Knowledge Problem

Pre-holiday Price Gouging: The View from Six Weeks Later

Michael Giberson

A “price gouging” search brings up pre-holiday complaints about the online secondary markets for Zhu Zhu Pets (like via Amazon and eBay):

There is a move on auction sites such as Amazon and eBay calling for buyers to boycott any vendor who is price gouging the public on the much wanted Zhu Zhu Pets.These ‘retailers’ purchase entire inventories of the toys when they arrive on store shelves and move them directly to online auction sites for upwards of three to four times their retail value.

Zhu Zhu Pets can be found on Amazon.Com, but they are usually going for outrageous prices.  There are currently dozens of auctions selling Zhu Zhu Pets for far above their retail values.   See a current listing of Amazon’s Zhu Zhu Pets In Stock.

… Patricia Oquin, from Max Meadows, Virginia writes about vendors on Amazon.com  ”Do not do business with these people that are ruining Christmas for our children. I think this outrageous price gouging should be illegal, These pets sell for $8.00 at Walmart (if you can find them). This particular “Mr. Squiggles is selling here today for $52.99! Wonder why you can’t find them at retail? Because of greedy people like this! Don’t play into these deceptive practices, you will just encourage more of this greed.”

The article suggests that resellers are “stealing the Christmas out from under children.”  My reaction was that the resellers were only redistributing the supply of the toys so that no additional children were having their Christmas “stolen.”  In fact, at the higher price fewer children likely ended up with multiple Zhu Zhu Pets, meaning it is likely that a larger number of children actually were delighted to obtain the little furry toy as a holiday gift.  Really, therefore, we could say that the too-low initial retailer prices threatened to “steal” Christmas.

But I like one of the comments posted better:

… “stealing Christmas” from our kids? If not having this toy means Christmas is ruined then you’ve already stolen the meaning of Christmas from your kids.

I’m more interested in the usage of the term “price gouging” in this kind of situation. The interesting thing about a site like eBay is that the reseller could have offered a Zhu Zhu Pet for any arbitrarily small price and then let the bidding begin, and still end up selling the devices for four or five times the original retail price.  The reseller gets accused of price gouging, but clearly the bidders are doing it to themselves.

Implicitly the parents recognize the problem – they are in competition against all other prospective buyers and it is other buyers who are driving up prices – and that is why the urge to call upon others to “boycott any vendor who is price gouging the public.”  After all, if one parent convinces enough other parents to boycott the vendors (i.e. drop out of the secondary market), then it becomes much easier for the first parent to get what he wants.

In any case, the price of Zhu Zhu Pets has fallen dramatically over the past several weeks.  While once the sought-after Mr. Squiggles could fetch over $50, he is now available via Amazon for as low as $6.60.