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Sneakers are everywhere. From the latest Nike drops to the runways of big European fashion brands like Balenciaga, the sneaker is at the heart of some of the biggest style trends: the rise of streetwear, casualization of dress codes, the drop model. Sneakers have such high demand and so little supply for some of the most sought-after sneakers of the year that resale of those sneakers has become a massive industry in its own right.
The sneaker resale industry is valued at more than $1 billion, and resellers like Stadium Goods have received funding from major players like LVMH’s Luxury Ventures investment arm. We spoke to some of the biggest resellers in the world — GOAT, Stockx and Stadium Goods — to explore where the sneaker resale market is now, how it got there and where it’s going.
Danny Parisi: What were the early days of sneaker resale like? How did it evolve into the mature industry it is today?
Josh Luber, co-founder and CEO of Stockx: What we think of as the sneaker resale market dates back to 1985 when the Air Jordan 1 [was] released. This was a shoe that had a drastically lopsided supply and demand curve. Supply and demand is all resale is. Sneaker resale is just Econ 101 at its most basic level. But the arrival of the internet and eBay changed everything. Now, there was no longer just your local sneaker store. For the longest time, eBay was the largest and only global sneaker marketplace.
Matt Cohen, vp of business development and strategy at GOAT: When a $100 pair of shoes are reselling for $1,000, there can be violence and riots.
JL: There was that Sports Illustrated cover about your sneaker or your life with a pair of Jordans and a gun on it. There had always been riots. When you have an asset that’s worth so much more than it costs and you put it in an unregulated environment, it leads to that kind of stuff.
MC: Stores started moving towards the raffle system. No more camping out. As things have gotten more digital, so has this market. A lot of sneaker brands are going more [direct to consumer].
DP: Do the sneaker brands pay attention to the resale market? How much acknowledgement of resale is there from Nike or Adidas?
John McPheters, CEO and co-founder of Stadium Goods: Every brand is thinking about resale. The aftermarket and how it performs is an indicator of success. A lot of people at brands watch it closely to see what’s going on out in the world.
MC: The brands are very aware of how they do in resale. Whether officially or unofficially, resale and retail are getting their lines blurred more and more. They are very in tune with the resale market.
Eddy Lu, CEO and co-founder of GOAT: We are a leading indicator for how sneakers are going to do. The primary and secondary markets are converging and bridging the gap between them is the only way to go.
JL: Nike’s had a “willful blindness” policy since 1985. Everything Nike does creates the secondary market. They benefit from it, but if you ask them about it, their response is that they don’t know anything about it, which is definitely not true.
DP: There are many issues right now. Fakes. Counterfeits. What else are the big challenges?
EL: Fakes are huge. Nike is the most counterfeited brand in the world. That’s why GOAT exists. We used to see a much higher volume of fakes, but now people know we authenticate heavily and our fake rate has gone down.
JL: Search for a shoe on eBay, you’ll get 1,000 results. But then it’s up to you to decide. Why is this person selling it for $600 and this person for $800? Why does this person have a picture of a cat sitting in the sneaker? If you go to the New York stock exchange and want to buy a share of Nike, there’s one ticker symbol, not thousands. The sneaker resale market is standardizing all of that.
MC: First and foremost, resale makes it hard to understand your supply. Resale exists because there’s less supply than there is demand. Recently Kanye West and Adidas said they want Yeezys for everyone. This created more supply than demand. Recently the second colorway of the Yeezy 700 dropped. The first retailed for $300 but it was reselling for $600 or $800. This one sat on adidas.com for days. It didn’t even sell out. The biggest problem we face is that if there’s a shift in how brands think about scarcity that’s going to affect resale. Yeezy 700s are still active, but the average price is $330 — barely over retail. We are not making money on those.
JM: We need to continue to figure out how to efficiently educate our consumer base. People don’t always understand how the prices work. Someone looking at our product the first time needs to be educated.
DP: What are your predictions for the sneaker resale market? What do the next few years hold?
JL: The theme of the primary and secondary market is convergence. Every time you have a secondary market, they start to work together. In consumer goods, this is kind of rare. But 10 years ago, sports teams were trying to shut down ticketing websites. Now they work together all the time.
MC: When Versace launched the Chain Reaction, it released on Versace and GOAT. They came to us because they wanted to tap into the same consumer — the sneaker enthusiast — and market directly to this consumer base who they haven’t been able to reach before.
Jed Stiller, co-founder and managing partner of Stadium Goods: [The future of resale is] reaching that mass market consumer, having the capabilities with fulfillment to reach the regular mass market consumer outside of sneaker specialists. It will lead to mass adoption. Once that fear and anxiety melt away, you’re just buying a product from a retailer, and you’re having a good experience. That’s the future of the resale market: the reinvention of retail and how people think about their transactions.