What is inventory hoarding?
Inventory hoarding is when bad actors use automated bots to buy large quantities of products online, preventing legitimate consumers from purchasing them. This practice depletes stock, disrupts fair access, and causes artificial scarcity and inflated prices.
Defining Inventory Hoarding Attacks
Automated systems or bots manipulate online inventories, especially in industries like e-commerce, travel, hospitality, entertainment, and gaming. They rapidly purchase limited-edition items, concert tickets, in-game assets, or other products to drive up prices, often so the attackers can sell them for a profit later.
The Motivations Behind Inventory Hoarding
Attackers are motivated by a number of reasons, including:
- Financial Gain: This is the primary motive behind inventory hoarding attacks. Attackers program bots to purchase products in bulk so they can resell them later at a higher price.
- Undermining Competitors: Inventory hoarding can be a form of economic warfare. Businesses place competitor’s products in online shopping carts without purchasing them, driving legitimate buyers to seek out the products on their own sites. Not only do the unscrupulous businesses benefit directly, but the practice can negatively influence consumers’ perception of a competitor’s brand.
- Monopoly of Resources: When conducted over time, competitors can achieve a monopoly and control long-term access or pricing to gain unfair advantage in digital markets.
- In-platform Competitive Advantage: In the gaming industry, hackers hoard in-game resources, virtual goods, and other essential items that allow them to influence game dynamics.
- Causing Chaos: By manipulating the supply and demand dynamics of digital markets, attackers The artificial scarcity created through automated bulk purchases influence market prices and prevent genuine users from buying items they want.
The Impact of Inventory Hoarding on Businesses
Inventory hoarding, also known as denial of inventory, has serious and long-lasting negative impacts on businesses. Businesses suffer losses as bots exploit pricing differentials, engage in scalping practices, or monopolize resources. It can disrupt the supply chain, causing inefficiencies and increase in operational costs.
By distorting market dynamics and creating artificial scarcity, cybercriminals can drive up prices and undermine fair competition. Genuine consumers may either not be able to access in-demand products and services, or may need to pay higher prices. This can lead to customer dissatisfaction, damage to company reputation, and decline in user engagement.
Financial Ramifications
Inventory hoarding artificially inflates prices, which results in decreased sales and direct revenue losses. Businesses may incur additional costs on cybersecurity software to mitigate the effects of these attacks, adding to operational costs and disrupting operational efficiency.
Damage to Brand Reputation
Inventory hoarding not only frustrates consumers, but also portrays the company as indifferent to fair market practices, causing reputational damage.This damage can result in loss of trust, customer loyalty, and repeat business, as well as the ability to acquire new customers.
Spotting the Signs of Hoarding Attacks
Fighting automated attacks is essential to maintaining customer trust and continued business growth. Businesses must consider employing tools and strategies that can help detect anomalies and signs of automated bot attacks.
Unusual Sales Patterns
These are often an indication of automated bot-driven activity rather than genuine customer behavior. Signs of unusual sales that businesses must look out for include:
- Increase in Sales: Sudden and unexplained spikes in sales for specific products or categories within a short time frame, or purchases that deviate from normal consumer buying patterns
- Disproportionate Purchases: A sudden increase in the number of items being purchased by a single user or a few accounts
- High Transaction Velocity: Unusually high transaction volumes over a short period
- High Traffic but Low Conversion Rates: A surge in incoming traffic but with low conversion rates
- Identical User Behavior: Repetitive clicks, keystrokes, or mouse movements
- Unexplained Traffic Spikes: A rapid and unexplained increase in traffic during high-profile events or product releases.
- Sudden Increase in Account Registrations: A surge in new accounts with generic usernames or email addresses, especially during promotional events
- Unusual IP Addresses: An unusually high number of requests from specific IP addresses or geographical regions
- Unexpected Login Times: Repeated login attempts or continuous activity during odd hours
- Returns or Chargebacks: An unusually higher than normal incidence of product returns and chargebacks
- Inconsistencies with Campaigns: A mismatch between marketing campaigns and actual sales performance
- CAPTCHA Bypass Attempts: Frequent attempts to bypass CAPTCHA systems
How are Inventory Hoarding Attacks Carried Out?
Attackers use automated scripts or bots that can mimic human behavior to exploit vulnerabilities in digital channels. This bot traffic outpaces genuine human consumers in purchasing specific products in large quantities, which quickly depletes the available stock and causes artificial scarcity.
The Role of Bots in Inventory Hoarding
Cheap and easily available bots play a central role in denial of inventory attacks. These automated programs can exploit online systems to manipulate the purchasing process and make quick and repetitive transactions.
Usually, bot-driven inventory hoarding attacks involve simulating human-like interactions to make large-scale purchases of specific products quickly, which is beyond the capacity of genuine users. These attacks are characterized by their speed, scalability, and the ability to operate round-the-clock, allowing bots to swiftly deplete available inventory.
Once the automated inventory hoarding attacks are successful and artificial scarcity for accumulated products is created, attackers resell these products at inflated prices to maximize profits.
Effective Measures to Prevent Inventory Hoarding Attacks
Inventory hoarding attacks can undermine fair market access, erode customer trust, and affect revenue. Therefore, it is critical that businesses proactively fight attacks to safeguard their financial well-being, ensure a level playing field for greater customer satisfaction, and preserve the integrity of their digital platforms.
There are several measures that businesses may consider to prevent inventory hoarding attacks, including strengthening security measures, regular updates to security protocols, and the use of bot detection software.
