We’ve all heard it. It’s the one thing that has dominated every gaming discussion this year: the seemingly endless struggle to secure the newest gaming hardware. But for some, this has never been an issue. In fact, they’re making hundreds of thousands of dollars reselling the very products that gamers are going to extreme measures to get. As you can imagine, profiting off these items isn’t exactly making everyone happy. But there is one thing gaming resellers want you to know: They’re people too, with student loans to pay off, medical debt, children, and mortgages.
In the year since Sony and Microsoft released their next-gen consoles and Nvidia came out with its GeForce 30 series of graphics cards, the global chip shortage has been affecting supply. From the PlayStation 5 presale in September 2020 through to the end of September this year, PlayStation sold 13.4 million units. Compare that to the 18.5 million PlayStation 4s sold in its first 14 months and you can start to see the grind. For gamers, the biggest problem is that most of those PS5s seem to be going directly to resellers, not consumers. “This really frustrates me and upsets me, especially when resellers and bots manage to get their hands on stock,” Jim Ryan, Sony Interactive Entertainment’s president and CEO, told Axios in June.
So, who are these resellers and how is this coveted gaming hardware landing in their hands in the first place?
A Not-So-Secret Community
Resellers mostly secure stock thanks to so-called Discord cook groups. These are servers of people, similar to Slack workplaces, who give each other inside tips on when a product is going to be available and where. They also use bots, otherwise known as monitors.
Bots crawl websites—anywhere from every few seconds to every two milliseconds or so—and when they detect a change in a website’s stock, they automatically notify the reseller or Discord group. And, in some cases, bots are programmed to grab the stock for the reseller automatically, making it almost impossible for consumers to have a fair shot at securing an item.
While there are many Discord cook groups out there, they are not all worth a reseller’s time. Some may be better for a specific category of item (such as shoes), some repost alerts from other cook groups with a delay, and some provide minimal support for members. The one thing they all have in common is a fee to join, with the simplest around $20 a month and the best charging more. The premium groups are often “sold out,” and their waitlists are generally a few thousand people long.
“If we wanted to, we could probably get to 5,000 to 10,000 members within a few months,” says 22-year-old Michael Stalley, the founder and owner of Notify—one of the more prominent reselling Discords, which has around 2,000 members and is currently sold out.
It’s a lucrative model. Notify brings in $60 from each member every month. With an average of 2,000 members, that’s $1.4 million in the past year alone (although Stalley notes that this is not pure profit, as the company has paid employees and pays taxes).
Adding members would “obviously be nice financially,” Stalley continues. “But it's just not going to give a good experience for members. It's hard to find support staff that have that level of knowledge that we want to actually be able to help people.”
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For resellers, being a part of these cook groups is the easiest and cheapest way to get into the industry, as they can ask staff and other members for help. Also, bots can cost up to tens of thousands of dollars each—and then the reseller would have to program them, which is, according to the resellers WIRED spoke to, not an easy task.
Twenty-six-year-old Shwet Patel has been a member of Notify since it launched in 2018, alongside a few other cook groups, and says that in the past year he has secured roughly 300 PS5s, 175 Xbox Xs, and 100 or so graphics cards—for a total profit of somewhere between $183,000 and $200,000.
Where does that position him in the world of resellers? “I would say I'm just above average, maybe a little bit on the higher end,” says Patel. “I know that there are people who make significantly more—and what I would make in a year, they could make in a month.”
A New Path
In the age of the hypebeast, shoes are like the gateway drug for resellers. The relatively low cost of purchase versus the high resale value makes exclusive shoe drops a lucrative get for people dipping their toes into the industry. And, for many, it’s their first proper taste of what having money looks like and how reselling can set them up for the future.
For Stalley, who grew up in England in what he describes as poverty—born to a first-generation immigrant single parent—reselling “has given me a second chance at having a really good life.” He started reselling in 2017 while living in London, where he was studying, thanks to Nike’s “The Ten” Off-White drops.
“It was pretty crazy, the hype going around London at the time … I went to a few of those in-store releases and got a few pairs. That’s when I really started to get into reselling—taking it seriously and actually seeing it as something that could be, mid- to long-term, a source of revenue for myself,” says Stalley. “I think the average person probably doesn't really think about how a shoe that sells at retail for 150 pounds or dollars, whatever, can resell for 10 times the value.”
After getting his footing in the industry, Stalley started helping other people enter the world of reselling for free via Twitter, ”because I just enjoy helping people.” Eventually he realized that, with the time he was putting in and the amount of money people were making off his advice, he should charge them. So he started Notify in 2018, to help people “while also making it worthwhile for myself.”
Twenty-five-year-old Gabriel, who wanted to go by his first name only due to privacy concerns, got into reselling shoes years ago thanks to his “infatuation with sneakers and how hard it is to obtain some of them,” but recently ramped up after becoming a father. (Disclosure: Gabriel was a colleague of mine at a former job.)
“Since I started a new family, I was trying to look at other ways of getting income,” he says. “I felt like I understood the sneakerhead and streetwear culture enough to where I can invest in items and resell it at a higher price compared to stocks, since I’m not well-versed in stocks. This is my version of stocks.”
