manage the supply chain accordingly. As a result, retailers’ storage capacities may reach their limits, which can lead to waste and unnecessary environmental pollution.
Fight Against The Unfair Practices Of Resellers
The abuses committed by resellers unfairly penalize customers for their loyalty to a brand. It artificially inflates prices and impacts the overall customer experience by limiting retailers’ ability to reach customers with loyalty rewards. Therefore, combating this abuse should be a priority for retailers.
The sophistication and automation employed by resellers mean that simple fraud and abuse detection solutions do not work. As a result, retailers are being forced to increase protection, but often these solutions require more excellent verification by the customer. While this eliminates some resellers, it also impacts the customer experience, meaning customers and retailers continue to suffer the impact.
An intelligent way is needed to recognize the fingerprint of reseller transactions. AI-supported tools for fraud detection can be a solution to the problem here. By analyzing user behavior across the entire customer journey and using machine learning to link it to a real-time global data network, retailers can uncover hidden identity links, such as B. slightly changed delivery addresses and multiple email accounts.
This ensures that real customers have the best possible shopping experience. At the same time, retailers can control their brand image, pricing policy, and reseller inventory availability. By making bulk purchases more challenging to automate and blocking serial offenders, retailers can make resale less profitable and discourage actors from targeting their brand. This means retailers can refocus on creating personalized, valuable experiences for real customers without risking their essential relationships.