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Business Unusual

Black Friday is coming and so are the retail bots

3 November 2021 7:15 PM
Digital technology

Bots are often the reason sale items appear and sell out almost instantly

This story begins with the latest Xbox that looks like a small fridge, Microsoft the makers of the Xbox said that if they could win a Twitter battle of brands they would turn the meme fridge into reality and after winning the contest in April released the mini fridges for a limited sales run in October. Lots of people wanted one, most did not manage to get one, but quite a few were seen for sale on auction sites at much higher prices.

The fridges were not bought by fans, but by a new kind of middleman that uses bot to buy high demand items to sell for a profit. Xbox has since made the fridge available again from December; those sales too seem to be plagued by bot purchases.

The happy moment when Xbox chose to make the mini fridge. The first run was very limited and sold out quickly many suspect to those who use bots to get them.

When the next batch were released it appears the bot buying was real. Retailers do have rules to try prevent the abuse of bots, but the practice is not illegal.

A brief history

Bots are short for robots, but not the shiny humanoid versions we think of but rather sometimes simple, sometimes complex programs than mimic the behaviour you would follow to make an online purchase, but unlike humans, these bots can do the operations way faster and more frequently than you ever could.

One bot reseller boasted about being able to buy over 100 of the fridges when they became available again recently, and the original item which retailed for $99 was being resold before even being shipped for over $600 (the item has since been retracted as the retailer reserves the right to cancel orders if they suspect that bots or unfair practices were being used.

But bots are not new and many are responsible for keeping your retirement savings growing. Trade on stock exchanges used to require actual buyers to bid against each other to buy and sell stocks and commodities. In time the market became electronic which allowed the buying and selling to be electronic too. Real humans buy and sell by tapping their keyboards when the conditions are right. Until some computer engineers reasoned that if they could write code to respond to the situations the humans were responding to, they could get machines to make the buys and sells. The upside is that these machines could do so instantly and they never got tired or needed leave or even a salary.

Markets these days may still have some actual humans buying and selling shares, but the bulk of the sales volumes are being handled by bots buying and selling in a fraction of a second.

The better the bot the more it can make, but there are so many bots in operation that they do balance each other out, unless there is a mistake, one of the largest occurred on 6 May 2010, for 36 minutes the Dow Jones and Nasdaq exchanges in the US lost a $1 trillion in value as a series of bot placed orders caused a a market reaction that resulted in a many other bot programs to respond in a way that effectively crashed the market.

For anyone seeing the bottom fall out of the market it must have been very scary and for the most part up to that time, not enough was put in place to deal with such a scenario. Since then not only have the rules been updated but new bots that constantly monitor or potential flash crashes watch and wait and spring into action should one occur. They do still occur, more often than you might like, but don’t last as long (from seconds to a few minutes) and dealing is often paused to not let it get any worse.

A recent incident saw the price of Bitcoin fall from $65 000 to $8 200 in less than 60 seconds. It was an error sparked by a bot, but corrected just as quickly. It is just as well humans could not respond quick enough to avoid making it worse.

Retail bots are spoilsports

There are some bots that are focused on buying multiple items quickly. So, the next time you try to get that airline ticket special or one day are able to buy concert or sporting tickets again, only to have them disappear in minutes you are likely up against a bot.

For those that enjoy bidding on auction sites, sniper bots are set to monitor the current bid and the time left on the auction and if within your set price will make the bids in the last seconds of the auction.

The rise in popularity of trainers or sneakers has seen the interest in using bots and the question about whether they should be allowed increase over the last few years.

For retailers, having their stocks sell out quickly creates the kind of buzz that ensures the next sale will be even more eagerly anticipated, but if too much of the sales are going to bots only to be resold later may leave fans to become haters.

And for many regulators the simple answer seems to simply outlaw them. That may be too drastic but trying to define what is acceptable may prove to be difficult and leave wiggle room for bots users to find a loophole.

Some options that have already began to be put in place:

  • Multiple purchases can’t be made using the same card even as banks allow for multiple virtual cards to be used to protect users online

  • Retailers may reverse multiple purchases made from dummy accounts if detected, this is a good basic rule, but may be difficult to detect

  • Items sold may be restricted from being sold at above the manufacturers

  • A cool off period lasting minutes or hours after a successful purchase to give more a fair chance to get the item.

  • For auction sites, if a bid is placed within the final minutes of an auction, it gets extended and the previous bidders are informed of the new bid

  • All sites might move from assuming first come first served is still a used option to one that favours a lottery version allowing everyone to make a purchase with a random number being chosen to get the product.

The lottery option is already the main method used for global tournaments like the Football World Cup.

There are other bots and services that are made to assist shoppers in a way that is also supported by retailers. Comparison sites like PriceCheck are even Google will display all the offers from all the sites that may have the item available. Coupons are often offered to ensure a potential customer actually makes the purchase. Browser extensions are available that when you are looking to make a purchase might nudge you to complete it by checking if there is a discount coupon available. It looks like a good win for both sides, but given the data tracking and historical analysis might see big coupons offered to first time buyers while regular buyers would not be offered the same coupon.

In the end the endless effort to find a price low enough to get the consumer to buy but as high as possible to make the greatest return continues now with some new options to shift the balance for a while before settling back to something that works for both sides.

This article first appeared on 702 : Black Friday is coming and so are the retail bots

3 November 2021 7:15 PM
Digital technology

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