How Grinch Buying Bots Took the Gaming Hardware Market Hostage

In video games jargon, the phrase “Console Wars” refers to the fierce competition between hardware manufacturers for market share. It turns out, however, that the only war going on at the moment is for acquiring a console. And thus far, Grinch Bots are winning.

Video Games’ Popularity Is Peaking Throughout The Pandemic

Data from Nielsen company SuperData says 55 percent of Americans picked up a video game in 2020. According to market research group NPD, the spending on video games and consoles in the US during 2020 was $56.9 billion – that’s 27 percent more than in 2019. A total of $7.7 billion of that was in December alone. The recent launch of a new generation of gaming consoles, as well as new PC hardware in the form of CPUs and GPUs has certainly contributed to that market growth.

Low Supply Plus High Demand Equals Sizeable Profit

The colossal demand for the newly announced consoles and hardware, combined with what was expected to be a very limited stock, made these new product launches high-value targets for scalpers (individuals or groups purchasing limited stock products to resell them for a higher price). The pandemic played a key role too, from disrupting supply chains, to retailers being forced to sell online only in order to avoid crowded lines in-store. The equation is simple – announce a highly anticipated launch, provide a date and time, and bots will be there to grab the inventory.

And sure enough, with the help of Grinch bots, scalpers were able to obtain whatever limited stock was available, leaving consumers befuddled by the speed at which the products were sold out. In his analysis of the scalping market, Data Engineer Michael Driscoll reveals the profits made by these scalpers from reselling: an astounding $82m. And that’s based on data from just one online marketplace. A recent Washington Post article provides an insight into individuals and organized groups running a fully-fledged bot operation, earning thousands, even millions, of dollars.

The underlying issues and threats to the retail industry

It appears as if the new generation of gaming consoles and GPUs are constantly flying off the (digital) shelves. Retailers should probably be happy, right? Well, not exactly. There’s more to it than just making the sale.

Website slowdowns, error pages, shopping carts randomly emptied, and unsuccessful checkout processes are just some of the issues plaguing launches. One example was the launch of a new GPU which sold out in just 1.2 seconds, sparking outrage among consumers over on Twitter.

In the competitive market that is e-commerce, website availability and functionality is imperative and downtimes are a significant loss of revenue. The inability to purchase a limited stock item in an environment where competitors are plentiful leads visitors to the next site selling it, thus hurting conversion rates.

Perhaps the biggest issue at the moment lies in the fact that supply doesn’t seem to be meeting demand anytime soon. For online retailers, this means they’ll now be having new frequent visitors to their sites – Advanced Persistent Bots, or APBs. These will constantly be querying the product pages, asking “do you have this in stock?”, thus placing a heavy load on the servers. In order to maintain uptime and avoid degraded functionality, retailers are forced to spend extra on reinforcing their infrastructure. Additionally, these bad bots are skewing decision-making metrics. Read more on how bots affect e-commerce.

Beat the Grinch bots

In an ideal world, regulations would be in place to prevent scalpers from selling products acquired using bad bots. The US Congress has even proposed the “Stopping Grinchbots Act of 2018”. How it can be enforced legally in a borderless internet is uncertain. What if a bot is based outside the USA, for example? It’s clear that, for the foreseeable future, the task of managing bad bots is in the hands of retailers. Some are limiting the purchase amount for limited stock items, but that isn’t effective as scalpers use multiple bots. Others aren’t confirming orders until they’ve manually investigated and approved each one, which is cumbersome and time-consuming. Another common method is the use of a virtual queue, which could still be bypassed by bots and causes great frustration for legitimate customers.

Sophisticated Bots Require Advanced Protection

The Grinch bots hitting e-commerce are classified as sophisticated bad bots, making them arduous to manage. A key part of the strategy for combating them is making it expensive for scalpers to run. Imperva offers a best-in-class Advanced Bot Protection solution, able to mitigate the most sophisticated automated threats, including all OWASP automated threats. It leverages superior technology to protect all potential access points, including websites, mobile applications and APIs. And it does so without affecting the experience of legitimate users.

Advanced Bot Protection is a part of Imperva’s Application Security platform. Start your Application Security Free Trial today to protect your assets from Grinch bots and other automated threats.