I guess you could call it market manipulation but it's more just resellers/scalpers trying to take advantage of the chip shortage. RPis have always been in high demand and often were backordered even when things were fine; now they're supply constrained enough that scalpers can buy up in bulk and resell at high markup, similar to the GPU aftermarket going on right now.
>I think a CAPTCHA in the ordering process would make more sense.
There was another thread here a while back where someone shared their experience writing sneaker scalping bots. Apparently, CAPTCHA tokens are valid for a minute or so, so this guy would solve heaps of them just before the form went live and cache the validation tokens.
Then, when the form went live, the real humans who didn't have cached CAPTCHA tokens would be slowed down even more.
Net result is that the botters ended up getting an even greater share of the supply than without CAPTCHAs.
> Apparently, CAPTCHA tokens are valid for a minute or so, so this guy would solve heaps of them just before the form went live and cache the validation tokens.
I mean there's whole services like 2captcha that give you a 24/7 on-demand API for this, and for some of their offerings/solvers there are specifically real human robots on the other end doing the CAPTCHA.
2captcha works very very well to the point that CAPTCHA is a very much solved problem especially for the popular services like Google's reCAPTCHA.
FWIW I missed reservations to a national park because I use Firefox and Google made me click traffic lights and buses for thirty seconds before being able to continue.
> retail arbitrage is just leaks by the resellers themselves
Anecdotal, but IMO lots... just depends on the industry.
It's a good situation for someone to come along and buy up some or all of your risk - especially for stuff like ticket sales. Many corporations like Ticketmaster design around this, and bake this part of the supply chain into their pricing/experience.
The bots are middlemen that ensure proper pricing of scarce goods. Their commission is the difference between the retail price and the actual market price.
0. Adafruit cannot raise prices of rpis due to contract.
1. Adafruit makes the same amount of money regardless of who buys the product.
2. It is in the incentive of Adafruit to increase it's customers good will. It is considered an asset for Adafruit (Companies account for this via 'Good Will').
3. People generally don't like scalpers, "Scalpers bad"
4. By providing means to avoid scalpers, they are capturing some of the profit that scalpers would be making and converting it to a 'Good Will' asset, "Adafruit Good"
Accounting "goodwill" is the price an acquiring company pays above the accounting value of the business being bought, which is a notional number usually (much) lower than the economic value of a successful business.
Correct. Aatsmyles was mistaken in relating the goodwill he/she described to accounting goodwill. In other words, aatsmyles shouldn't have used the phrase "account for" goodwill.
Interestingly (at least to a weird human like me), there is something of a relationship between accounting goodwill and goodwill like the value of a brand. The reason why goodwill only shows up on a balance sheet after an acquisition is, I imagine, to follow the accounting principal of conservatism.
Let's spice things up with a hypothetical. I'm going to make up some numbers here so don't go around telling people I revealed some privileged information on HN.
Say you're Mr. McIlhenny, the() owner of a major private company called the McIlhenny Company. The McIlhenny Company's primary endeavor is selling a beloved hot sauce called Tabasco. On the income statement side, McIlhenny has revenues of $200 million and profits of $30 million. On the balance sheet, Tabasco has no liabilities (no long term debt, no payables, etc) and its only asset is cash, of which it has $1 million. Since (equity) = (assets) - (liabilities), this company has a "book value" of $1 million. You might notice that the book value seems absurd - a company that makes tens of millions of dollars a year and has a product with a major following would be a total steal of a purchase at $1 million!
A few purchasers attempt to woo you, and they each make offers for about $100 million. You go with Carl Icahn's offer. Now, the company's book value is $100 million (the balance sheet has $1 million in cash and $99 million in goodwill on it).
Clearly, the day before the acquisition, the company had roughly $99 million in "real" or "intrinsic" goodwill, but that didn't show up in the balance sheet. Why's that? One reason is conservatism. For many intangible assets, there's an art to choosing a number. If you let CEOs put in a goodwill number, many would probably throw in huge numbers as they vastly hype up the value of their brand and reputation. So, instead, we have a market approach to calculating goodwill by using transactions.
