Infant-Formula Shortage Shines Light on Resale Market

Photo: Sergio Flores/Bloomberg/Getty Images

TheSellingPost.biz is an unlikely baby formula seller. The company’s small storefront in a suburban Massachusetts mini-mall sits next to a barber shop and across from a car wash – promising in neon letters to buy gold and “Transform your PASSED IN CASH”. Like many eBay consignment stores, TheSellingPost.biz traffics in goods your average commuter might have and takes discounts on sales of used handbags or old iPads that it auctions off for people who are too busy or technologically illiterate to navigate the platform themselves. But this month, as the supply of infant formula available in the United States fell to nearly half of what’s usually on the shelves – and with the existing black market for the product simultaneously exploding – TheSellingPost.biz has apparently found a very profitable, albeit temporary, niche.

Over the past week, as federal regulators negotiated with Abbott to reopen a plant partly responsible for the severe shortage of formulas, TheSellingPost.biz spammed local Craigslist sites with offers to buy two dozen types of formulas – promising money to anyone looking to “make some extra money”. ” of the formula they had trailed and offering between $6 and $30 a can. But on the company’s eBay page, between Ford F-150 dome lights and audio/video cables, a single Neocate Formula case is listed for $249.95. The same case costs $167.50 purchased from Neocate’s website – but of course the item is out of stock. The fuss at TheSellingPost.biz appears to be profitable, as eBay lists the Neocate formula it sells as a “hot item” – with ten purchased in the past 24 hours. When I called the store, a jovial man named Paul got serious when I told him I was a journalist. Emails asking for information about the moral implications of selling a product that keeps babies alive at such an extreme margin went unanswered, but after my call Craigslist messages from TheSellingPost.biz disappeared.

TheSellingPost.biz joins a number of unlikely price gouging strongholds on Craigslist attempting to capitalize on the formula shortage over the past few weeks: A person in Anaheim pays cash for Similac and Enfamil. Another offers to pick up and “Pay cash $$$for infant formula of any kind. It is a ploy exploiting the unequal economy of a product necessary for at least supplement the diet of half of American infants up to 6 months. A year ago, the infant formula monopoly belonged to the four major producers who sold more than 90 percent of infant formula purchased in the United States: Abbott, Mead Johnson Nutrition, Nestlé USA and Perrigo. Today, a network of dealers is trying to replicate that monopoly by buying up remaining stock and setting prices as high as possible.

As one of the least regulated marketplaces on the internet, Craigslist remains the starkest illustration of the infant formula black market. But like MIT Technology Review reported recently, parents are turning to Facebook and Instagram groups to find out where to buy the specific brands their kids need. On TikTok, influencers are sharing potentially risky recipes for anyone who might not be able to find their favorite brand or, alternatively, advising people to shell out hundreds of dollars to vendors like TheSellingPost.biz. The terms of use of most major tech platforms prohibit the sale of Instant Formula – Facebook, for example, classifies it as a “medical product” – but there are still dozens of posts listed under cryptic names offering a formula many times what it might cost. in a store. Even Etsy moderators are deleting baby formula listings as they appear.

The fact that all of these sellers are trying to price formula milk is somewhat at odds with the market’s attitude towards the necessary good. As one supply chain expert said Fortune recently, one problem with infant formula on the manufacturing side is that “it’s not a very lucrative market”. Demand is dictated by birth rate, and there isn’t much room outside of that number to grow or expand – even though that demand is shorthand for what may be the only food source of A baby. The state level bidding process whereby the big four producers compete for exclusive contracts with WIC, the nutrition program for low-income families with infants, has further tightened the control of these companies market for 30 years.

What is happening now is a particularly extreme acceleration of a broken market that has spawned an underground and resale economy – an underground economy that existed long before the current crisis. Given the importance of infant formula and the short duration of its demand (infants typically rely on infant formula for up to 12 months), websites like SellFormula.com were launched years ago to encourage parents to exchange the products for money. “With grocery bills so high, SellForuma makes sure I get money for everything I don’t use,” reads one user testimonial, an unintended illustration of what makes the industry so dark.

It’s not just about buyouts. The police regularly announce injections targeting the shoplifting and resale formula of “criminal networks”. In 2009, for example, Florida police announced they had arrested 21 people who stole an estimated $2 million in gunpowder each year — removing and repackaging it and leaving empty canisters on the shelves. (But what else can you expect from a medically necessary resource produced by a monopoly that in many stores was already locked behind glass?) This week, I spoke to a Connecticut woman named Sherisse Rissey with three sons – including a 5-month-old one. She was relieved to find a few boxes of formula milk on the shelves of a local supermarket last week, but when she returned home she found the seals on the boxes had been broken. Instead of formula milk inside, there was flour.

It took until this week for the federal government to meaningfully address the shortage triggered by the closure of the Abbott plant in February. Now he’s ordered companies to prioritize delivery of formula ingredients — citing the same Defense Production Act conditions deployed during the pandemic, when peddlers stockpiled and sold masks at markups over 400 percent. The Biden administration has ordered government agencies to steal in formula from abroad — formula that, until recently, regulators had made importing nearly impossible. But millions of parents like Rissey need formula for their babies now. In such a vacuum, of course, an eBay consignment store that has made its business in truck parts and estate sales is getting in on the action. It’s a simple matter of supply and demand.