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Patel also got into the reselling industry thanks to sneakers, around the end of 2016 when he was a junior in college. At the time, he was tutoring and making $10 an hour. He worked for three weeks to save up the money to buy a pair of shoes he could flip—some Adidas Ultraboosts that he says he got for just under $200 and his friend helped him resell for $275. “That was probably the reason I got hooked so fast,” Patel says. “Because it wasn't quick money, but it was really nice to be able to make that much money off just one shoe.”
With the profits from that one pair of Ultraboosts, Patel kept flipping shoes one at a time until he got to two at a time, and so on. Years later, he still resells shoes alongside other items like the gaming consoles and graphics cards. The day before I first spoke to him, he had purchased “north of 300 pairs” of shoes on Yeezy Day, between the hours of 6 am and 10 pm, dropping around $100,000. “I was very tired,” he says.
Perfect Side Hustle or Moral Dilemma?
While spending $100,000 on exclusive shoes with the intention of reselling them definitely makes it difficult for people to get a pair at a fair market price, there is a positive side to the reselling industry—one bound by the morals of the individuals and the ethics the industry has set for itself.
“If it’s an essential item, I don’t think it’s justified to bot that and resell that,” Patel says. “I know some people who had scripts for Walmart just to buy up toilet paper early in the pandemic when it was very difficult to get some. I personally have a problem with that type of stuff and I wouldn’t bot something like that. I particularly hated people who resold items like that because those are just essential to being alive.
“Whereas, if you’re going to tell me that you need a PlayStation to be alive, I’ll be very skeptical. That’s where I draw the line.”
Since he started reselling in 2016, Patel says he has made upward of $750,000. His foray into the industry couldn’t have come at a better time. After graduating from college in 2017 he was able to pay for 95 percent of his living expenses and tuition for his master’s degree through reselling. Then, in 2019, he had to go to the hospital for a second surgery on his kidney. While the total bill was in the low six figures, he estimates that insurance only covered around 70 percent of the cost and reselling paid for the rest. “I don’t doubt my mom would have wanted to pay it regardless,” he says. “But just having the ability to say ‘Don’t worry, I can cover it’ took a lot of stress off her head too … it was probably the best part. If it wasn’t for reselling, there’s no way I would’ve been able to cover that.”
Looking to the Future
The reality of the reselling industry is that the manufacturers and retailers still get paid, leaving consumers to decide whether they pay the marked-up prices or go without the item. While much of the frustration with reselling has been aimed at resellers and bots, some has also been leveled at the retailers, who don’t often go public with information on what they’re doing to counter botting or curb resellers. For consumers, often all they see is a reCAPTCHA system, but there’s apparently much more to it than that.
“Retailers, by and large, are trying very hard to make sure that the legitimate buyer—their customer—can actually buy from them,” says Patrick Sullivan, CTO of Security Strategy for Akamai, a global cybersecurity and edge services company. “It’s not this callous attitude of ‘We don’t care who gets this—if it’s a bot operator who marks up the price we don’t care.’ There’s a very legitimate concern on the part of most retailers. People are working very hard to try and prevent bots from consuming all of the inventory.”
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For Akamai, finding bots is a $200 million-a-year business, according to Sullivan. While reCAPTCHA is part of the system in place to fight bots, a lot of them come with a service-level agreement for solving captcha challenges—and, Sullivan says, “Machine learning is better at solving captchas than human beings are, unfortunately.” Instead, one of the things Akamai does to combat botting is figure out whether the customer is an actual person by looking at their behavior—whether their fingers press the keyboard or move the mouse in a way that’s “consistent with a human being,” as that is “harder to simulate for a bot.”
For its part, Sony is "working incredibly hard" with its retail partners to get PS5s into "the right hands," Jim Ryan told Axios in the June interview. Although Ryan didn’t elaborate on how Sony plans to do this, many of the big retailers have rolled out paid subscription services that give customers exclusive access to gaming hardware drops. Take GameStop’s PowerUp Rewards Pro membership, for example. For $14.99 a year, members “get first dibs on new console drops, graphics cards, collectibles, and more.” Best Buy, GameStop, and Walmart did not return requests to comment for this story.
The resellers, however, don’t see themselves as being the wrong hands, per se. Many reject the idea that they’re just rich, privileged teenagers who sit on their computers all day and are greedy to profit off gamers. “The way I see it,” says Stalley. “From all my conversations with people … a lot of resellers are just average Joes trying to help out their family, trying to make a better life for themselves.”
In Patel’s case, reselling not only allowed him to pay for his medical expenses but also helped him buy and renovate a house. For Gabriel, it’s setting his daughters up for their future. For Stalley, it’s a way to get business experience that he can transition into a new startup. One that is “not necessarily reselling related” but that helps people financially. “I would just love to be involved in something that's making a tangible difference on people's lives or finances,” he says.
While we’re about to head into year two of the new console generation and a slate of exciting new game releases, hardware stock shortages are expected to continue well into 2022, if not longer. As retailers roll out the next phase of their anti-botting efforts and put console and graphics card drops behind paywalls, it’s worth thinking about whether you really need that shiny new thing now. If you do, just remember that at least some resellers are less profit-minded and more just trying to make a living—and shoppers are in this situation because of the current market climate.
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