The $2bn sneaker resale market: How entrepreneurs are cashing in | FT Features

The reselling aspect of sneaker
culture has changed everything I think now is the biggest
time for sneakers in maybe it's ever been. There's people taking money. And rather than investing in a
traditional asset classic stock or bond, they're
buying sneakers. And they're investing
in that sneaker. And they're selling it
on an exchange later. There is a lot of money
to be made in this game. You could make 50 grand
in a weekend, man. I've seen people do it. We estimate that there's over
$2bn in gross market value overall. Footwear being resold
– we think StockX is the leader in this market
with gross market value north of $1bn. We connect buyers and
sellers the same way that the world's stock markets
connect buyers and sellers.

Just like Apple doesn't
trade at the same price every single day in
the market, nor does a particular sneaker trade for
the same price from day-to-day. Some people's closets, you look
at it and it's stock portfolio. There's some shoes
I love so much, I got 41 pairs of
the same exact shoes. Resell's all about
product allocation.

It's all about who can get
it and where you sending it that the person is
willing to pay you more. We think this market
can grow from $2bn to $6bn in a relatively
short time period. These days sneakers
are more like stocks than your average trainers. Prices up and down like
Wall Street, some experts value the sneaker resale
market at over $2bn.

And it could be $6bn by 2025. Uh, got this drank in my cup. Oh, I fill that cup,
I fill that cup. We're going to take a
deep look at the industry, show you who and what
is making it move. Is it lost, baby, tell
me what you plan on it. I had lost a job and something
that I enjoyed doing. And I was just trying
to find another job, and I figured selling
sneakers would hold me over until I found
that other job. Well, that other job never came. And we wind up opening this bank
account, get a little $2,500 lot of credit line. And the day I signed
the lease to my store, I had $40 to my name. So in four years, it jumps from
$40 to $20m in sales to 2019. We wind up teaming up
with American Eagle, and I sell part of my
business to American Eagle. And I got Urban Necessities
inside American Eagle. There's ultimately
some companies here that are earning very
good economic returns on facilitating these exchanges.

And I think you're
seeing investors look at these businesses
very seriously. ComplexCon, 6am right now. There's literally
nobody here yet. I will be the first person to
purchase the Safari Pack that is coming out… three new different shoes,
should be very profitable. They cost around, I
think, $230, retail, should be able to
sell for about $600. Let's see how many we could get. We're also going to be
heading to Chinatown market. Converses are going to be $100. Should be able to sell those
for about $400 to $500. But yeah, I can't really
disclose how I'm here so early. But shout out to the blood. Thank you. The amount of money you can
make is essentially unlimited. And there are sneaker
resellers that we've seen, they're earning several hundred
thousand dollars a year. The way to make
the most money is if you can acquire
these shoes at retail. We find out where is
it going to release? Who has the shoe? What retailers? How limited is the shoe? And if we possibly get
it before anybody else we are the ones that
create the market.

There's this thing
called "backdoor" now. Backdoor is pretty much getting
a shoe early from a retailer or somewhere like that or
someone that works inside. The chances of
any average person being able to buy a pair of the
shoes that are highly coveted is effectively zero. I have no idea how
kids get on there. On the resell, it's like,
yo, what are y'all doing? It's crazy. Demons in my heart, surrounded. But they'll never take me. Drowning, you're my lifeline. I'm drowning. You're my lifeline, baby. Buyers reach out to us. It's because they know the shoe
is going to go up in value, and you know what the hype
is about, especially now with all the marketing that's
going on with social media and stuff like that. We're tracking the
markets, let's say the StockXs, the Goats,
eBay, and we're trying to compete with their prices.

We try to buy every pair
that comes out of the store. Get your ticket. Thank you. Remember, you guys
heard me already? Chinatown market. Number one, going to be
getting these Chucks. Are y'all ready? Hey, yeah, yeah. Yeah. So, right now we're getting
the Chinatown market UV Chucks. They actually change colours,
pretty dope shoe, $100 retail. What's going on, man? What can I do for you? I'll take a size 10 high. So I just got a size 10,
high, in the Converses, a very, very dope shoe.

As you can see, retail
is $100 on the shoe. Should be reselling
for about $500, $600. If you have a lot of capital
you're able to hold onto them, and then eventually they'll end
up going up, stuff like that. This is the shoe right here. You want to flash the UV light? They change colours. I'm Dylan Aryvand,
I'm 13 years old, and I started reselling
when I was eight years old. How much money do
you think you've made since you started
reselling, if you could estimate? Probably in the five digits. I mostly sell on StockX,
Goat, and the Sneaker Con app. We have a marketplace of
buyers that come to our sites and look for the most
sought after sneakers.

Those buyers have
the opportunity to either buy it at its
market clearing price, or to be able to set
a price at which they are willing to buy that item. On the other side
of the marketplace, we have a really dynamic
marketplace of sellers. Consumers, individuals,
businesses, brands that are essentially
selling that same product, and also choosing a price at
which they want to sell at. I think it's great, because
it's become the Kelly Blue Book of sneakers,
and now everybody has a fair guideline
that everybody has to try to abide by. Because although you might
be able to get someone to justify your added
expense or different price, this polices what is essentially
like the wild, wild west. If you think the sneaker
business is worth $1bn, just imagine what the
counterfeit sneaker business is worth. The counterfeit business
is insane right now. Literally, you see every single
shoe being counterfeited, and they sell. People in the streets
are wearing them, and you can't really tell. We literally only
buy from stores.

