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What are the ethics on this?


guitarzombie

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4 minutes ago, arch_8ngel said:

That's a thin margin ($100k profit on $1.7M revenue).  Good for him that it worked out and he didn't get burned.

I thought so too, but it says he had to rent a warehouse space and also paid 2 friends $15 an hour.  I'm sure his gross profits were much higher, netting 6 figures as a teen and creating 2 jobs in the process is not bad at all.

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Yeah, the only thing that seems remarkable is the kid's age moving that amount of money.

37 minutes ago, guitarzombie said:

I thought doing stuff like this was illegal during the pandemic, unless its only necessity items.

I thought it was the other way around, gouging on stuff people need being the not kosher thing. If someone is willing to pay double for an above ground swimming pool, I don't really see the issue.

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Guys, the article is weak on details.  Maybe I'm being cynical but I think it's people like this that are our scalpers.  He just branched out beyond video games.

Now, I know I've argued in the past that scalpers can do what they are doing, and I'm not offended by the business practice (unless they are colluding with distributors, which is a whole new level) but to me is sounds like this kid is nabbing retail items and immediately flipping them.  So he's a highly motivated, young scalper.  As a young "entrepreneur" myself when I was 16 or so, scalping it the obnoxious, low hanging fruit.

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5 minutes ago, Tulpa said:

Yeah, the only thing that seems remarkable is the kid's age moving that amount of money.

I thought it was the other way around, gouging on stuff people need being the not kosher thing. If someone is willing to pay double for an above ground swimming pool, I don't really see the issue.

I agree with this.  Just to be clear, I'm saying this article is glorifying a scalper.  When most people hear it in those terms, they get mad because scalping is universally hated by all.

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5 minutes ago, Tulpa said:

Yeah, the only thing that seems remarkable is the kid's age moving that amount of money.

I thought it was the other way around, gouging on stuff people need being the not kosher thing. If someone is willing to pay double for an above ground swimming pool, I don't really see the issue.

Thats what I meant.  I should have added "Unless its only for necessity items that its illegal".

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Also to be clear, I worked at a pawn show for a few years where people were willing to sell us their stuff and we would just sell it after the 30 day legal hold.  I was under the impression this kid was buying stuff already scarce, prohibiting someone else from getting it at that fair value.  IE buying all the amibos at walmart, then selling them off for double.  Id like to know at 16 how he got the capital to even start this.  I have a feeling mom and dad might have helped out.  But I can't read the Wall Street Journal article if it went into more detail.

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Graphics Team · Posted
1 minute ago, guitarzombie said:

I was under the impression this kid was buying stuff already scarce, prohibiting someone else from getting it at that fair value.  IE buying all the amibos at walmart, then selling them off for double.

We all have equal access to these kinds of things. If you are unable or unwilling to go to the same lengths to aquire the item, you miss out. That's life. I think its lame that people do it, but there's no law saying they can't, as far as I know.

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Damn, 40 hours a week when you're 16 on top of school? Get a life kid, you're only 16 once! This isn't too different from what a lot of us did. Buying from an underpriced market (whether $2 copies of Contra at the flea market or Switches at Best Buy) and selling for market value on Ebay. This kid is just doing so at a massive scale. I always blame buyers more than scalpers for creating the opportunity. I live a comfortable life and I wouldn't pay $25 over MSRP for a Switch, I'd just wait. People paying $500 for a Switch due to impatience are just nuts to me.

Props to the kid for the head start in life. I still personally wouldn't sell one of my teenage years for $100k though. 16 is a cool time to be alive and with friends that aren't your employees.

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Administrator · Posted
18 minutes ago, guitarzombie said:

Also to be clear, I worked at a pawn show for a few years where people were willing to sell us their stuff and we would just sell it after the 30 day legal hold.  I was under the impression this kid was buying stuff already scarce, prohibiting someone else from getting it at that fair value.  IE buying all the amibos at walmart, then selling them off for double.  Id like to know at 16 how he got the capital to even start this.  I have a feeling mom and dad might have helped out.  But I can't read the Wall Street Journal article if it went into more detail.

Might have had enough on his own to buy the first few things, then you keep re-investing the capital.

