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Even with the cooling of the resale market for sneakers and electronics, bots are still actively targeting releases and have significantly expanded their supported products and brands. We will break down some of the biggest botting trends we have seen in 2023 so far!
When the sneaker resale market was at its peak, many retailers were forced to turn to raffle as it was the only way to prevent bots and allow their customers to get the releases. By using a raffle, retailers had the control and time to remove bots and fake profiles spamming these entries. Raffles were created to prevent the rush of bots and provide a more fair experience; however, now there are rafflebots designed to target and win raffles.
However, many sneakerheads are beginning to experience raffle fatigue with a significant decrease in human entries, with retailers raffling 2-3 products a week. With the decline in entries from legitimate customers and the cooling resale price, many retailers reserve raffles solely for high heat releases. The shift for raffles is because raffles are time-consuming and expensive, with retailers needing to drive traffic to enter the raffle or pay a percentage fee for every raffle win. Additionally, the feeling of a “win” has died off as raffle participants expect an “L.”
With raffle fatigue and a cooling resale market for sneakers, we see both sneakerheads and retailers looking for alternative releases because the level of effort is not yielding the results raffles used to produce.
Bots have expanded outside exclusive and collectible items to arbitrage opportunities (i.e., brick flipping) and anything going viral on social media, such as the Stanley Cups. For example, brands like lululemon, Home Depot, Scheels, and Ulta are now actively targeted by bots, who find profitable non-exclusive resale items. These botters are slightly different because they are not looking for the 2-3x uplift in resale price, but instead, they are buying items in bulk and making 15-30% profits.
Through bulk buying products with discounts, these botters create resale margins that they use to slightly undercut or uplift the price on Amazon, Walmart, and other 3rd Party sites. For example, since the world cup, Adidas Sambas have become popular again, with many botters purchasing Sambas on discount or sale to flip them online.
The expansion of products and brands targeted by brands will grow exponentially, especially with the large discounts being offered by brands. Since these botters and resellers own most of the inventory, it is hard for brands to grow sales and develop a relationship with customers because many potential buyers are just purchasing from these reseller listings. This new hybrid between botting and reselling will become more prominent over the next few months.
Even with the resale price for many exclusive products decreasing significantly, these items are still actively botted. Bots target every sneaker release; however, the intensity of the botting fluctuates more because the resale price of an item is not guaranteed to be profitable anymore.
Retailers, especially sneakers, face new challenges because items that would sell out instantaneously 18 months ago are now sitting on shelves for months. This is causing massive inventory issues, highlighted by Nike's enormous inventory backlog, forcing sneaker retailers to significantly change their customer interactions and strategy. Despite the drop in sneakers, we saw a significant uptick in concert tickets and sporting events targeted by bots this summer, even outside the Taylor Swift fiasco.
We have seen bots expand their impact to brands outside of purchasing with, botters spamming first-time buying coupons, opening customer support tickets, and inflating returns. Botters are finding and taking advantage of loopholes that impact the entire business:
These loopholes and leakage are expensive for retailers; for example, Foot Locker lost 4% of their gross margin because of promotions and retail theft. Outside of traditional e-commerce retailers, subscription services and restaurants are being heavily targeted by abusers, who are taking advantage of giveaways, free point, and loyalty points.
We have seen Cook Groups add a new feature, group buying. This new trend is where a group of people submit their interest for a product or a service (e.g., UberEats Discounts), which then someone or an entity handles the entire botting or sourcing process. By doing this, they are able to bot products without needing to purchase or configure a bot. This is becoming a more popular trend as many Cook Groups are morphing into a community that incorporates botting, reselling, and additional ways to make money.
The trends highlighted, including raffle fatigue, expansion of bot targets, abuse impacting entire businesses, and the emergence of group buying, signify a complex and evolving landscape in the retail and resale markets. These trends are not only reflective of current challenges and opportunities but are also indicative of the dynamic shifts that will continue to shape the industry throughout 2023.