Can Target Ban a Secondary Market in Its Goods?

business_ethics_highlights_2Is reselling Target merchandise unethical or does it just expose the weakness of a pre-internet-era, loss-leader business model? Should Target be permitted to refuse an order on the grounds that the company suspects the goods will be resold? These questions go to the very core of business ethics: the ethics of buying and selling. >>>

LINK: Target Buyers Report That Resellers Have Been Banned

You may remember last month when Target put out its limited-quantity special Lilly Pulitzer collection, and frenzied fans waited in line, fought in the store aisles, and even crashed the retailer’s website. Past Target collaborations with big-name designers have resulted in those items being flipped on eBay for a bunch of money, but after the Lilly Pulitzer debacle, Target has reportedly banned resellers from buying from them.

The Internet makes retail arbitrage super easy: you can buy an item on sale in one location, or even at regular price, and sell it using eBay, Amazon, or some other venue to a person who doesn’t have access to that item. That’s basic economics, and it can be a full-time living for many savvy people.

eCommerceBytes reports that one reseller was told that he is no longer allowed to buy from Target online, even though he has spent more than $100,000 there in the last year alone. Why doesn’t it matter that he has been such a good customer? Resellers aren’t good customers from Target’s point of view: they’re hoping that customers who come in for the Lilly Pulitzer event or to buy items at loss-leader prices will buy other things with a higher markup.

What do you think?

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