However, accounting principals allow companies downwards. So the CEO of Nikola isn't allowed to turn his bogus claims into dollars on the goodwill line item, but he is allowed to reduce goodwill if he buys a battery manufacturer that turns out to be a fraud too.
() It's owned by the McIlhenny family, but no need to complicate things
Not sure why you're getting DV'ed. If a product is priced such that it is actually profitable to have bots buy it (and presumably re-sell), then it's priced incorrectly and the bots are a corrective market force.
If a gas station started selling gasoline at half price, it would be instantly overrun with everyone from Harry with his pickup truck full of jerry cans to empty tanker trucks.
Attempts to corner markets have always almost resulted in disastrous losses for the conspirators. Not that cornering the raspberry pi market would even be possible or make sense.
This doesn’t always work out, and can destroy the speculator too. Imagine how many piles of hand sanitizer and toilet paper are out there, bought to resell for profit.
Raspberry Pis are developed by a literal charity that has making computing and computing education affordable as its mission. That's why he's getting downvoted. This attitude is effectively saying charity should be punished and profit is the only worthy goal any organization should ever have.
Nope. That's entirely untrue when the bots are buying all the remaining product. That is where it becomes harmful to both consumers and producers and is no longer "free market" because consumers are now being harmed by being forced to pay more for the same product and the seller is also being harmed because they are getting not even one penny more. When the price of these things are being fixed by contract (as is the case with quite a number of retail goods), then an alteration of the price caused by botters really isn't particularly different from front-running.
If something is merely priced incorrectly, then someone else can also produce that same good and charge more for it. As a reminder, snatching up everything through automation is not "producing a good", it's market interference.
If you want to take the pure economics argument -- you have failed to account for the present value of future business that Adafruit will generate by keeping their repeat customers happy.
The demand for the Pi has always been about the low price coupled with capability. The Pi is impressively capable for $35. It's far less impressive at $50. It's downright shit for $100.
Scalpers are going to slit their own throats by price gouging Pis. Demand for Pis will dry up if the price stays at $100.
I think you're ignoring that there now entire classes of wealth where value for money is entirely secondary to instant gratification.
Anti-scalping measures are going to be necessary more and more often as the super-rich diverge from the merely rich and the rich diverge from the poor etc.
There's no such thing as a "correct price". There is a "highest price" that enough people will still pay such that all inventory is sold, but that's not the same thing as being "correct". It depends on what the seller is optimizing for.
The Raspberry Pi Foundation wants their hardware to be sold at particular price points, and they've worked hard to keep costs down so it can be sold at those price points. They've chosen to forego extra profit, with the goal of getting this hardware into as many hands as possible, especially the hands of people who want to learn and may not be able to afford a higher price.
Sure, this isn't consistent with our profit-at-all-costs capitalist culture, but that doesn't make it wrong. And retailers are free to do their best to ensure that these products get into the hands of actual end-users, rather than parasitic, speculative, profiteering scalpers who provide no added value.
In the case of Adafruit, they would much rather have a bunch of satisfied end customers who are able to buy their products and get use out of them, than a bunch of satisfied scalpers. That's their choice (and frankly, I think much better for their business), and it's their right to impose technical measures to try to deny bots from their platform. (They may not always succeed, but that's another matter.)
> If a gas station started selling gasoline at half price, it would be instantly overrun with everyone from Harry with his pickup truck full of jerry cans to empty tanker trucks.
Just like Adafruit is trying to do with bots, that gas station would be well within its rights to refuse to serve tanker trucks or pickup trucks full of gas cans, if their goal in slashing prices was to sell gasoline cheaply to end customers.
The bots ensure that steps are taken such that scares goods are distributed in a manner better than "whoever can pay the most".
RPis have, and will continue to be, aimed at education and enrichment, and the makers/retailers will take steps to ensure that as many people as possible can get ahold of them at a low price.
