In late July 2021, famous hip hop artist Travis Scott released his latest footwear collaboration on the singer’s website. The Travis Scott x fragment x Air Jordan 1 High sneakers quickly sold out, but that didn’t mean sneakerheads were happy.
Aggressive sneaker bots spoiled the fun, flooding Scott’s page with purchase requests. Several bot operators tweeted out that they had made more than 25,000 raffle entries to ensure they got the hot kicks. A few hours after the release, the Travis Scott sneakers were selling on third-party sites at a markup of 20 times the original price.
The bot purchases were the latest in a long string of mishaps in limited releases and hype sales. The practice has grown significantly over the past few years as retailers have sought to build stronger relationships with their most loyal customers and create excitement around their brands. The collectibles market has blossomed, driven by the emergence of liquid markets online that turn hot shoes and fashion items into investment vehicles. The bot operators have kept pace, upping the ante with ever better technology to evade detection and flood flash sales with orders that put normal customers at a clear disadvantage.
So yes, your marketing team has big plans for limited editions and flash sales. These sales events have entered the standard arsenal of retailers of all stripes, from mass-market merchants like Target and Gap to highly exclusive like Supreme. It is essential to understand that, as the Travis Scott cautionary tale underscores, there are risks to this novel marketing tactic—revenue risks, reputation and customer loyalty risks, and operational risks. Before you plan and launch a limited release or flash sale program, it is useful to consider the significant risks, why they are a problem, and how to fix them.
What are the big risks from flash sales gone wrong?
As mentioned above, there are three primary risks. Let’s break them down.
Revenue risk caused by bot operators
You might think that if the retailer is selling all their inventory of hot items, then the revenue risk is minimal. But this fails to account for one of the best profit sources for retailers in many situations. Bot operators tend to purchase only the hot item they wish to resell. Regular customers will often purchase multiple items, jacking up profit margins and revenues. For example, when an average shopper buys a video game console, they are also likely to buy some new titles to play on that console. They may also purchase accessories or additional capabilities such as streaming play or credits towards in-game merchandise. For clothes, the shopper is often likely to buy related clothing items. When you buy shoes, you may also buy socks, for example. By allowing bots to dominate flash sales and limited releases, retailers risk losing real revenue, mainly when they frequently run these promotions and count on them to drive purchases.
How to address: There are several methods that retailers are using to address the revenue risk. Primarily this focuses on blocking bots and allowing real humans to buy more easily. Companies like Adidas sell limited-edition wares only to customers who have paid to join a limited release club that enjoys other benefits like free shipping or discounts on regular merchandise. Starbucks issued SMS texts to be presented in person for the redemption of drinks. Another fix is to deploy technology solutions that identify bots and prevent them from entering the sales queue. This technology uses machine learning to study shopping behavior patterns and compares all shoppers across hundreds of categories to identify automated purchasing and weed out bots.
Reputational and loyalty risk
Hype sales gone wrong can generate loads of ill will and bad press. When bots block out legit loyalists, brands get a black eye, and Bots can cause loyal fans to bail. If it’s a retailer selling a brand product, a bad experience can spill over into other purchasing behavior at the retailer. For example, a spurned video game fan may choose not to go to that same store to purchase gaming headsets or PCs in the future.
How to address: To address this risk, brands should consider a proactive approach that allows them to interact with all purchasers and offer “consolation prizes”—additional discounts, specialized access to upcoming drops, and other ways to let these buyers know they are wanted. Addressing reputational risk works best when brands can filter automated traffic and block bots. This is not a perfect solution but showing that you care about each shopper goes a long way. The shoppers know that brands struggle with bots and are sympathetic. When brands don’t acknowledge the struggle and try to make amends, the real damage occurs.
For retailers and brands, dealing with the aftermath of poorly executed limited edition or flash sales costs money, time and aggravation. Angry shoppers might flood support queues, stressing customer representatives. In some cases, bot operators seek to access APIs to pre-order wares not yet public by accessing internal inventory systems, creating real cybersecurity risks.
How to address: Brands and retailers should be prepared for the potential for bumps in support activity in the wake of flash sales and arrange for more representatives to be ready on-call or respond in social media to requests for help. Ideally, the brands and retailers should build playbooks with scripted activities they can follow in case of bad sales. For example, have a playbook for quickly sending out apology emails to customers, identifying and reaching out to customers that might have been stranded in purchase queues, or running a system sweep to ensure that all API and web application access during the sale was authorized and legitimate. The goal is to create a response muscle and a plan to deal with the operational imperatives of the crisis.
Making hype sales safer feom bots
Flash and limited-edition sales are now a regular part of marketing activities for brands and retailers that wish to compete and differentiate. Modern technology to block bots from buying hot sales items is now highly accurate. Many of the world’s leading retailers and brands deploy it to help them maintain control of their inventory and reputations. Putting in place the necessary technology and creating the right plans to respond and react to problems quickly will significantly diminish the risks of flash sales and limited release promotions going wrong. Travis Scott’s brand may have learned the lesson the hard way, but the message is clear. Get ahead of these problems to keep your customers, revenues and reputation on the up and up.
PerimeterX provides security services for websites and mobile applications.Favorite