Corporate Greed Creates Dozens Of Business Opportunities For Sneaker Scalpers

Ticket scalpers have found their match in the sneaker industry. Automated sneaker bots are grabbing limited edition shoes as soon as they appear on websites, leaving many sneaker fans disappointed and frustrated.

The idea behind sneaker scalping is simple: a bot quickly searches the site, adds sneakers to the cart, and checks out before a human has a chance to even load the page. Even though websites like Nike's SNKRS and Adidas' YEEZY SUPPLY are turning up their defences, sneaker botting continues to thrive.

Little tangible information exists about this industry, with sneaker resale market estimates ranging up to $6 billion US dollars. Its participants have built a whole ecosystem around limited edition shoes, trying to capitalise from the artificial scarcity sneaker companies have created for their products. For many, flipping limited edition shoes is not only a lucrative side-gig, but their main source of income.

Our company, Smartproxy, is one of the most popular tech companies serving major sneaker-heads. Sneaker scalping may look like a malicious activity that harms both sneaker fans and major retail websites. But it is merely a response to the root problem behind sneakers releases – corporate greed.

The anatomy of a sneaker 'drop'

Whenever a new sneaker design appears (or 'drops') on the shelves of Footlocker and similar websites, hundreds or thousands of pairs become available online. Sneaker-heads have calendars, precise times and, sometimes, even early links for new merchandise. Their bots connect to target websites dozens of times a minute, serving extreme loads on shoe-selling servers.

Many sneaker bot users also rent powerful data centers. Servers help make the bots faster. They can also withstand the load that the sometimes poorly-optimised software puts on personal computers.

To avoid website restrictions, sneaker-heads often pair the bots with proxy networks. They provide IP addresses from various locations. Our residential proxy network contains millions of IPs borrowed from real residential users, which makes it very hard for sneaker websites to identify and block the bot.`

And no matter what detection or blocking option websites implement, sneaker-heads find a way to automatically avoid it.

For example, when sneaker sites started implementing CAPTCHAs to filter out artificial traffic, bots quickly adjusted to it. They added a feature to collect CAPTCHA tokens by watching YouTube videos through seasoned Gmail accounts. This allows the bots to avoid solving puzzles and instead receive challenges that require one click of a button – a simple problem to overcome.

Issues sneaker sites face

Traffic from sneaker bots overloads websites. According to cybersecurity experts from Akamai, hundreds of thousands of requests barrage a footwear website whenever a scheduled limited edition sneaker appears.

At Smartproxy, our data confirms such estimates. We have noticed that during a limited sneaker release the traffic to sneaker websites increases by several orders of magnitude. It then returns to the regular numbers shortly after the release ends. Not a week passes before our customers are counting profits from successful resells.

The servers of popular sneaker sites can usually withstand these spikes in traffic. But they have to resort to expensive CDNs, invest in manpower and infrastructure. Companies like Akamai and PerimeterX are eager to help with protection against bots, but they too are businesses with financial interests in mind.

Ticket scalping redux?

It may look like sneaker scalping causes nothing but issues. Sneaker websites incur extra costs trying to protect themselves from bots; sneaker-heads that don't bot have very little chance to snatch the shoes they so much covet during a release.

Up until recently, a similar issue plagued the ticket industry. Ticket scalpers would buy out all the tickets to events seconds after they became available. Those tickets would then reappear in reseller sites, going for several times over their retail price. It took strict legal measures to finally put the practice to a stop.

A curious detail: even with obvious limiting factors in events, such as the number of seats, the organisers still try to game the system. According to a report by the New York Attorney General, only 46% of tickets go on sale to the public. It is less a matter of constraints than of plain unbridled greed.

On the face of it, sneaker scalping looks like a carbon copy of ticket reselling. But, we forget one important detail: unlike events, sneakers have much fewer physical limitations. There is no set number of seats to sell; you can manufacture as many shoes as the demand allows. And in this case, the demand is very large.

A problem of ideology, not technology

Going back to physical stores is not an option, but perhaps a change of strategy is. Sure, sneaker sites can continue tightening the restrictions: account verification with identity checks would go a long way to prevent multiple sneaker accounts from buying too many pairs. Or you could choose the ticket scalper approach and ban sneaker reselling altogether through legal regulations.

But short of a complete ban, sneaker reselling will continue. Geared with advanced bots and tools like residential proxies, sneaker-heads will find a way to get their hands on limited edition shoes. Eventually, technological measures against botting can curtail it, and they may even bring a pyrrhic victory in the end. But to whose benefit?

Instead of creating artificial shortages and stirring unhealthy competition, why not have fewer limited releases and more availability? It might lose us customers, but sneaker websites like Foot Locker would gain peace of mind, and real sneaker-heads – a much better experience.

We embrace change, but we cannot enforce it. For now, sneaker bots and proxies provide the only way to buy limited edition sneakers at a reasonable price. And so, Smartproxy remains a prime location for sneaker-heads to get their tools of the trade.