After raising $5 million this past August from investors like Upfront Ventures and Matrix Partners, the GOAT sneaker resale app scored another $25 million in funding led by Accel Ventures in February, leaving them with $37.6 million in total.
The app, launched by Eddy Lu and Daishin Sugano in the summer of 2015, is just one of many platforms selling collectible sneakers, including the much-loved Flight Club, StockX and Stadium Goods — making the monetary endorsement all the more noteworthy.
“The investment in companies like theirs just shows that this market is bigger than ever, and it’s not getting any smaller,” said Jeff Carvalho, a partner and executive editor at Highsnobiety. Indeed, the latest research from StockX pegs the sneaker resale market to be worth more than $1 billion.
“The sneaker game has changed a lot over the last five to six years, [due to] sites like ours, what Kanye West is doing and the Adidas vs. Nike battle,” said Carvalho.
As he sees it, GOAT (which stands for “greatest of all time”) is just the latest player.
“They seem to be marketing themselves more to what I would call a ‘recreational sneakerhead’ — the casual buyer who’s looking for two or three products,” he said. However, there’s a more hardcore breed that relies on multiple consignment shops, eBay auctions and Instagram to sleuth out the most-coveted pairs.
The GOAT team, which says it has 1.5 million users, sees itself as breaking new ground by offering more reliable customer protections and developing a business model that saves money for all involved parties.
The company launched after co-founder Daishin Sugano purchased a pair of Air Jordan 5 Grapes on eBay that ended up being replicas. “He went back and forth with the seller for months, but eventually gave up,” said Segano. “So we built GOAT to solve this. No more fakes or having to deal with sketchy sellers and buyers.”
To ensure this, the team is pioneering what they call the “ship-to-verify model,” in which sellers hold onto their sneakers and only ship to GOAT once they’re sold. Although all products go through an initial online assessment that involves human reviewers, machine learning and computer vision, they are vetted again in person at one of three Los Angeles warehouses before being sent to the buyer. If, by chance, the shoes turn out to be fakes or simply aren’t up to par, the company will provide its customers with a full refund.
But not holding any inventory has freed them up to offer the lowest commissions in the industry, said Segano. What’s more, the average order value is $330.
The GOAT app
One downside to GOAT’s model, however, is how long the process takes compared to the two- or three-day shipping process of its competitors. It takes about 7-10 business days for a buyer outside of Los Angeles to receive their shoes. (GOAT ships internationally, too.)
But the company is hoping to lessen that delay when it opens a new distribution facility on the East Coast, sponsored by their latest round of funding. “Our goal is to ship anywhere in two days,” said Segano.
GOAT is also one of the first companies to take a mobile-first approach to sneaker reselling, launching their web platform after the app — rather than vice versa, as is traditional.
Segano claims that 95 percent of GOAT’s users prefer to shop on the app, too — a number that seems a little lofty when compared to recent mobile commerce data. For instance, a Global Web Index study found that, on average, only 46 percent of internet users purchased something via mobile last year, compared to the 73 percent who bought something on the web.
The GOAT team has tried their best to make the shopping experience more pleasant than other resellers, too, by organizing its listings so that the lowest price of each size is at the top. The hope is to lessen some of the endless searching for the best deal or fit that other consignment sites require.
Segano would not disclose how many sellers the company has currently approved, but he said it has a waitlist of over 60,000. “We are continuously approving new sellers, but we also limit the number to ensure we maintain a great marketplace experience for everyone,” he said.
Interestingly, of the eight sneaker fans consulted for this story, only one — Carvalho — had ever heard of or used GOAT, with most citing eBay (despite its risks) as their go-to for its endless options. But the team is confident that their stringent review process and consumers’ increasing shift to mobile will help grab the attention of those customers soon enough.
However, whether or not GOAT comes to dominate may not matter all that much. As Carvalho points out, sneakers are hot across demographics, freeing up space for a myriad of resale companies to thrive.
“[When I started to have] friends and family — who are not sneakerheads — coming to me to ask where they could get the latest Yeezy shoe, I recognized this was becoming much bigger than before,” he said.