Reselling

When the world went digital, most retailers followed suit and developed their own digital mechanism for reaching their customers. There were a few exceptions; Primark being one of them. Primark’s lack of an online channel has been others’ gain. Unofficial resellers have been flogging Primark gear on Amazon for mark-ups of up to double the Primark retail price, causing the Irish retailer to this week release a warning to its customers not to buy at inflated prices. What if anything can be learned from this? Perhaps for Primark this highlights an opportunity, either in building an online presence, or in its pricing policies. More generally, it provides some insight into how and why people buy. The consumer it seems might not be as price sensitive as one might assume to the delivery and handling charges that need to be built into a reseller’s model. This might be explained in two ways. Firstly, consumers might be willing to pay more for the convenience of online delivery (and to avoid the opportunity costs of having to go to the shops). That would be particularly the case where the store portfolio is sparsely distributed, and so where the inconvenience costs are high. Perhaps this also explains why grocery is one of the sectors that is least impacted by e-commerce (convenience shops being everywhere). Secondly, where a brand is selling a unique product, the lack of competition provides an opportunity for mispricing. The most inflated prices were on themed products (e.g. Harry Potter merchandise) with limited supply. The purchase and resale of these products created a marketplace that would otherwise not exist.