BeforeÂ the internet there was little chance for enterprising types to profit fromÂ holiday-generated scarcity. I’m thinking of the Cabbage Patch Kids dolls, which were the must-have collectiblesÂ for much ofÂ the 1980s, and caused frenzied pre-Christmas rushes at bricks-and-mortar stores. Now there areÂ online markets to help resolveÂ supply / demand imbalances. I was reminded of thisÂ as I talked to my friend at BuyCostumes, the world’s largest e-commerce costume site.
Earlier this monthÂ I wrote that if you remove the constraints of shelf space dictated by a physical costume store, you see the same Long Tail sales trends that otherÂ categories experience (at BuyCostomes, at least). When variety of product is virtually unlimited (pun intended), niche sales can be very profitable.
Conversely, when there is a lot of demand for somethingÂ in limited supply, not only will you sell out quickly, but you’ll see that product continue through the food chain until it finds its ideal price. Certainly for Christmas items, but also for Halloween, which is now the second largest American holiday in terms of spending.
A fact I was reminded of when I learned that Burger King costumes are big this year.
BuyCostumes has an exclusive deal to sell these masks this year, andÂ sold nearly 2,000 of them over the course of about 6 hours (cumulatively,Â because theyÂ sold them in batches over several days).
TheÂ retail price wasÂ $39.99.Â Many who scooped them up immediately put them back on the market. My contact at BuyCostumes guessed they were going for as much as $80 each on eBayÂ and finally settled down toÂ $65, including shipping and handling. Unfortunately, the speculators, plus eBay and perhaps pay-per-click ad sites (see the ads on the Google search I did this weekend) were the only parties to profit from this demand spike.
For several years I’ve been reading that movie theaters are talking about putting their tickets for extremely busy nights up for a higher price than normal, and conversely, marketing their slow nights at lower ticket costs. That day is still a long way off, for social reasons and not technical ones.
Similarly,Â I wonder if holiday-related e-commerce sites should consider having their own markets for their hottest products, so they can benefit from these demand spikes. After all, oil companies do it. And isn’t a Burger King mask that can be re-sold many times on eBay and Craigslist just as fungible as a gallon of sweet crude?
The only constraint I can think of: Society may not be prepared to have a merchant with exclusive rights to a product take every action to benefit from its popularity. The negative PR implications of an online auction by the seller may be too great, leaving the opportunityÂ in the hands ofÂ the speculators and eBay.
You’ve got to wonder. If the frantic parents outsideÂ the toy stores of the 1980’s were told there would be an auction for the last 10 Cabbage Patch Kids, and “Who will start the bidding at $100?” …Â would there be a riot? And would there be a flame-fest from consumers if modern-day eTailers did the same?