If you ever wanted to buy one of these, then you know it's a lot harder than it looks.
Thanks to Sneakerhead culture, which got its start in the late 1980s and by
the early 2010s, Sneakerhead resale culture hit a fever pitch.
That's right, people were fighting over sneakers today.
It's all over this shoe.
A shoe shoppers say cost them $180 a pair.
Finish line and all the big sites crashed last night.
By mid-afternoon, hundreds had appeared for sale on eBay.
Yeah, I'm going to resell it.
You're going to resell it? Yeah.
Anybody wants to pay 1000.
In 2022, the global sneaker industry was valued at nearly $86
billion. With the market predicted to reach $128 billion by
2030, and the sneaker resale market is also huge, projected to grow to
$30 billion by 2030.
That's why a phenomenon known as sneaker botting has taken off alongside the sneaker craze, making
it harder and harder for many to get these valuable sneakers when they drop.
A bot is basically just something that automates the checkout process.
So when you go on a website and you buy anything, it asks you to fill out your credit card number.
It asks you to fill out your billing information.
A bot, it automates that entire process so that you can get through the checkout as fast as
possible.
Sneaker bots took off in 2012, when Nike released its Air Jordan Doernbecher 9
shoes on Twitter.
Requiring users to direct message them for a chance to reserve the shoe.
This led to the creation of bots that DMed Nike when it found keywords like RSVP
Now and Doernbecher.
The bots were able to react faster than humans.
Man. Bots are like a thorn in my side.
I'm now competing with them all the time for special releases and collabs.
It takes the fun out of the hobby and that's kind of what it is, at least for me.
It's a hobby, it's a passion.
But for some it's also a booming business opportunity.
In 2022, I made a gross profit of $131,000,
minus $15,000 for botting expenses.
And then we still make six figures over the course of one year.
CNBC dove into the sneaker industry to find out why bots have made buying sneakers harder than
ever and what companies are doing to get ahead of the problem.
To understand bots and the issues they raise.
Let's take a look at how sneaker shopping has evolved.
Until just a few years ago, customers would camp outside a sneaker retailer such as Foot Locker,
waiting in line for a slim chance to buy a pair of shoes.
Now, in the digital age, instead of waiting outside, you're waiting in a virtual queue.
In that physical world, there's unwritten rules, you don't jump the queue.
You don't let people in front of you.
You are patient. You are being served one by one.
Now, we are not talking 500 people.
We are talking millions, sometimes 5 to 25 million or 30 million people in a queue
coming into the website wanting to buy those goods.
And that's a mix of bots and there is no transparency on who came first.
Sneakerheads rely on platforms like Nike SNKRS app to buy highly coveted shoes at retail
price. But with the shift to e-commerce came the rise of bots, and they've only gotten better at
gaming the system.
So that good bots like the one that are crawling the internet, updating search engines and
Wikipedia and all a lot of stuff that we all benefit from.
And then there are the bad bots bots that we could call the parasites of the Internet, which
purpose it is to get into the web shops, buy a lot of the goods ahead of people in order to
sell them on the secondary market.
A 2021 study from cybersecurity company Imperva found that 42% of Internet
traffic was non-human and nearly 24% of retail site traffic came from bots with
malicious intent.
CHEQ, another cybersecurity company estimated that 1 in 4 Black Friday shoppers in
2022 were fake.
Everything that is a high ticket, high demand item, especially
if there's scarcity involved, is a prime target for
scalper bots.
Jesper Essendrop has experienced fighting bots with a top sneaker brand as CEO of
Queue-it, an IT company that specializes in controlling Internet traffic with virtual waiting
rooms.
If we look at some of our biggest sales of high profile goods like sneakers, we see
something between 40% and 95% of all traffic coming into that
web shop is from bots.
Once sneakers are purchased using bots, they are often resold on third-party platforms like StockX,
GOAT and Flight Club.
And exclusive drops can bring in huge profits for resellers in 2022.