As long as they're not necessity items (like the guy that got stuck with the garage full of hand sanitizer and wipes, etc), have at it.   I sure as hell wasn't turning down $200-300 for a Wii with some games.

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Administrator · Posted
1 hour ago, arch_8ngel said:

That's a thin margin ($100k profit on $1.7M revenue).  Good for him that it worked out and he didn't get burned.

So it sounds more like he was moving scarce stuff than gouging or he had some horrible amount of overhead.   If you're selling $500 pools for $1000-1500, you best be doing better than a ~6% profit.

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It's difficult to judge with limited context but, ethically, it comes down to whether or not the result was him taking advantage of scarcity of product. Re-selling at mark up to cover "finders & handling costs" is arguably fair but if he was looking for profiteering beyond recouping costs and making a small margin to support future stability and growth of his "business"...that's when it starts dipping into ethically shady territory. It's rather rampant in our society today, enough so that we don't often give it much serious thought anymore...but profiteering is a specific expression of greed and greed is ethical no-no.

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8 minutes ago, Webhead123 said:

It's difficult to judge with limited context but, ethically, it comes down to whether or not the result was him taking advantage of scarcity of product. Re-selling at mark up to cover "finders & handling costs" is arguably fair but if he was looking for profiteering beyond recouping costs and making a small margin to support future stability and growth of his "business"...that's when it starts dipping into ethically shady territory. It's rather rampant in our society today, enough so that we don't often give it much serious thought anymore...but profiteering is a specific expression of greed and greed is ethical no-no.

If it isn't a safety concern (someone "profiteering" by cutting corners on safety-critical items) or a life necessity (food, housing, medicine, fuel) -- I don't think there is much of an ethics-based argument against arbitrage on non-essential leisure/entertainment items.

As a buyer, sure, it doesn't feel good to pay higher prices.

But this is really just connecting the products with buyers that "want it the most" and are willing to pay for it -- at the seller's risk that they get stuck with merchandise they may not even be able to sell at regular retail prices. 

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Administrator · Posted

It may be legal and that's fine.  But idk....during the pandemic, I'd feel like a pretty big jackass if I was buying stuff like razors and webcams to sell for profit.  Obviously it's a whole different thing than hand sanitizer and health items, and yea, free market.  So I get all of that.  I'm not saying the kid is evil - and I'll give him props for the business management and experience, but idk....I guess I'd just feel wrong mass-buying stuff that people want but is hard to get, purely with the intent to sell for profit.  

There's also a whole different level between someone who buys a few games to resell for profit, and then someone who makes it a full time job and literally snags all the PS5s available in town, so no one locally has a chance hah.

I mean, I can live without a PS5, so it's not a major life-changing thing, but still, I don't know.

It was frustrating during the pandemic to get certain daily items you needed, that weren't basic life necessities, but still needed for daily normal living.  Some of that was people panic buying for themselves, and I imagine some was people like this who would stalk the shelves and grab all the toilet paper as soon as it hit the shelf to resell on ebay.

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20 minutes ago, arch_8ngel said:

If it isn't a safety concern (someone "profiteering" by cutting corners on safety-critical items) or a life necessity (food, housing, medicine, fuel) -- I don't think there is much of an ethics-based argument against arbitrage on non-essential leisure/entertainment items.

As a buyer, sure, it doesn't feel good to pay higher prices.

But this is really just connecting the products with buyers that "want it the most" and are willing to pay for it -- at the seller's risk that they get stuck with merchandise they may not even be able to sell at regular retail prices. 

As a business model, it works, sure. But whether profiteering could be considered "ethical" behavior is another concern. Just because the market and business model dictates that you can charge more money for something, does that make it right to do so? That's where I'm coming from.

Which is not to say that this individual was truly "profiteering" in this case. I don't think this simple article gives us enough information to make that determination. Hence, it is difficult to say if there is any unethical practices at work here.

Edited by Webhead123
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39 minutes ago, Estil said:

I can't stand people like this who take such unfair advantage of a bad situation just to line their own stupid pockets.  I mean what if one day its himself who needs something and can only get it from a scalper?

Nobody needs an above-ground swimming pool. Or a PS5, or a patio heater.

