Integrative research means our extensive company research informs every thesis and perspective. The result is deep industry knowledge, expertise, and trend insights that yield valuable results for our partners and clients.

About the Authors:
David Gearhart, CFA
Senior Vice President
David Gearhart has worked in finance and investment for two decades and joined First Analysis in 2011. He works with entrepreneurs as an investor and as an advisor on growth transactions to help build leading Internet of Things and e-commerce software businesses. He has played a key role in building First Analysis’ Internet of Things and e-commerce franchises and is a thought leader in his sectors, having authored several widely read white papers. He supports First Analysis' investments in CoolR Group, EdgeIQ, Freeosk and SmartCommerce. Prior to joining First Analysis, he was an accountant with The Northern Trust Co. and an options broker with American Option Services. He earned a bachelor’s degree from Purdue University with a concentration in economics and finance and his MBA at DePaul University with a focus on finance and entrepreneurship. He is a CFA charterholder.
Marta Mikos
Marta Mikos is an analyst with First Analysis. Marta joined the firm in 2023 after completing her internship. She previously interned at Stifel Financial supporting the energy and natural resources group. Marta graduated from Washington & Lee University with a bachelor’s degree in economics and global politics.
First Analysis E-commerce Optimization Team
Matthew Nicklin
Managing Director
David Gearhart
Senior Vice President
Richard Conklin
Managing Director
Marta Mikos
First Analysis Quarterly Insights
E-commerce Optimization
Rise of harmful internet bots underscores need for effective technology solutions
May 23, 2024
  • The pandemic’s acceleration of e-commerce growth has made it more attractive than ever for a shadow industry of ethically compromised entrepreneurs to siphon sales from legitimate e-commerce sites using automated software called scalper bots. Harmful bots altogether, including outrightly criminal bots, represented 32% of all internet traffic as recently as 2023, up from 24% a decade ago.
  • The damage wrought by scalper and other bots that divert sales from legitimate sites ranges from higher costs and frustration for consumers to lost sales and reputational damage for legitimate sellers.
  • While many have advocated for legislation and regulation to stop bots, little has come from these efforts. We think companies offering technology solutions to counter bots offer a much more effective and immediate path to minimize the bot threat.
  • We profile several innovative companies addressing the bot threat in four categories: CAPTCHA, multi-factor authentication, and behavioral analysis technology solutions that help sellers defend against bots and offensive bots that empower consumers.


Includes discussion of nine private companies

Rise of the bots

Multiple types of bad bots active in e-commerce

A detailed look at scalper bots

A survey of the damage bots cause

Coordinated bot efforts exacerbate the threat to businesses

Botnets also magnify bots' impact

Consumers and sellers want a solution (and it's not regulation)

Technology is the solution

Bot-fighting tech offers hope for a better e-commerce future

Strong one-year gain for e-commerce optimization index, lower growth outlook

E-commerce M&A: Notable transactions include Squarespace, Cortina and Elevar

E-commerce private placements: Notable transactions include G2 Reverse Logistics, Scuti, and Krepling

Rise of the bots

Bots, short for internet robots, are computer programs that automate tasks, often standing in for humans and simulating human activities. While they have been deployed in various industries, most people know of bots primarily from their widespread use in e-commerce. Shoppers almost universally view bots negatively, and most have encountered bot activity personally and seen firsthand its impact on website functions, product availability and pricing.

Bot use dates to the advent of online shopping in the mid-90s, but despite bots' long history, society has yet to effectively counter them. Further, bots' sophistication and use and the damage they cause have grown dramatically, in large part due to the accelerated growth of e-commerce triggered by the pandemic. As retailers and brands have expedited their online sales strategies, upgrading their websites and online stores and adding online sales channels, a shadow industry of ethically compromised entrepreneurs has burgeoned by using bots to siphon sales and profit from the expanding universe of legitimate sellers. The increasing availability and diversity of items online means no product is immune from being targeted if it's in demand and profitable.

Bots have gained visibility and notoriety by targeting high-profile goods and services. A prime example was Taylor Swift's ERA concert tour. It was her first tour in five years after multiple album releases, and the tour announcement ignited unprecedented excitement among fans. It also attracted scalper bots. During the November 2022 pre-sale, Ticketmaster faced overwhelming bot traffic - three times higher than ever before. This forced Ticketmaster to slow and eventually stop sales, leaving many fans empty handed and frustrated. The incident garnered widespread media coverage and a strong backlash.

We think such reports are starting to draw much-needed attention to the bot problem and offering hope it will be effectively addressed near term with advances in technology.

To access the full report, please provide your contact information in the form below. A First Analysis representative will follow up with you shortly. Thanks for your interest in First Analysis research.
First Name required!
Last Name required!
Email required!
Industry required!
Unfortunately, your request to access the complete report has failed.

Please check the contact information you have entered.

If the form submission failure persists, please contact Person at (xxx) xxx-xxxx to handle your request. Thank you.
©2024 by First Analysis Corporation.
One South Wacker Drive
Suite 3900
Chicago, IL 60606