Introduction
If you've been yearning to buy a new console, new PC hardware, or any premium product but have been met with difficulty then you might want to sit down.
What Are Scalpers?
If you know, you can skip this paragraph. For those who don't know, today scalping refers to the practice of buying up all or most of the available inventory of certain high-demand products. This prevents other consumers from purchasing these products from traditional retail locations yielding an almost pseudo-shortage. This forces consumers to purchase products from a limited number of other sellers for outrageously high prices; usually multiple times the original MSRP. Sellers who do this are called "scalpers".
Best Buy's New Membership Program
In a world of "out of stock" messages and high prices due to scalpers, Best Buy is seemingly throwing their hat in the ring with the introduction of a new exclusive membership program.
It's called the Totaltech membership and costs $200 a year. What does it get you for the price of a Nintendo Switch Lite? ...Well a lot actually.
According to Best Buy's website, TotalTech members will enjoy:
Around-the-clock tech support (24/7)
Up to 24 months of AppleCare+
Up to 24 months of product protection on most Best Buy purchases
Free delivery and standard installation
Free 2-day shipping
Extended 60-day return and exchange window
Savings on repairs
Advanced services
Access to exclusive Totaltech member prices
Other benefits
This looks great for frequent and loyal Best Buy customers who already take advantage of all their services. However, there's a huge caveat for those who purchase items infrequently--let's say--once a year for the holiday season.
What does it mean to have "access to exclusive Totaltech member prices" and "other benefits"? That's where this sweet annual membership might become sour for many customers.
According to Arstechnica, some in-demand and hard-to-get items such as the PS5 will now be locked behind this $200 membership fee. They also believe that it wouldn't be surprising to soon see other desirable products such as the Xbox Series X|S and graphics cards reserved exclusively for Best Buy's Totaltech members.
Membership Comparison
Best Buy isn't the first retail store to have a paid membership for exclusivity. Bulk retailers such as Costco and Sam's Club have charged customers an entry fee in the form of a membership cards for years. But let's compare these memberships to get the full picture.
Sam's club annual memberships start at $45 for base perks and $100 for premium perks. Costco's annual memberships start at $60 for base perks and $120 for premium perks. These stores also provide more than a single category of items and services such as food, groceries, fuel, medicine, glasses, automotive help, and even consumer electronics.
Best Buy's Totaltech membership doesn't cover the same spectrum of services as other memberships but cost more than 4 times that of Sam's Club and more than 3 times that of Costco when comparing the lowest membership fees.
So who does Best Buy's new Totaltech membership actually benefit? ...Unfortunately, mostly scalpers.
Scalpers will spend less time in much smaller queues to buy up everything in sight since this $200 entry fees can easily be covered by selling a single item at inflated prices online. There is simply less competition to buy in-demand products when the starting price is already inflated.
Scalpers have become a huge problem in recent years and have only been exasperated by the pandemic which has caused chip shortages and other logistical issues. What allows scalpers to buy up so much inventory is the mere fact that they have the funds and desire to do so.
While the common gamer only really needs one PS5 for their entire family, scalpers can buy dozens, hundreds, or even more and sit on this inventory as long as they see fit. Scalpers also make use of automated software or bots to quickly buy up online stock.
But simultaneously, Best Buy's Totaltech membership might allow some well-off customers the chance to score a next-gen console or premium product for the holidays without long wait times.
Who Should Actually Benefit from Supply Shortages and Inflated Prices?
During LinusTechTips' podcast, the WAN Show, Linus and Luke discussed possible reasons for this major shift by Best Buy. Linus plays devil's advocate by asking:
"So let's assume we live in a world where--where there's nothing we can do to keep it out of the hands of scalpers and effectively you are not going to be able to get it [popular items like the PS5] for MSRP. Who should get that money? Should it be Sony? Should it be the retailer? Should it be a scalper?" -Linus Sebastian, LinusTechTips
Linus raises an excellent question. If low-stock of in-demand items such as the PS5 are going to sell well above MSRP, then who should this inflated price actually benefit?
When it comes to the PS5, one could argue that Sony should receive the benefits of inflated prices because it's their product that's in high demand. GamesRadar reported back in August that Sony was selling their PS5 systems at a loss.
This is partially because Sony is competing with Microsoft's Xbox consoles which are set at a similar price point. But to increase the starting price of the PS5 after-the-fact would likely only hurt Sony far greater than any amount of short-term profit they could ever hope to gain.
As Linus and Luke point out, Sony has the most control over who gets their products but without a sure-fire way to securely and responsibly identify who is purchasing their products, it's not likely that Sony could do much better themselves.
If this is the case, there's likely only three real ways to end scalping practices:
Stop buying from scalpers
Corporate or legal intervention
An influx of supply to meet the rising demand of affected products (more on that later)
What if Availability is Holding You Back Instead of Prices?
On the bright side, if you're dead-set on purchasing some of this year's latest and greatest products and you are willing and able to pay higher prices, then Best Buy might actually be the best option for you. Let me explain why.
If you buy from scalpers, you're not only supporting the awful practice but you're also denying yourself the opportunity to:
Make returns & exchanges (especially if it turns out that the product is broken or the wrong one)
- NOTE: Extended holiday return windows exist for this reason
Obtain an extended warranty (like Best Buy's protection plans)
Guarantee the integrity of the product's packaging (it could be tampered with, stolen, or hacked)
If you're going to pay $200 above MSRP for a PS5 or any other in-demand product then you're much better off actually getting something out of it. A good alternative to paying scalpers is to simply enjoy the above benefits plus the beforementioned list of Best Buy's Totaltech perks.
Conclusion
IEEE Spectrum predicts that chip shortages and supply problems will likely plague markets well into 2022. Consequently, Best Buy will gain more paid memberships while scalpers face decreased competition when purchasing in bulk from Best Buy. So unfortunately, consumers are ultimately the biggest losers given our current global situation. But with any luck and a little bit of patience, consumers may find what their hearts (and their wallets) have been longing for in due time.
I hope scalpers dont find a way to the $200 membership, I also wonder if more people will stop going to bestbuy due to the $200 membership. either way im too broke to get anything lol.
yoooo this is a great article