Nike's Air Force 1 Low Off-White Brooklyn shoe, which originally retailed at
$160, had an average price premium of 912% on StockX.
They're buying inordinate amounts of product line and then
jacking up the prices that are oftentimes unaffordable, if not
abusive.
The market was impacted in October, however, when Adidas ended its deal with the rapper Ye,
formerly known as Kanye West, after he made antisemitic remarks.
Now, more than $1 billion worth of his Yeezy line shoes are in limbo.
Between that and the general slowdown in spending, Cowen Research Equity told CNBC, the
resale market is seeing a slowdown, but Adidas and other top brands like Nike and New Balance
are still constantly under attack from bots.
If we look at a concrete sneaker sale last year, 1.7 million visitors came
into our website on a sneaker sale.
Only 100,000 out of those 1.7 million visitors were
actually real human.
The rest was bots.
In the past, Nike SNKRS app has come under criticism for the way it handles bots
with loyal customers complaining that they had to compete with bots on every single drop.
Nike says the Sneakers app receives an average of 12 billion bot calls or entries trying to
game the system per month.
A customer can submit an entry to a draw by selecting a shoe and a size.
Nike then selects participants at random to buy the shoe.
But some of these customers are actually bots.
The 2022 release of Nike's Travis Scott Air Jordan 1 Reverse Mocha shoe
received nearly 3.8 million entries, with almost 1.9 million
of those entries being bots.
But since then, Nike has attempted to make some changes.
In 2022, Nike released updated terms and conditions aimed at fighting bots, which
banned purchasing products for resale, saying it could cancel orders, refuse returns, charge
restock fees or close the accounts of people suspected of botting.
But these terms only apply to U.S.-based customers.
Nike did not comment on why the terms don't apply internationally or if there are plans to
expand them. And botting is still a huge issue across the global market.
I just want one pair in my size.
I actually want to wear it.
And bots just kind of will eat up 50 pairs at a time and they just all end up on the resale
market.
So how does this all work?
We ask one of the people behind the bots.
The amount of sneakers that I bot can really vary from month to month.
Sometimes I'm able to bot hundreds within a single month.
Sometimes I bot less than 50.
Meet Nova, known as Botter Boy Nova on YouTube, where he has amassed nearly 200,000
subscribers by teaching people how to bot.
I got one. Got another one.
I run the biggest, most popular sneaker Botting YouTube channel.
Nova is a self-proclaimed sneakerhead and has been botting for around four years.
I was seeing a lot of these botters take so many sneakers away and
I thought I was at a disadvantage.
So I thought to myself, You know what?
How do I get one of those?
Nova asked not to reveal his real name because of security concerns.
Around 2017, 2016, there was a real stigma in botting.
I basically put a face on what botters may look like, and
at the end of the day, I'm just a regular person.
And, he's not the only one.
There are entire botting communities made up of people just like him and serious botters join
paid membership groups called Cook Groups, which provide access to resources like release
guides, insider tips and restock alerts on platforms like Discord and Slack.
Your Cook Group is basically your bread and butter.
They tell you what websites to go for, what shoes are profitable, what shoes aren't
profitable. The vast majority of them, especially the best ones, they can range anywhere between
$40 to $100 a month.
Cook Groups help botters learn the basics, but there's still a learning curve for beginners.
I guess I could bot myself to just get one pair for myself.
I honestly am not very tech savvy and I don't really care to put the energy into
that. I just kind of miss back in the day when you just walk into a store and just get it and
it's not really a hassle.
Botting can also be a costly hobby.
You need multiple bots because you need to make sure all of your bases are covered.
And for each of these bots, some of them have renewal fees ranging anywhere between
$50 to $80 a month.
But Nova also spends less on bots than some, because he's often given free bots in exchange
for promotion on his YouTube channel.
Normally, bots can be rented for as little as $5, while others have purchasing fees reaching
into the thousands.
Which brings up the question — is botting fair?
At the end of the day, there's not enough sneakers to go around for everyone.
So long story short, you have to work as hard as possible
to be able to obtain the sneakers for retail price.