The only thing that can
really sell on our platform is somebody that
has bought and held a shoe that's in
perfect condition, that we then authenticate
to the buyer. Seller sends it to us, we
authenticate it, and make sure not only that it's
real, but it's the right size, the
right condition, it is what it's supposed to be. And then we send
it to the buyer. StockX, I love y'all, for real. Love y'all. They changed the
whole way I operate.

digital marketing

We end up finding a way to
get multiples of these shoes. It's literally crazy
the way we get it, but we get a lot of
numbers in there. I've been my pack, baby. Virgin Louis V on my back, baby. Living fast, dying slow,
that's the catch, baby. Suicide doors, around
and crash, baby. I do the dash, baby. These are some of the
purchases that we made. A lot of Converse,
these were pretty much the two sneakers of the event
that are actually profitable. Yeah, I ended up
getting a lot of pairs. Yeah, this was pretty
crazy, I ain't even gonna lie, especially
for being by myself. None of my team is out here,
so I literally did all of this by myself. $870 off Converses,
that's pretty good.

That's good, right there. Yo, where you at? I'm at the hotel. Yeah, I'm at the hotel. Yo, go back to ComplexCon. I'm going back right now. There's going to
be a stash, right? Yeah, go back there now. Hurry up. All right, I'm coming now. I'm coming now. I don't want no drama. They're allowed? No? Don't put up with no drama. I got the heat of a conner. And you keep the heat
while I keep you hotter. Where's he got – where's that? Where's parking lot 41? I don't know. Wait, let me think. Where the … is that at? Through Sneaker Con,
I've been able to… I've come to every single
show for the last four years.

And in the last
two, three years, I've probably spent $10,
$11 mill buying shoes. Now keep in mind,
I started with $40. We just wanted to come together
and start, create a place where resellers could come
together with buyers and just buy, sell, and trade. This is the only industry in
the entire world with anything that has to do with buying,
selling, trading a good that accepts all walks of life.

Certain retail, you
walk into the store, the second you walk into
the store, no matter what… It don't matter
how you dress, it don't matter how
educated you are. The second that
stereotype hits and you ask for something in that store,
they're not going to help you, bro. They not. That happens to me
all day long, it's the reason why I dress this way. And more women need more shots. You guys got any other? Other than the zebras,
y'all got any other size? I can't find them in
the size right here. It's a young, male-dominated
marketplace at this point.

That's not to say
women won't, and girls won't become more active
in this marketplace. Nike, Adidas, Jordan, they're
making great shoes for girls too, and women, and I think
that women are a major focus inside Nike in particular. That's where the
influencers need to go, because those are
the people that are going to get more
support than the athlete. The days of the athlete
being the influencers, those are, that's
becoming extinct. The way a shoe builds
hype or goes from a $200 to a $1,000 shoe or anything
like that, I would say first, it's going to be social media. The roll-out plans that
brands are doing now, and the competition
between the major brands to make sure that their
endorsers are doing something different to launch a product is
just adding hype to this stuff. Once the everyday human sees
these people wear these shoes they want the shoe.

And that's when the
resell comes in, because you can't
purchase these shoes, and that's where we come in,
because we're going to be the people that have the shoes. Right now, the reason that
a lot of kids, especially the really, really young
kids are able to do this, is because everything
went digital. So the stash, you literally
have to run to a location and scan everything
with your phone, and that gives you the
chance to purchase the shoe. Let's get it. Let's go, let's go. You know what time is it. Resellers are making the most
money out of this, for sure, right now. The manufacturers, they're
ultimately earning, like I said, halo benefits.

The hype and the buzz that's
getting created in resale is 100 per cent filtering
back into the primary markets. It's going to be interesting
to see how the companies start to try to monetise. You see now, they're
putting out more pairs, flooding the market with it. The real business is
ultimately working with brands to become an alternate retail
channel, to literally IPO products into existence, where
brands can release products at a true market
value as opposed to this very antiquated
concept today of retail price. These limited edition scarce
Nike, Jordan, Yeezy, Adidas sneakers are a form of
creative self-expression for a demographic, these Gen-Z,
millennial consumers that are really obsessed with being
unique and differentiated. There's no shortage
of fans, of people that want this stuff now. Everyone is always waiting for
the sneaker bubble to burst, and I don't think it's going
to happen anytime soon.

My love for sneakers
will never go away. I think I'll forever
be tied to Sneaker Con. There is a lot of money
to be made in this game. There's thousands, if not
millions of transactions happening online per day. It's nowhere near a bubble, bro. I think that as
StockX or Stadium Goods get these
evaluations, all it does is make people who
want to invest money in soaring markets more aware.

We think this is,
kind of for lack of a less cliche
way of saying it, a truly revolutionary
form of commerce. This doesn't exist outside
of the actual stock market. And we think that this is, not
only will it exist in 10 years, but this is logically how
these certain products should be sold. Our parents may not have
been paying attention to, this Jordan is coming out,
or this AirMax is coming out. But when they read something
in the Financial Times, or something else that there
is a billion dollar industry on the secondary market of
sneakers, that's something that they're paying
attention to, and it's opened up
the eyeballs, it's opened up sneaker
culture to the masses.

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