If you want to start making value judgements about who is worthy to purchase your product, wouldn't it be better to enforce that by directly verifying the identity/worthiness of each individual customer rather than relying on crude proxies like "didn't use a bot to make the purchase"?
In this case it is a vendor deciding not to sell to a customer who is acting in a way they perceive to be bad faith. This is their right as a vendor.
In this case it happens that the bad faith is at comfortably odds with the objectives of the vendor and product manufacturer.
As high incomes diverge even further from low (and even median) incomes, we're doing to see this happen a lot more.
And I think until this chip shortage is over in particular, we will see a lot more measures like this.
I fully applaud this -- I love my Pi 4 and I want more people to experience what these little things can do, without paying over the odds to cynical manipulative stains.
Sorry, bro, if I'm selling a product, and part of my goal is to see "regular people" get a chance to buy it and get a decent price it's well within my rights to try methods to limit scalping, just like governments prevent gas/food overcharging during emergencies. Not everything is a "pure" market.
No, the bots are the reason the goods are scarce. They are not a genuine indicator of scarcity, nor are they a part of genuine price discovery. That they still exists just shows that the bot operators are too small to attract the interest of regulatory agencies. ...yet.
> No, the bots are the reason the goods are scarce.
It is possible that bots are creating artificial scarcity, but that would require either one bot to corner the market or collusion among enough bots to control prices. It seems equally plausible to me that RPIs would be scarce regardless.
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
While it could be argued whether I was being unkind, in re-reading I certainly wasn't being kind, and there was no small amount of snark. While I stand by the sentiment behind the comment, I don't think it is likely to change the mind of the poster I was replying to. There's a chance that it would avoid having the conversation turn into an extremely capitalist/libertarian echo chamber as commonly happens here, but that's about the extent of it.
Partly, the mindset that was evident in teeray's post was rather frustrating. Implicit in the post was a dismissal of the Raspberry Pi Foundation's goals of providing low-cost teaching hardware, an assumption that re-distribution to those who can pay more is a good thing, blame at Adafruit for not having priced out the primary target market in the first place, and praise for scalpers who are standing between a charity (RPF) and its intended recipients. None of those were explicitly stated, but those are the implications and results of the philosophy in that comment. It's a cruel, unkind, and mean-spirited philosophy, which is why I felt it appropriate to respond with snark.
1) First come first serve (e.g. most product launches)
2) lottery (e.g. grand canyon rafting permits)
3) auction (e.g. broadband spectrum)
4) third party speculators (e.g. scalping)
You can often use several of these methods simulatenously, but if your goals include prioritizing egalitarian access to the scarce resource then #4 can significantly interfere with that goal. There's a reason you aren't allowed to resell grand canyon rafting permits.
It's actually extremely relevant as the weighted lottery system for non-commercial permits was used to replace the prior system which was a first-come first-served waitlist. It's a great example of evaluating different methods of rationing access to a limited resource when the primary goal is not maximizing revenue or efficiently distributing resources for maximum economic production.
Adafruit isn't "rationing scarce resources", they're trying to provide good service to their customers. Adafruit is an actor in a "free market" acting in their best interest.
i don't disagree, adafruit is probably acting in their best interest, however they perceive what that interest might be, it's not always just "more profit", more often than not, it's a matter of survival that is at stake.
My issue was with the comment somehow suggesting the entire system (Big Bad Market) is somehow less wise than an individual actor.
Yet, the entire system contains much more information, that the individual actor does not, and can never have access to, e.g. value judgements of other market participants he will never meet.
Markets, at the core, are just auctions. It's one way to resolve the question who gets the scarce resource first. At other times, it's medical triage, a system very different from "free markets". It can also be first-come, first-serve, which is what currently being attempted by Adafruit now.
Many such options. Why is "free market" judged to be inappropriate here?
From my experience in markets with severe shortages, first-come/first-serve rationing approach never failed to produce a poor supply, and free floating markets were always oversupplied (to a varying extent, but in general there was a trend).
Sometimes people express a sentiment that the supply/demand curves are more than just tools to evaluate a situation, but instead, are a sacred ideal to always strive towards. But economists also recognize that markets are awful at pricing in externalities, and even worse at respecting morals and ethics.
