Countless news sources claim that bots and “scalpers” are the reason why you can’t purchase the highly demanded PS5 consoles. Let’s analyze the data to see what’s REALLY going on…
Disclaimer: If you’re reading this with a bias or grudge because you didn’t get a PS5 and aren’t willing to engage in a productive discussion, this article isn’t for you.
The “Problem”
It’s nearly Christmas and little Tommy wants a PS5! But sadly he can’t buy one, all thanks to those GOSH DARN SCALPERS! Grr…
Let’s face it, even if “scalpers” didn’t exist, Sony still wouldn’t have produced enough supply to give every single Tommy a PS5 this Christmas. And here’s why:
While Sony hasn’t released the official stock numbers (at the time of writing this article), we can conservatively estimate the total units sold to be 2.31 million units since launch.
If you’re interested as to how this estimate was calculated, read below. Otherwise, you can skip to the Reseller Analytics Section.
Estimation Calculation
Last month, according to NPD analyst Mat Piscatella,
“PlayStation 5 achieved the highest launch month unit and dollar sales for a video game hardware platform in U.S. history,” said Piscatella. “The records were previously held by the PlayStation 4, which debuted in November 2013.”
Sony revealed they sold 2.1 million PS4s during the month of November 2013. The PS4 in November 2013 was 1 console sold at $399. This represents a total of $837.9 million+ sales.
The PS5s currently sell at $499 for the BluRay Edition and $399 for the Digital Edition. Based on stock information obtained from one of the Best Buy stores by an anonymous source, we can predict that both editions of the PS5 are stocked at approximately the same level. While we can’t definitively say the same for all retailers and sales, we can reasonably assume an even amount of stock for both consoles in order to create the base case scenario for number of units sold in November and December.
We use our Best Buy source’s information to understand how much stock one store (online and in-store) received in both months in order to determine if the stock decreased, increased, or stayed the same when comparing November to December. We were also provided with an estimate of the ratio of Blu Ray to Digital consoles, which we found to be 1 to 1. So, that means that the amount they had on hand was about the same for both consoles.
Going off the NPD analyst and our Best Buy source’s information, we can predict that for both November and December this year there were at minimum 2.31 million units of PS5s sold, generating a revenue of approximately $1.037+ billion in sales, which lines up with the NPD analyst’s statement.
Keeping in mind that unit sales is based off of the total amount of units sold and dollar sales is the amount of money generated from PS5 sales, we can approximate that 1.15 million units of each console were sold. For the Blu Ray console, this would result in 1.15 million units times a price of $499 which gives us approximately $576.3 million sales. The same can be done for the Digital Edition but with a price of $399, which is approximately $460.8 million sales. Therefore, the total sales for both consoles combined is approximately $1.037 billion.
This number can vary significantly. Based on the PS4 initial release, 4.2 million units were sold through November and December.
Reports from a few months back suggest that Sony planned on producing as many as 5 to 6 million units for 2020. It is uncertain if they were able to meet these figures.
Reseller Analytics
Keeping in mind that resellers use numerous secondary market websites and apps, this calculation will be done with units we know definitely resold.
StockX is one of the top premier places for resellers. It’s a second hand market designed for people to buy and sell products. In the United States alone, 32,106 Blu Ray Edition PS5s & 15,865 Digital Edition PS5s have been resold on the website since its initial launch in November (at the time of writing this article). That’s a total of 47,971 units resold on StockX in the US.
The first place the average person goes to buy and sell anything is typically eBay. In Michael Driscoll’s analysis, he shows the amount of PS5s sold in the US on eBay were 7,322 Digital Edition and 25,642 Disc Edition units. That’s a total of 32,964 PS5s resold across eBay in the US.
Combining both StockX and eBay, that’s a total of 80,935 PS5 units that we know for sure resold out of the estimated 2.31 million units. That’s only 4% out of the entire stock that we know for sure resold on the two major secondary marketplaces.
While it is difficult to calculate, let’s look at the worst possible case scenario. If the amount of PS5s sold across all secondary marketplaces (Facebook Marketplace, Craigslist, in person, etc.) including the top two, StockX and eBay, sales were equal to about double 80,935 (both StockX and eBay combined), that would be about 161,870 units resold out of the estimated 2.31 million units. This is still only 7% out of the entire stock that we assume has been resold.
