The Rise of Sneaker Reselling

Imagine tons of teens sneaking onto the Nike SNKRS app during their first period class, hoping not to take another “L” on their favorite pair of Jordan 1s. This is sneaker reselling — buying a profitable, “hype” brand of shoe (e.g. Jordans, Off White, Yeezy) from a retailer (e.g. Nike, Adidas, streetwear stores) and reselling it on the secondary market through sneaker platforms. Over the years, sneaker reselling has undergone tremendous growth. This evolution includes the emergence of a new generation entering the marketplace, the prevalence of sneaker bots, and the expanding relationship between retailer and reseller.

Teens in Sneakers

Fashion has always been a huge part of a teenager’s existence. For many teens, having the right outfit is key to the perfect day and shoes are no exception. But there are some teens who are taking it a step further, delving deeper into their passion for sneakers, leaving the consumer side and exploring the potential of becoming a seller.

“Everyone wants shoes, and there’s always someone who will spend an absurd amount, so it’s just about getting those pairs and building the right connections and understanding the market” (Shoshy Ciment 2019).

Now an adult, Benjamin Kapelushnik (Benjamin Kickz) is arguably the most successful reseller in the world. He started at age 13, and became popular for being known as DJ Khalid’s sneaker plug. Since DJ Khalid is a well known celebrity, this connection undoubtedly gave Kickz the business boost that excelled his business into the big leagues. Why stand in line for shoes at the mall when you can get your kicks straight from DJ Khalid’s plug? As Jake said, it’s all about connections. Though it may be difficult to direct message (DM) someone like DJ Khalid as a 14-year-old and receive a response, there are other platforms that prove to be more approachable. Take TikTok for example. This widely known video creator app is home to teen celebrities whose follower counts reach into the millions. Many famous creators on the app are between the ages of 16 and 20, so sending them a pair of shoes in exchange for a shoutout may be a bit less intimidating for the average Gen Z sneaker reseller. Look at rising video-creator account, Cookies ‘N Kicks, an L.A. based sneaker store that rose to fame quickly when TikTok famous users started showing off the sneakers sent to them by the company. Bar Mansuri, an employee and model for Cookies ‘N Kicks’, is only 19 years-old and already making a name for herself in the sneaker world and the social media industry.

Bots

Let’s face it. Every shoe release isn’t going to flip you a 500 dollar profit and sometimes, it may not even earn 100 dollars. So why bother? Why not just wait a few weeks for the next more profitable drop? Well, what if you could get multiple pairs? Let’s say a shoe retails for 100 dollars and you can resell it for 150. That’s not cute. But what if you got 50 pairs? Retail brings you to $5000 but you gross $7500 which is a net profit of $2500 dollars. But getting one pair on a sneaker’s drop day is difficult, and managing to “cop” a profitable size (a men’s size 7.5 is going to have more demand than a size 14 or 15, because it’s a common men’s size and a decent women’s size, however sizes in the teens are also a lot rarer so that can raise profitability occasionally) is close to impossible. So how can you do it?

The Retailer

So what do retailers have to say about their shoes being sold for three to four times their original amount? The resale community does contribute indirectly to retailers. Generally, resellers can estimate the “hype” (e.g. the popularity which dictates the profitability) of a shoe, therefore retailers can determine how much stock they should release to maintain a high demand. However, high demand is kept with a low stock. So, what do these retailers stand to gain from only releasing a small amount of shoes besides a bit of brand hype? In an article from Business Insider about the long-standing silence in the resale industry from relevant sneaker retailers like Nike and Adidas, author Dennis Green obtains information from resale platform StockX.

“We already start to service that customer who just buys a different pair of shoes than is available at Foot Locker. And the next step is then you work with the brands to release products directly, to literally IPO products into existence.” (2019) Cofounder of StockX, Josh Luber, tells Business Insider.

IPO, in this context, stands for Initial Product Offering, and an example of this would be StockX’s collaboration with jeweler Ben “Baller” Yang and shoe brand Straye. Instead of bringing a buyer and seller together over their platform, StockX released the created product directly from their site. The same could be done with shoes if StockX were to collaborate with sneaker retailers. This could possibly tweak the game for resellers because their customers now have a chance at copping sneakers at retail price from the platform that is usually used for reselling.

“So we’ll see. Hopefully over the next four months, we probably have about a half a dozen IPOs coming, including, knock on wood, some really big sneaker companies.” Luber says. Since this article’s release in August of 2019, myriad retailers have collaborated with StockX in doing IPOs, including Nike and Adidas.

“It doesn’t make sense to sell a pair of sneakers at retail price,” Luber says for European newspaper, The Drum.

It definitely doesn’t make much sense for retailers, but for now, a piece of the industry through IPOs is acceptable.

Conclusion

Predicted to be a six billion dollar industry by 2025, the growth of sneaker reselling is benefiting from updates in engineering, adolescent creative ability, and the potential invitation and partnerships between retailers and resellers. This year, the Covid-19 pandemic has closed down popular locations to snag a win on some resalable sneakers; forcing resellers, specifically manual workers who don’t have the luxury of a bot, away from in store sneaker raffles and towards being dependent on online retailers who can be easily overrun by bots and/or site crashes. These set the slow in business due to the mounting unemployment rate. Additionally, when a shoe is sold through a platform like StockX, it goes through a warehouse where it is authenticated before being released to the buyer. With Covid guidelines for places of employment becoming stricter, a slowdown in the authentication process has commenced, and it can take weeks for a shoe to reach its final destination. But setbacks and uncertainties are a part of nature, and even with the novelty and uncertainty of Covid, the future of this industry still seems bright.

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