Posted on: March 16, 2020 at 7:53 pm
Last updated: September 9, 2020 at 9:10 pm

When the United States reported its first death from COVID-19 on March first, the entire country went into a complete frenzy, seemingly overnight. The virus, which had until that point felt like someone else’s problem, suddenly became very real.

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In the weeks following the announcement, the number of coronavirus cases across the country began to increase at an alarming rate. Cities and states began putting in stricter travel bans, businesses and public spaces began closing their doors, and governments and public health officials started asking everyone to practice social distancing and isolation [1].

Supply Shortages Throughout the Country

As rumors of pending mandatory quarantines began to circulate, and fear has begun to spread throughout the country, citizens have been swarming supermarkets, corner stores, and drug stores for supplies like toilet paper, canned goods, hand sanitizer, and N95 masks, causing a nation-wide shortage for many of these products.

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As Americans have attempted to stock-pile on essentials for their homes in preparation for a quarantine, images of barren shelves that once held roll after roll of toilet paper have become ubiquitous with the conversation surrounding the outbreak [2].

What has become even more problematic, however, is the shortage of necessary medical supplies like hand sanitizer and protective face masks. Purell spokesperson, Samantha Williams, released a statement on behalf of the company, assuring citizens that they were doing everything they could to meet demand:

We have added shifts and have team members working overtime — in accordance with our plans for situations like this,” she said [3].

As anxious civilians continue to hoard medical supplies, hospitals are now starting to run out of respirator masks that are crucial for protection against the virus. Dr. Marc Habert, a pediatrician in Fishkill, N.Y., whose group works from eight offices in three counties, explained to the New York Times the difficulty many hospitals, doctor’s offices, and other health care spaces are having with replenishing their stocks.

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“I was on a phone call earlier with the local department of health and they basically said the state has supplies, but we need to show we tried to order from three separate places first,” he said [4].

Read: How to Distinguish between the Coronavirus and Flu

Price-Gouging and Supply-Hoarding

While most people across the country have been panicking and running around from empty store to empty store trying to purchase hand sanitizer and other products in an effort to protect themselves and their families, others have been profiting off of the hysteria.

Just as the pandemic hit the United States, some third-party retailers on websites like Amazon and eBay amassed stockpiles of thousands of bottles of hand sanitizer, face masks, and COVID-19 “pandemic packs”, and have been selling them at a premium- sometimes upwards of fifty to over one hundred dollars for a single bottle [5].

Media sources have reported prices for items such as a 10-pack of hand sanitizer, which usually retails for less than ten dollars per box, being listed for four hundred dollars [6].

This prompted Senator Edward J. Markey (D-Mass.) to write a letter to Amazon CEO Jeff Bezos, demanding the company take action against users who are profiting off of consumers’ fear.

“No one should be allowed to reap a windfall from fear and human suffering,” the senator wrote. “Internet-based retailers such as Amazon.com have a particular responsibility to guard against price gouging in current circumstances as consumers — who are finding the shelves of local brick-and-mortar stores bare, and who may wish to avoid venturing into crowded stores and shopping malls — turn to the internet.” [6]

Read: How to Prep For a Quarantine

Noah Colvin’s Story

Noah Colvin, a 36-year-old former Air Force technical sergeant, has been selling as a third-party retailer on Amazon since 2015. He has managed to develop a six-figure business by selling Nike shoes and pet toys, simply by following trends.

When the headlines started announcing the spread of coronavirus in China back in February, Colvin saw an opportunity. He purchased two thousand “pandemic packs” from a defunct company for $3.50 per pack, each containing fifty face masks, four small bottles of hand sanitizer and a thermometer.

He sold them very quickly and managed to make a substantial profit by pricing them at forty to fifty dollars each. As public panic began to rise, and the demand for hand sanitizer and wipes grew, Colvin, encouraged by his initial success, drove for thirteen hundred miles across Tennessee and Kentucky, collecting thousands of bottles of sanitizer and cleaning out the retailers’ shelves.

He immediately sold three hundred bottles ranging in price from eight dollars to seventy dollars each [5]. 

Amazon Cracks Down on Price Gouging

The very next day, Amazon pulled Colvin’s items along with thousands of other listings for sanitizers, wipes, and masks, from their site.

Colvin now has nearly eighteen thousand bottles of hand sanitizer sitting in his garage with nowhere to sell them.

“It’s been a huge amount of whiplash,” he said. “From being in a situation where what I’ve got coming and going could potentially put my family in a really good place financially to ‘What the heck am I going to do with all of this?’ [5]

After receiving Senator Markey’s letter, the online retail company pledged to take steps to fight price gouging on their website. In an email to the senator, the company expressed their disappointment and stated that their teams are monitoring the site 24/7, and have already removed tens of thousands of listings.

“We are disappointed that bad actors are attempting to take advantage of this global health crisis and, in addition to removing these offers, we are terminating accounts,” the company stated [7].

Other retailers with online-commerce platforms such as Amazon, eBay, and Walmart, have been attempting to stop their sellers from making substantial or “excessive” profits from a public health crisis.

Related: Can’t Find Any Hand Sanitizer? Here’s How To Make Your Own

Retail Arbitrage

All of these third-party retailers are practicing what is known as “retail arbitrage”. The concept is simple: a buyer purchases a product from a retail store like Walmart or Target then sells it at a higher price and pockets the difference [8].

Sellers who operate this kind of business must pay close attention to the trends, and look for something they can sell at a sharp markup. A pandemic is like a fear-based trend, and a perfect opportunity to make a quick profit.

The strategy was working for a few weeks, until Amazon, eBay, and other online retail platforms began cracking down on the practice. Amazon expressed its policy in a recent statement:

“Price gouging is a clear violation of our policies, unethical, and in some areas, illegal,” the company stated. “In addition to terminating these third party accounts, we welcome the opportunity to work directly with states attorneys general to prosecute bad actors.”[5]

Thousands of Supplies with Nowhere to Go

Many states have price-gouging laws that prevent sellers from charging unreasonable prices for essential goods in response to a disaster, including Colvin’s home state, Tennessee. He has been given a cease-and-desist letter from the state’s attorney general and is now being investigated [5].

Colvin was charging twenty dollars for two bottles on Amazon. While those bottles only cost him one dollar each, he argues that his price reflects labor costs, Amazon fees, and about ten dollars in shipping, since alcohol-based sanitizer is considered a hazardous material.

“Just because it cost me $2 in the store doesn’t mean it’s not going to cost me $16 to get it to your door,” he argued [5].

Colvin also argued that he was simply fixing inefficiencies in the marketplace, stating that some areas in the country, such as in big cities with larger populations, need these products more than less-densely populated areas. He was just helping send the supply toward the demand [5].

Initially, Colvin was looking for ways he could sell his stockpile locally but has since stated that he was exploring ways he could donate his supply.

“I’m not looking to be in a situation where I make the front page of the news for being that guy who hoarded 20,000 bottles of sanitizer that I’m selling for 20 times what they cost me.”

Keep Reading: Photos show why hand sanitizer doesn’t work as well as soap and water to remove germs

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Brittany Hambleton
Team Writer
Brittany is a freelance writer and editor with a Bachelor of Science in Foods and Nutrition and a writer’s certificate from the University of Western Ontario. She enjoyed a stint as a personal trainer and is an avid runner. Brittany loves to combine running and traveling, and has run numerous races across North America and Europe. She also loves chocolate more than anything else… the darker, the better!

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