Enhancing Security Measures
Robust security measures are essential to protect against automated threats. Therefore, to thwart bot-driven inventory hoarding attempts, it is crucial that businesses strengthen their security measures with strong authentication methods, real-time monitoring, and the use of smart CAPTCHAs.
Businesses must invest in strong security protocols that allow them to stay ahead of evolving threats. This will help create a resilient and proactive security posture that actively detects and mitigates inventory hoarding attacks.
Utilizing Bot Management Tools
Bot management tools are critical in the fight against inventory hoarding attacks. They can help businesses proactively identify and mitigate bot-driven hoarding activities to ensure genuine consumers get fair access to products, protect against market manipulation, and maintain a trustworthy digital environment.
A Closer Look at Bot Management Tools
Effective bot management tools enable businesses to accurately detect and mitigate automated threats. Equipped with the latest digital technologies, smart bot management tools can distinguish between legitimate users and malicious bots, enabling businesses to enhance user account security and adapt to evolving bot tactics.
In a rapidly evolving threat landscape, smart bot management tools can help businesses stay ahead of emerging threats and ensure a secure online environment that safeguards business and consumer interests.
Functioning and Benefits of Bot Management Tools
Bot management tools use advanced techniques to detect and mitigate the impact of malicious bots. These tools use behavioral biometrics, device fingerprinting, signature-based detection, and other techniques to distinguish between legitimate user interactions and automated bot activities. While behavioral analysis enables security teams to detect anomalies and abnormal transaction patterns, device fingerprinting helps track and recognize devices potentially used by bots. Signature-based detection helps identify known bot signatures.
Bot management tools bring several benefits to businesses, including:
- Enhanced Security: Improve security by identifying and mitigating the impact of malicious bots and reducing the risk of evolving cyber threats.
- Proactive Threat Detection: Proactively detect and respond to potential cyberattacks before they can cause harm.
- Preservation of Fair Market Access: Distinguish between real users and malicious bots to prevent bots from unfairly accumulating products or creating artificial scarcity.
- Protection of Digital Assets: Protect digital assets from automated threats and unauthorized access.
- Platform Integrity: Prevent bot-driven disruptions to maintain the integrity of digital platforms and preserve user experience.
- Positive Digital Experience: Identify and block malicious bots to create a positive online experience for genuine users, granting the ability to access services and resources without interference.
- Reduction in Operational Costs: Reduce operational costs incurred on managing the aftermath of inventory hoarding attacks and potential losses in revenue.
- Adaptability: Use advanced technologies, such as machine learning and artificial intelligence, to adapt to evolving bot tactics and counter new and evolving threats.
- Regulatory Compliance: Aid compliance with regulations and standards related to user data protection.
Choosing the Right Bot Management Tool for your Business
Depending on the industry and unique needs, businesses must choose a bot management tool that effectively mitigates risks and provides long-term value in the fight against automated inventory hoarding attacks. Some of the key factors that can help choose an effective bot management tool are:
- Detection Techniques: Combines detection techniques such as behavioral analysis, device fingerprinting, and signature-based detection.
- Adaptability: Uses advanced technologies like machine learning and artificial intelligence to adapt to evolving bot tactics and ensure ongoing protection against emerging threats.
- Scalability: Is able to handle increased traffic and adapt to the changing demands of the online platform as the business grows.
- Ease of Integration: Integrates seamlessly with existing infrastructure and applications to reduce implementation time and minimize disruptions to business operations.
- Accuracy: Accurately distinguishes between legitimate users and bad bots to maintain a low false positive rate and increase genuine user throughput.
- Real-time Monitoring and Reporting: Provides real-time monitoring capabilities and detailed reporting to help analyze patterns and respond to threats quickly.
- Cost-Effectiveness: Is cost-effective not only in terms of upfront costs but also ongoing maintenance, updates, and potential savings in operational costs.
- Configuration Options: Offers configurations to tailor the settings to specific needs and characteristics of the business.
- Compliance: Helps comply with relevant cybersecurity regulations and standards.
- Vendor Support: Comes with a high level of customer support.
How Can Online Merchants Stay One Step Ahead of Inventory Hoarders?
Digital businesses, especially online merchants, need proactive measures and advanced technologies to stay one step ahead of inventory hoarders. Businesses must craft strategies and implement robust bot protection tools to detect and mitigate hoarding activities. Some of the measures that digital businesses can take to stay ahead of inventory hoarders are listed below:
- Employ sophisticated, AI-driven bot management tools, such as Arkose Bot Manager, to enhance threat detection capabilities.
- Implement modern CAPTCHAs like Arkose MatchKey and other advanced security checks to differentiate between human users and bots.
- Implement rate limiting and throttling mechanisms to control the frequency and volume of requests.
- Use real-time monitoring tools to analyze user behavior patterns for timely detection of anomalies and potential hoarding activities.
- Implement geo-blocking measures to restrict access from specific regions or IP addresses associated with suspicious bot-driven activities.
- Regularly update security protocols to keep them up-to-date.
- Conduct regular security audits to assess vulnerabilities and identify potential weaknesses in the system.
- Stay abreast of the latest trends and tactics used by hoarders and other malicious actors.
- Collaborate with cybersecurity experts and industry peers to share insights, best practices, and information about emerging threats.
Want to know more about how to Get your inventory into the hands of genuine customers, not bots? Learn how to prevent inventory hoarding with Arkose Labs.