I'm kinda with other people on this. Scalping can be problematic but blaming the scalpers is rarely much use; you set up a market economy, it's gonna happen, and they have a pretty reasonable argument they're just doing what market economics says you should do. If you want scalping not to happen there are ways to do it that are both more effective and less icky than morally condemning scalpers.

This is a case where it doesn't even really seem that "bad". I get some of the ethical arguments against scalping e.g. limited edition games, or concert tickets. There are only so many of those things, and it does take away the opportunity from "real gamers" and "real fans" to some extent when the people producing the game or concert intended "real gamers" and "real fans" to have a shot. But this is not the case with above ground swimming pools (or patio heaters or even PS5s), really. If you really want one at retail price, wait a year and supply will recover. If you're so desperate to have one RIGHT NOW you pay a scalper an above-retail price, eh, that's your choice. It's not like a limited edition game you'll never have another chance to buy at retail, or a concert where they can only fit X people in the venue.

PS5/Xbox scamming does suck a bit for "real gamers", but ultimately the problem there is the silicon shortage. Even if there were no scalpers, a lot of people who want one wouldn't have one yet. And if there was no chip shortage the scalpers would be nowhere. So, don't sweat about the scalpers, fix the chip shortage...

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32 minutes ago, Webhead123 said:

As a business model, it works, sure. But whether profiteering could be considered "ethical" behavior is another concern. Just because the market and business model dictates that you can charge more money for something, does that make it right to do so? That's where I'm coming from.

Which is not to say that this individual was truly "profiteering" in this case. I don't think this simple article gives us enough information to make that determination. Hence, it is difficult to say if there is any unethical practices at work here.

Everyone is entitled to their opinion on this, of course -- but what breach in ethics has occurred when you earn the arbitrage between retail price and a higher market price on a nonessential item?

I don't think it is difficult, at all, to say that for NONESSENTIAL items, and more specifically LEISURE items, that there is nothing unethical about this.

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Administrator · Posted

I suppose it depends really.  I mean, if you need a razor to cut your hair or shave your face, and/or a webcam that is needed for your job during the pandemic - things like that - maybe they aren't like life essential, but they're not exactly leisure either.  Now the PS5, swimming pool, etc., I agree aren't really as important.  But it sounds like all sorts of things were being scalped, including lots of things that people needed for their daily routines or jobs.  It's not to say it's as bad as medicine or food, but also not so much of a no-brainer as swimming pools.  So I can understand some different viewpoints here.

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11 minutes ago, arch_8ngel said:

Everyone is entitled to their opinion on this, of course -- but what breach in ethics has occurred when you earn the arbitrage between retail price and a higher market price on a nonessential item?

I don't think it is difficult, at all, to say that for NONESSENTIAL items, and more specifically LEISURE items, that there is nothing unethical about this.

I'm not an expert on ethics and I'm sure matters like this get really messy when we start exploring the philosophy and psychology of examples like this. I'd actually be curious to find some reading on this idea from someone who does have the benefit of that background. All I will say is that if profiteering is a manifestation of greed and if greed is considered an unethical frame of being, then the act of profiteering itself stands on ethically dubious grounds.

Again, this is not my specialty, so I entirely invite my position being debunked with sufficient evidence to the contrary.

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For items of necessity: It’s up to the retailers to put reasonable measures in place to prevent scalping. If the retailer did nothing to prevent scalping its the retailers fault. If they did put some reasonable measures, but the kid circumvented the measures in order to scalp goods of necessity then its illegal (by intent of the law, but not necessarily legally enforceable)


For items of luxury:

Again its up to the retailers to enforce buying limits. If they do nothing to enforce limits, then its the retailers fault. Law shouldn’t be involved in this case by any means since we are not talking about items of necessity.

 

Afterthoughts: $1.7M is misleading, revenue is totally irrelevant. He made $100k profit working 40 hours a week. I guarantee he spent more than 40 hours a week all things considered. Sounds like pretty fair compensation to me.

Its a free market society, can’t get mad at some kid for trying to make some money. Better than sitting around begging for money, or worse, getting involved in crime. As much as I hate paying inflated prices for games, nobody is forcing me to buy them. And if I really wanted the game that badly, I could have been at the store earlier than him. If he was able to scoop up that many games early, I’m pretty sure any one of us could have also scooped them up if we really cared to.

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