How Resellers Are Ruining Our Supply Chain

This issue is impossible to ignore. It impacts our quality of life and our wallets. The global supply chain is faltering.

Resellers add unnecessary strain on our fragile supply chain. It’s a sinister problem that is well-hidden from public view.

Resellers

Resellers are actors who buy retail goods and resell them at a markup to the consumers of those goods. Unlike retailers, they have no relationship with brands and manufacturers — they are free agents who buy directly from retailers. Instead of offering a service or legitimate value, they manipulate retailer inventory and abuse discount codes to create a profit margin for themselves.

The Squishmallow Story

Alice runs a small online store. She specializes in cute, warm and fuzzy items. That’s why, when Alice sees the new Axolotl Squishmallow©2022 Jazplus, LLC and Kelly Toys Holdings, LLC , she knows she has to get some for her valued customers. She orders six, but due to high demand, her supplier is only able to provide her with four units for her inventory.

She’s seen the tweets and knows these squishy friends are hard to get, so she sets up a rule for her shop: only one squishmallow per customer!

Chad is a reseller. He spends most of his time on Discord in reseller communities, finding ways to abuse discount codes and flip popular products to make a buck. He likes to brag about how he doesn’t need a “normie job.”

Chad saw a post in a discord server about how Axolotl Squishmallows are selling for twice their list price due to high demand.

Chad’s eyes light up. Plushies are his specialty.

As a professional reseller and grifter, Chad has already set himself up to acquire cute, warm and fuzzy items that are in high demand. He has farmed several spam accounts on Alice’s online store.

Chad uses an automation tool to submit four orders to Alice’s store at the moment her squishmallow offerings are listed for sale.

At the same moment, squishmallow fans are anxiously waiting to order theirs. Alice receives a total of 8 orders for the product. She will only be able to fulfill four of them.

Two of his four orders are fulfilled and Chad receives two squishmallows. Chad turns around and lists his two squishmallows for sale for twice the price he paid to buy them on Alice’s site.

One of the genuine consumers, Bob, does not get a squishmallow. His niece’s birthday is coming up and he knows how special this axolotl squishmallow is to her. He resorts to searching for her gift on a resale website.

He finds Chad’s listing for an axolotl squishmallow and decides to pay twice the original price for the same product.

Alice sees the eight orders and is saddened. She cares deeply about her customers and wants to do her best to take care of them. Any unfulfilled order is not only bad for her business, it’s a bad experience for her valued customers.

Alice writes a heartfelt message to each user account that ordered but didn’t receive the squishmallow, and promises to restock as soon as she can.

Due to the high demand she saw, Alice places a back-order for six more units.

After a few weeks, Chad still hasn’t sold his second squishmallow. It turns out that there were actually only three real people who wanted them. Meanwhile, Bob attends his niece’s birthday with mixed feelings about his experience getting her gift.

Chad sees squishmallow sales declining on secondary markets. His fellow resellers are struggling to sell them at list price.

Alice always puts her customers first, and offers a 30 day return and refund policy for her customers with no questions asked. Chad takes advantage of her policy to recoup his investment.

Alice receives Chad’s returned squishmallow. Her supplier has delivered her back-order of six more units. Alice now has seven axolotl squishmallows in stock.

Unfortunately for Alice, the demand for axolotl squishmallows has subsided and she is unable to sell her inventory.

Scale It Up

Without reseller manipulation, Alice could have delivered three units to the three genuine consumers for a total of three packages delivered. Due to Chad’s interference, she paid for an additional delivery (to Chad) and the return trip — adding two more packages delivered to the scenario. If we include the additional backstock that Alice ordered based on bad analytics, that’s a total of 3 additional unnecessary deliveries. This has doubled the logistical footprint of Alice’s squishmallow sale.

At scale, the logistical impact of resellers is significant and unnecessary. It has an impact on shipping availability and an impact on our climate.

Yofi (formerly known as BotNot)

We are frustrated about the impact of resellers on our lives. The negative impacts go beyond the obvious: overpaying for concert tickets, videogame consoles, sneakers, and everyday items. We work with brands and retailers to understand and mitigate these negative impacts.

Follow us and join us in our movement!