Scalping: a sharp practice that hurts everyone
Scalping, or buying products with the intent to resell at inflated prices, has existed for centuries. Formerly known as touts, scalpers now use technology to infiltrate and subvert online sales platforms, resulting in an arms race between sellers and scalpers. Automated bots can now purchase thousands of items in seconds, transforming what was once a street-corner hustle into an industrial operation that extracts value from both consumers and the businesses whose products are being resold.
Why scalping hurts everyone
The most obvious victims of scalping are consumers. Ticket buyers and online shoppers end up paying inflated prices or miss out entirely on the products they want. When scalpers dominate a market, legitimate buyers face a lose-lose proposition: either pay the markup or go without.
The economics are straightforward. Some estimates suggest that 10% of tickets sold in the primary market are later re-sold by ticket scalpers, with scalped tickets accounting for 20-30% of top-tiered seats. These seats command the highest markups, sometimes reaching several hundred percent above face value. A £40 concert ticket might resell for £200 or more, with the entire markup going to middlemen who added no value beyond restricting access.
These inflated prices represent a pure transfer of wealth from consumers to scalpers. Unlike retailers who bear inventory risk, marketing costs, and customer service burdens, scalpers simply exploit an artificial scarcity they’ve helped create themselves. The consumer pays more whilst receiving nothing additional in return.
Business damage
Whilst scalpers profit, the businesses whose products are being resold face multiple forms of damage. The most immediate is reputational. When fans can’t buy tickets at face value, they don’t blame scalpers; they blame the venue, the artist, or the ticketing platform for letting scalping happen.
This perception problem is particularly acute because primary sellers often appear to benefit from scalping. If tickets consistently resell for double their face value, critics argue, why didn’t the original seller simply charge more? This misunderstands how primary markets work. Event organisers price tickets based on multiple factors beyond maximising immediate revenue: building long-term fan relationships, ensuring diverse attendance, and generating buzz that drives merchandise and concession sales. The contrarian argument – that scalping corrects an artificially low market price – falls flat in face of the absurd markups for cheap products regularly seen on online platforms.
The technical burden represents another cost. Businesses like Queue-it have emerged specifically to help companies manage bot attacks and traffic surges during high-demand sales. When scalping bots overwhelm infrastructure, businesses must invest heavily in defences just to ensure legitimate customers can complete purchases.
Brand dilution poses a longer-term threat. Luxury and lifestyle brands carefully control distribution to maintain exclusivity and brand positioning. When scalpers bulk-buy products and flood secondary markets, they undermine these carefully constructed strategies. A limited-edition product that’s meant to feel special becomes just another commodity being flipped for profit.
The automation problem
Modern scalping operations bear little resemblance to the individual resellers of previous generations. Today’s scalpers deploy sophisticated software that monitors websites continuously, reacts to product launches in milliseconds, and completes checkout processes faster than any human could manage.
These bots exploit every advantage. They can bypass purchase limits by creating hundreds of fake accounts. They solve CAPTCHA challenges using AI. They rotate through thousands of IP addresses to avoid detection. CAPTCHA challenges then become more difficult, to the point where they frustrate human users or require multiple attempts to pass. Why is this necessary? Any speed advantage is decisive for first-come-first-served sales. Where a human might take 30 seconds to complete a transaction, a bot can do it in 0.2 seconds.
Why scalping persists
If scalping harms both consumers and businesses, why does it continue? Part of the answer lies in economics. The existence of profitable secondary markets signals that primary sellers are underpricing their products relative to demand. From a purely economic perspective, scalpers perform a function by moving goods from lower-value to higher-value consumers.
This argument, whilst technically correct, ignores the costs that scalping creates. The rent-seeking behaviour, where scalpers compete to snap up products purely for resale, has no price discovery function and eliminates any potential efficiency gains their activities might generate.
Conclusion
Scalping extracts value from transactions without creating it, imposing costs on both consumers who pay inflated prices and on businesses whose reputations suffer and infrastructure creaks under bot attacks. The rise of automated scalping and ecommerce has transformed the practice from a minor irritation into a systematic problem that affects every market. The costs of rent-seeking, brand damage, and technical defences are huge, and harm everyone. Taking steps to prevent scalping involve an investment of time and money, but is now sadly essential in the modern commercial ecosystem.
