Susan Scafidi was quoted in a Fox Business article about the practice of retail arbitrage.
Retail arbitrage involves middlemen make purchases in brick-and-mortar as well as online shops and resell them for much more through third-party retailers like Amazon (AMZN) and eBay (EBAY).
“It’s as old as ticket scalping,” says Susan Scafidi, Academic Director of Fordham’s Fashion Law Institute. “As long as there’s been market imperfection; that is to say people are willing to pay more than sellers are charging.”
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Scafidi says retail arbitrage benefits “consumers who have more money than time, but is a detriment to consumers who are willing to spend time on line, but cannot afford to pay secondary market prices.”
She notes that the practice actually helps retailers in the short-term because it moves the product but is harmful long-term because they could potentially lose part of their customer base. Specifically, those disheartened by trying and failing to get their hands on items due in part to retail arbitrage may never shop with these retailers again.
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Since retail arbitrage is legal, there is not a lot retailers can do to stop it from happening. Both Scafidi and Quist agree limiting quantities has been the method most commonly used to prevent goods from being sold on the grey market.