It's unfair, I would say, and it's just more of like a memorabilia thing.
If they're only making 500 of these shoes, I want to be one of those people that
has one.
Buying, renting or using a bot to purchase sneakers may violate the terms and conditions of
retailers, but it's still legal.
I don't think botting should be illegal.
There has been a few times where legislators are trying to ban retail botting,
sneaker, botting, things of that nature, but nothing ever came of it.
This has become more and more of a common occurrence, a
phenomenon that is totally anti consumer and anti small
business.
In 2016, Paul Tonko introduced the Better Online Ticket Sales Act, or the
BOTS Act, which outlawed the resale of tickets purchased using bot technology.
However, the effectiveness of the laws in question after a fiasco in 2022 over Taylor
Swift tickets led some congressional members to accuse the Federal Trade Commission of not
enforcing the law.
The FTC's only case of enforcing this law came in 2021, five
years after it was passed.
Also in 2021, Tonko introduced a new law that would act like the BOTS Act for
retail sites instead of ticket sales.
The Stopping Grinch Bots Act authorizes FTC to go forward,
utilize the tools that we would give them with this legislation where they could levy fines for
those who have knowingly circumvented control systems.
Congress has yet to vote on the bill, and it's unclear when this will happen, even if it does
pass. FTC enforcement is still key.
It seems like something has to be done at some point because it's just kind of out of hand and
kind of messing up the hobby for a lot of purists.
I feel like it's going to be a law that's going to be impossible to enforce because at the end of
the day, some of the bots are so sophisticated now where telling whether or
not it's a human or a machine would be impossible.
For now, it's up to retailers to implement anti bot measures.
Some brands use CAPTCHA methods which help identify a bot as a non human, and companies
like Nike have implemented raffle systems instead of the first come first serve drops that give bots
an advantage.
Recently, as of 2023, my success with Nike has been in the gutter.
I've not been copying anything from the Nike SNKRS app.
People are successfully able to still bought Nike SNKRS.
However, the way in which you have to go about it, you have to
really understand how the Nike filter works.
Nike did not comment on whether customers using bots are still finding success on the SNKRS app
or if there are any updates coming to its raffle system.
Bots can make up 10 to 50% of entries depending on the demand of the launch.
For example, almost half of the entries for the recently released Travis Scott Air Jordan 1
Low OG Olive shoes were bots, but Nike told CNBC it has up to a
98% success rate combating bots in the highest demand launches.
Nike probably has the most advanced and intricate anti bot systems, and
they're actually quite effective in stopping bots.
When you press buy now it says, Hey, you're in line to purchase the item, you're not actually in
line. This is actually a raffle.
So it's a raffle that lasts for three minutes.
And as Nike is taking in the entries, it's filtering out all of the bot
entries and all of the duplicate entries.
Companies like Ticketmaster and Fabletics lean on third-party services such as Queue-it to help
filter out bots.
We are basically what we call a virtual waiting room that can monitor whether or not this is a
human being or a bot.
When we try to do our best to kick all those bots out.
Still, sneaker bots can often bypass these measures with loopholes like jigging: slightly,
changing their address name or other identifying information.
At the end of the day, it's still up to retailers to regulate botting.
There are some websites that really don't care about botters simply because sometimes their
only goal is to sell out.
And if your goal is to sell out, then it doesn't make sense to create a barrier between someone
trying to purchase your sneakers and someone trying to sell the sneakers.
As bottters get more advanced and sneakers become more exclusive, will sneakerheads without bots
ever regain a chance at scoring the latest drop?
For as long as it's legal, I think I'm going to keep botting.
Because simply put, if a human can do it, then a bot can do it too.
And as long as there's items coming out, whether it be sneakers, new generation
consoles, GPUs where the demand far outweighs the supply, then there's money to be
made.
I understand people out to get their money or whatever, but it kind of just destroys the fun for
people like me.
Find something else to make money, right?
Keep the rare shoes for the people that want them.
Fans. That's what we are.
We're fans. Stop.