The base Raspberry Pi model is supposed to cost $35, because the Raspberry Pi Foundation has decided that offering a low cost SBC is important for the world.
Using a bot to buy up all inventory so you can resell it at $50 or $100 or whatever is unethical. You have provided no added value; you are just a parasite scalping others for your own enrichment.
If this is what a "free market" is, as many people here seem to think, then free markets are objectively bad for the commons.
It's not a free market since the manufacturer determines what the stores should sell it for and the result is a middleman extracting the value between set price and market price.
That only bolsters my point. I see a lot of posts here decrying Adafruit's actions as being anti-market, or that these middlemen extracting value are somehow "fixing" something wrong with the market.
But it's not a free market! Adafruit (etc.) are only allowed to sell at particular price points, or the RPi Foundation will stop giving them inventory to sell. You can argue that is a free market, since Adafruit and the Foundation have voluntarily entered into a mutually-beneficial contract.
But then we also have to accept that Adafruit is well within their rights to impose restrictions on how the product is bought, in an effort to ensure the products get into the hands of the people they want it to, at the (lower) price point they want.
All Adafruit is doing is putting up a big "we reserve the right to refuse service to anyone" sign whenever an ordering bot shows up, which is completely up to them to do if they want.
If you have 5 RPi resellers and they all have to have the same price because the manufacturer tells them so is not a free market. There is no interplay between supply and demand.
I stand by my statement: you need to read it a few more times until you understand it.
The market is credit card sized arm based computers, not raspberry pi. If you narrow things too much then you can make anything not a market. Wal-Mart has a monopoly on apples if you narrow the market to inside their store.
> I stand by my statement: you need to read it a few more times until you understand it.
I understood your comment just fine, I just don't agree. Either way,as I commented earlier it's not the essence here so I see no point in further debating this particular point.
Arguing over what constitutes a "free market" is silly. It's a gradient, not a boolean. Every real-world financial market that exists has non-market forces that apply to it, even if they're just laws against fraud.
The interesting question is: are the resources actually scarce as in "actual users want to buy more of the resource than the supplier can produce", or are scalpers buying up inventory and leaving it unsold simply to drive up the price even more?
There has never been an actual shortage of toilet paper or disinfectant during the pandemic, the production-side supply has always been enough to satisfy the demand - the "shortage" was only because people hoarded up and/or tried to profit by re-selling loo rolls on eBay [1].
Why should "whoever has the most money" or "whoever is willing to pay the highest price" be the fairest way to ration scarce resources?
Speculative resellers don't actually provide any value. They just extract extra cash from people who want something, when -- absent the retailer with automated buying tools that are faster than humans -- those people could have acquired the product from the original seller at a lower price.
I think "whoever gets through the website order form the fastest" is a perfectly reasonable (if often frustrating) way to ration scarce resources. You get in line, as a person, and get to buy some limited quantity for your own personal use.
Certainly no one can outright ban a secondary reseller market, but I think it's perfectly reasonable for a shop to want to sell to real end-users rather than people who will just turn around and scalp people who could have been potential customers... customers who are now frustrated and get a worse experience.
> Why should "whoever has the most money" or "whoever is willing to pay the highest price" be the fairest way to ration scarce resources?
It's not the fairest, but it is definitely better than arbitrary. If Alice is willing to pay $5 for a widget, and Bob is willing to pay $50, it's likely that Bob values the item more than Alice does.
It's also possible that Alice is simply poor, of course, but I can't imagine how a practical system could take this into account without also destroying incentive structures.
>I think "whoever gets through the website order form the fastest" is a perfectly reasonable (if often frustrating) way to ration scarce resources. You get in line, as a person, and get to buy some limited quantity for your own personal use.
This is arbitrary, IMO. Might as well hand them out to whomever can win a race in Mario Kart.
How is that any less arbitrary than "whoever has the most money"? You only think that's not arbitrary because that feels customary, and is essentially a foundation of capitalism. I don't see how "making end customers pay more while lining the pockets of third parties who provide no added value" is any less arbitrary.