Only 4–7%?? Then why can’t I buy one?
The truth is, everyone’s lives are online now and you, along with an estimated 22.05 million people are going after 2.31 million PS5 consoles. The stock is too low for everybody and secondary markets are the next place to purchase them. According to VentureBeat reports, Sony has sold over 112.3 million PS4s and there are over 45 million people subscribed to PlayStation Plus. These numbers alone should give a perspective as to how high the demand is for the PS5.
The Manipulative Media
Media outlets know that most people can’t get their hands on the PS5, so they sensationalize blaming resellers and the secondary market. The high resale prices make resellers easy targets. They only tell you the amount of money these “scalpers” make and say the reason you couldn’t purchase was because of them. They publish article after article perpetuating that the majority of PS5 stock was salvaged by “scalpers” when in actuality, the data couldn’t be more opposite.
Let’s analyze one of these articles giving partial statistics and see how people react to them.
In this tweet, @TmarTn discusses how “scalpers’’ made $50,000,000 from reselling Xbox and PS5 consoles. The majority of replies to this tweet are people enraged over not being able to obtain a console for themselves. The reason for this is because the article lends the assumption that these “scalpers” have taken majority of the stock for themselves, leaving no stock for anyone else.
This assumption would be reasonable, given the *shocking* number — $50,000,000; however, this is wildly incorrect once you know the percentage of the entire stock being profited from.
The article mentioned in this tweet references the same one I used, Michael Driscoll’s analysis. The article only shows the amount of money “scalpers” made, but doesn’t mention how much of the overall stock they affected. According to the data in the article, the PS5s accrued a profit of $34,753,329 with 32,964 units. This alone is only less than 1% of the entire estimated stock of PS5s released thus far (more calculations for the PS5 previously mentioned). This is not even considering if Sony outperforms our estimate of 2.3 million units, this percentage would be significantly smaller. As stated earlier, 2.3 million units is a very conservative estimate and Sony stated publicly that they wanted to produce 5–6 million units before the end of this year. The reason we don’t use 5–6 million units in our calculations is because we are unsure if Sony is able to meet these figures. Therefore, our estimate for the total amount of units produced is extremely conservative. The same argument applies for the Xbox series X and S.
Rather than acknowledging the truth of how little resellers affect the stock of the consoles, the media would rather pin the blame on “scalpers” by writing articles with clickbait headlines. These articles aim to trigger you by implying that the PS5 stock all went to “scalpers”, without looking at the hard evidence. As we’ve seen thus far, this is not the case.
What about bots/automation?
Bots are automation tools designed to help people purchase items they want on websites. Not all bot users are resellers. Bots are used by regular buyers, collectors, and resellers. You use them as well. When going on a website and purchasing items, your information might be pre-filled by your browser with autofill. Autofill is an automation tool that simplifies having the need to fill out forms manually. A bot is a similar tool. A bot merely speeds up the cart and checkout process, as opposed to slower human clicks, just like how autofill enters your information without requiring you to type every single field out.
Bots can give you a better opportunity to purchase items you desire. They don’t, however, guarantee that you’ll succeed in purchasing the item 100% of the time. They just simplify the need of having to go through tedious and time consuming conditions of websites. While retailers love to mention the amount of bots they prevent, they don’t mention the amount of people active on the site or the amount of stock available for purchase.
Respect the Hustle
Where there’s limited supply and high demand, there’s a real probability of resell. This goes hand in hand with the fundamentals of a market. Expect resell value to be high when supply is low and demand is high, not just for PS5’s, but for any consumer goods. A majority, if not all the time, resellers only make up a low single-digit percentage of overall units sold. Without a secondary market, PS5s wouldn’t even be available to buy until Sony supplies the consumer demand. How you buy something and what you decide to do with what you buy should be entirely up to you, whether you plan on using or reselling it. Ultimately, it’s up to the manufacturer on how they wish to supply the demand. For goods that are likely only purchased once, this is done in small micro releases, as this allows hype to build.
Bots and resellers are also a major part of sneaker culture. They give buyers who missed their chance at the initial drop access to sold out items. Reselling has allowed so many people to make a good side income and pay off their debts. It’s a hustle that’s aided so many people financially in the midst of this pandemic and continues to do so. While times may be frustrating, we shouldn’t be jumping to conclusions like hoes without looking at the data and analytics first.
