Sony and Microsoft launched the latest iterations of their popular gaming consoles at the end of 2020. But good luck trying to get one if you didn’t preorder. Gamers across the globe have been left fighting for scraps while bad actors and bots have snatched up the lion’s share of the supply chain. But of course, it isn’t quite as cut and dry as that and I think I know what’s happening here.
Crisis and Opportunism
When the coronavirus pandemic swept the world in 2020, it impacted so many people in so many ways. The tragic loss of millions of lives was just one awful outcome of this insidious disease. But beyond the more obvious and immediate impact, the pandemic has had huge consequences for the global economy. Our wallets are hold less value, a lot less. And many people have sadly been laid off or even seen their business go into liquidation. But what does this have to do with the supply of PS5 consoles? Well, it turns out quite a lot.
The PS5 is constrained in part due to a global shortage of semiconductors. AMD who supply the silicon inside the PS5 simply can’t source the materials and components necessary for Sony to ship the console in volume. And in times of economic crisis people innovate, get creative and jump on opportunities to make some money. It just so happens that the already slim supply of the PS5 combined with pent up demand for the console has created the perfect storm. eBay, Gumtree and many other e-commerce sites are rammed full of listings for the consoles, all with a significant markup.
As frustrating as it is for people that want to get their hands on one of the consoles, it’s hard to blame folks for trying to make some extra cash in such a tough economic landscape. I feel very privileged to be in paid work. Many people haven’t been as fortunate and if my circumstances were different, I’d probably consider reselling PS5 consoles too! That isn’t to say that everybody that has chosen to resell a PS5 has been impacted financially by the pandemic, but I’d be willing to bet that it has been a significant contributor.
Now the bots…
Of course, there are different types of opportunism and the use of bots is something I have little sympathy for. There is a big difference between buying a console or two to make some extra cash and sucking up a retailers entire supply chain. There are a few different types of bots but the main ones are called AIO ‘all-in-one’. They work by scanning thousands of websites to source stock the moment it becomes available. And once it does, the bots are loaded with various pre-made accounts and credit cards ready to suck up all the stock quicker than a human can even click ‘add to cart’.
Some retailers have tried to counter this by employing lottery systems. The system requires that you sign up to a mailing list to be given a random chance at an opportunity to buy. It isn’t ideal and I don’t think it’s consumer-friendly. But it’s better than the alternative. And given the state of the supply of semiconductors, this problem isn’t going to go away for some time. I’d be surprised if supply and demand balances for the next generation consoles this year and especially the PS5.
My biggest concern with bots is less the more immediate frustration for consumers but the implications for those that scalpers target to distribute the consoles. Once the consoles have been acquired somebody needs to go and sell them. Often that will take place via online marketplaces like eBay. But that isn’t always the case. Stores such as CEX in the UK will happily buy the consoles in huge quantities from resellers at a markup. Then CEX in turn sells the consoles on at an even higher markup!
But it isn’t always the scalper themselves that complete the in-person transaction because of ‘buy in’ quantity limits. Instead, they exploit underprivileged communities and families struggling financially to do the dirty work. In exchange, they receive a slim cut of the takings. What’s worse is that the people they exploit often need to have the funds move in and out of their own bank accounts. If the consoles were acquired via illicit means that could make the exploited person complicit in a crime known as ‘money muling’. Moving money while keeping a cut when that money was acquired through criminal means, is a crime in the UK. It could even land you in jail. Most people have probably never even heard of the term.
The layers to this cake stack high
The supply issues that surround the PS5 and Xbox Series consoles are a product of various factors. Sadly it doesn’t just lead to consumer frustration, but the exploitation of vulnerable people. And we all know that not all listings on e-commerce websites are genuine. Take my word for it. Never, ever pay for a PS5 via bank transfer or wire transfer (sometimes called faster payment in the UK). Paying for anything by bank transfer is like handing over cash. You can’t get it back once the payment is made and your bank can’t cancel the payment. I’d go as far as to say that you should never pay for anything using a bank transfer unless you know and implicitly trust the person you are paying. If the person selling isn’t willing to use a secure platform like PayPal with buyers protection then the deal isn’t worth it. No matter how badly you want the console.