Simply put, scalping is generally understood to be a form of fraudulent market manipulation.
While there is a neutral definition (i.e. when trading in securities, commodities and foreign exchange, the trader takes advantage of differing prices in different markets to make profit), the definition most people are aware of is most assuredly negative.
For the purposes of this Analysis Page, the focus will be on the negative definition.
There are three main venues for scalping:
- Trading (e.g. securities, foreign exchange, stocks). An example of this is quietly purchasing shares that have been put up for listing, and then recommending those shares for investment to others (e.g. via social media) before then selling the shares at a profit once the market prices has risen thanks to that recommendation and subsequent interest. This is considered particularly insidious when the scalper has a relationship of trust and confidence with the persons to whom the recommendation is made.
- Ticket reselling (e.g. tickets to sporting events and performances such as concerts). What most commonly comes to mind when references are made to "scalpers". While resale of tickets isn't necessarily illegal (e.g. secondary sellers may receive a certain number of tickets directly from primary sellers thanks to partnerships), the popular image of a shady, Conspicuous Trenchcoat-wearing Motor Mouth hawking tickets outside a stadium comes from the fact that these were the most common type of scalpers people would run into.
- Goods and commodities (e.g. toys, video game consoles, even sundry goods). An increasingly common form of scalper who purchases items they feel will soon rise in price (at least partically because of the scarcity caused by them purchasing so many of the items), making them very similar to the Trading example above.
The most useful skill for a scalper is having a good advance feeling for what ticket or toy or what-have-you will be both popular and be limited enough to make scalping profitable.
Sometimes this is pretty obvious: a highly anticipated championship match between two evenly-matched boxers would almost certainly be worth the "investment", as would a comeback concert tour by a singer with a still-sizable and enthusiastic following, or the release of a hotly anticipated new video game system. This has been a problem from almost the beginning of organised ticket sales, as at least one editorial cartoon from the 1920s lamented how "specs" (short for speculators) snapped up all the good seats for a prize fight despite the fight only being announced that very morning.
Other times, it requires some knowledge or familiarity with the target customer group. For a toy scalper, this might mean having a good idea of what characters are popular within a franchise, as well as being aware of the level of hype for a particular toyline. As an example, Taskmaster from the Black Widow (2021) Marvel Legends action figure toyline was quickly snapped up by scalpers due to being a popular villain in the comics and fan excitement from his introduction to the Marvel Cinematic Universe. In comparison, no one bothered to scalp toys from Shang-Chi and the Legend of the Ten Rings or Eternals because both properties were unfamiliar to the general public, and hype for both films was notably muted in comparison to other MCU films.
This can, however, backfire badly. Word of mouth and fan reaction can quickly make the commodity near worthless. For example, upon the release of Black Widow, demand for the Taskmaster figure dropped dramatically due to dissatisfaction with the "in-name-only" aspect of the character. In addition, because scalpers make their profit off of a limited supply, any increase in said supply affects them badly. Buying up all the exclusive "Behold, Galvatron" sets hoping to make a profit won't help a scalper if he walks into the local toystore and discovers that it has just received another case of said exclusives.
Simply put, the way scalpers operate is to take advantage of people's desperation. One tactic used by train ticket scalpers in the time when train travel was widespread was to purchase tickets from the ticket booth and then sell them at less than face price (i.e. cheaper than the official sellers). However, as the departure time approached and people realised that there were no more tickets to be had, the scalpers would then dramatically raise their prices, correctly predicting that desperate enough people would be willing to pay those higher prices since they had no other options.
More recent examples include cases during the COVID-19 pandemic, where there were reports of people buying up sundry goods such as toilet paper, face masks and Antigen Rapid Test (ART) kits in order to sell them at higher prices later once it became clear there was a shortage and people became desperate. The fact that the shortage happens precisely because the scalpers buy up the goods is what makes them such scum, since they're quite comfortable with letting people suffer until their prices are met. On at least one occasion, the US government stepped in and forced a pair of scalpers to give up their stockpile, citing the greater good trumping their right to do business.
In the case of entertainment-related scalpers (e.g. ticket resellers, toy scalpers), what makes them crummy is them taking something that is supposed to be entertaining for their intended audience, and deliberately making it difficult for them to indulge in their hobbies for the sake of profit. As mentioned in the Real Life folder on the main page, during the heyday of the Furbies scalpers shamelessly snapped them up and offered them for sale at ten times their retail price. Online purchasing is even worse, as tech-savvy scalpers take advantage of bots and the like to quickly buy up entire supplies for resale later. Examples of this include the rollout of the Playstation 5 and Xbox Series X|S consoles, or Hasbro's online Hasbro Pulse store (which often sells exclusive toys not available at general retail) often selling out of popular or highly desired characters not long after being put up for sale or pre-order.
Governments have tried fighting against scalpers because of fears that scalping is a fairly simple method for criminals and terrorists to fund their activities. In addition, as mentioned above sometimes scalpers deliberately carry out actions that affect the general populace (e.g. buying up supplies for sale when a crisis seems imminent). Many primary sellers are complicit in this shady trade, since they already get their money from the scalpers and so don't consider what happens after their problem. The company Ticketmasters, for example, has been accused of working with scalpers in order to help drive up demand of tickets (and thus their profits).
On the other hand, many companies do recognise that scalping is a problem. Part of this is because they recognise that scalpers help drive away their actual customers. Someone wanting to get into collecting G.I. Joe action figures with the 2020 G.I.Joe Classified series is quite likely to give up when they realise the only way to get certain popular toys is to pay twice the retail price (and often much more than that) from online "resellers", with no chance of finding them on actual store shelves. Here
, a reviewer expresses bitterness that due the fact he has to work and can't actually sit outside a store and wait for it to open simply to buy toys, he missed out on a better version of the Megatron toy.\\\
Worse case scenario, this can result in a toyline (or even a franchise) going belly up simply because people can't actually buy merchandise and eventually give up. This is what befell He-Man and the Masters of the Universe (2002), when a combination of Mattel's poorly thought out distribution methods (whereby a carton of 6 action figures might come with 2 He-Mans, 2 Skeletors and one each of Teela and Evil-Lyn) and scalpers snapping up the rarer characters resulted in toy shelves being clogged by nothing but armies of He-Man and Skeletor action figures. Eventually people simply gave up trying to ever get any of the other characters and the toyline died, taking the cartoon with it (despite the cartoon actually being very popular in its own right).