If you still think first-come-first-served is too arbitrary, then how about some sort of lottery? A new batch of N units arrives at the warehouse, and then people have a week or something to drop their name into the lottery. At the end, Adafruit pulls N names out of the hat, and they get devices. That eliminates any unfairness around a FCFS ordering period starting at an inconvenient time for some people, or around people's internet connection being too slow to get through the order process fast enough. Adafruit could still try to implement measures to avoid that lottery winners aren't bots, or that people don't enter the lottery some large amount of times, or whatever.
> If Alice is willing to pay $5 for a widget, and Bob is willing to pay $50, it's likely that Bob values the item more than Alice does. [...] It's also possible that Alice is simply poor
That's exactly the point here! One of the Raspberry Pi Foundation's goals is to get decently-powerful, hackable, educational computing into the hands of people who usually can't afford it.
Sure, if we were talking about a Lexus or Mercedes-Benz, this doesn't matter quite as much; it's not a big problem if scarcity raises their prices. But for Raspberry Pi, raising prices hurts one of the important demographic targets of their product!
>How is that any less arbitrary than "whoever has the most money"?
Because when you're talking about a discretionary purchase like this, it's less "who has the most money" and "who is willing to sacrifice the greatest proportion of their disposable income".
I'm not saying the scalping isn't scummy, but it genuinely is a better way to distribute scarce resources than a lottery or first come first serve. On average, the person willing to pay a scalper to get their hands on something (which is not just expensive but degrading) needs it or wants it more than someone who isn't.
>One of the Raspberry Pi Foundation's goals is to get decently-powerful, hackable, educational computing into the hands of people who usually can't afford it.
If that is genuinely their main goal, then they're doing a woeful job as an organisation! For the price of a base model Pi 4, one can get a refurbished desktop with an i5 (!!!) processor, 500GB HDD and 4GB of RAM. Blows the Pi out of the water.
Maybe I'm a little bit biased here (I spent a decent chunk of my life designing a low-cost USB Oscilloscope, sold with free worldwide delivery, and almost all of my customers have been wealthy tech-enthusiasts from the Western world) but outside of IoT/Education, I don't really see the product being used as much more than a toy for rich people.
Putting severe limits on people who would arbitrage the rarity when the seller doesn't want to raise prices. Allowing the seller to determine how they want to distribute sales of the item (as long as it isn't price gouging essential goods)
Are they actually scarce, though? Is it legitimate customers, or botted speculators, that create more demand? It seems to me that someone has realized the product is slow enough they can afford to just buy all of them to resell regardless of actual demand. I used to do this with glyphs in WoW and got a lot of hate mail for it. I was buying cheaper glyphs in such quantities that I would delete a good third of them due to warehousing capacity and was still making money reselling other peoples products, and even then I was not selling 100% of my stock. To me this means that demand was actually lower than what the market could bear if it werent for me pinning it at 100% by buying literally everything. It's totally abusive but nobody can do anything about it.
They're actually scarce because of the wonderful debacle the whole supply chain has become in the past two years. This short-term scarcity is being exploited by bad actors who are seizing upon an opportunity to attempt buy up all the remaining stock in hopes that the legitimate end users will be forced to purchase from them at inflated prices.
As far as "nobody can do anything about it" is concerned, 15 states have made ticket scalping illegal because it harms consumers, and if this sort of thing continues you can bet that will expand further. Such legislation would even be fairly straightforward to write, but I suspect it will be more entertaining to watch as various scalpers of retail gear get nailed for various forms of tax evasion.
Sometimes the bots are just because people want the items for themselves. I know of some companies that bought 1000s of disk drives for their data centers that way from retailers, back when there was a drive shortage a few years ago.
Except they were buying them for their own use and protecting against supply chain interruptions, not buying them to sell them to other consumers at artificially-inflated rates.
Are the bots operated to manipulate the market, by buying up the whole supply to then sell at a higher price?