Skip to content Skip to footer

Cashing in on Canvas

The secondary market for limited-release sneakers is minting money for teenage sneakerheads and VCs alike

5 Minute Read

QUICK FACTS

  • The sneaker resale market is estimated to be worth $2B a year and is expected to triple by 2025
  • Founded in 2015, secondary sneaker market StockX now reportedly grosses $2m a day
  • Young sneaker marketplaces are seeing big exits: 3-year-old Stadium Goods sold for $250m in December 2018

First, you need a bot. They go by names like Easycop, SoleSlayer, and RSVP Kingz, and their automated software promises to help you snag the latest/greatest sneakers a few crucial seconds faster than mere humans. Sure, bots aren’t cheap — nor, by the way, are they smiled upon by Nike and Adidas — but what’s a few hundred bucks to a budding sneaker entrepreneur?

The secondary market for limited-release sneakers has blown up in the last few years. Gone are the days when Jordans reigned unchallenged. Now sneakers you’ve probably never heard of (Air Foamposite One Tianjins, anyone?) sell for more than a package trip to the Caymans. An entire industry has sprung up to service the obsession, with apps like GOAT, Stadium Goods, and StockX, the latter of which allows you to chart price fluctuations and pretend your shoe rack is a hedge fund.

It’s also turned teenage sneakerheads into day traders able to earn quick profits by correctly predicting which pairs will become grails. (One shoe, the Nike SB Dunk Low Tokyo, once sold for 94x its $60 list price, according to a Trends analysis.)

I’ve witnessed a 13-year-old breezily reject $1k in cash for a pair of Yeezy Turtledoves. I’ve met a 14-year-old with a rubber-and-canvas stockpile worth north of $20k. I’ve also run across a 19-year-old who routinely drops several grand on sneakers in Manhattan and sells them to a hook-up in China for twice what he paid.

A lot of these young wheeler-dealers look up to middle-aged shoe magnates like Jaysee Lopez, aka ‘Two Js,’ who owns Urban Necessities, a consignment superstore in Las Vegas. As he tells it, five years ago he started his business with $40 and he’s on pace to do $20m in sales this year. He posts inspirational messages like “Work harder than you think you did yesterday” to his quarter-million followers on Instagram.

Jaysee “Two Js” Lopez, founder of Urban Necessities, via Instagram

“I’m very focused on showing repetition, showing growth, showing what can happen when you put in the effort,” he told me.

Rule #1 of sneaker trading: Buy the “drop”

For sneaker entrepreneurs, a big part of the job is simply getting the shoes. The most sought-after sneakers never touch the shelves of your local sporting goods retailer. Instead, they’re usually distributed on a first-click, first-served basis by Adidas and Nike. Sneakerheads track the “drop dates” on websites like Complex and Hypebeast, and snap them up instantly, using bots and online proxies, which allow you to create multiple IP addresses, thus outsmarting the one-pair-per-customer limit.

They’ll then re-sell, perhaps within hours, either through brick-and-mortar stores like Flight Club, or via online retailers. Right now StockX is the acknowledged go-to platform. The company was recently valued at $1B. And it’s no wonder: More than half of its shoes sell for over $750 a pair, a Trends analysis found. That’s 12x more than the average sneaker price of $58.

But other apps are nipping on StockX’s heels. Foot Locker invested $100m into StockX’s primary competitor, GOAT, last February, and Farfetch, a luxury retailer, acquired Stadium Goods for a cool $250m in December. Those companies are betting fortunes that customers will continue to buy and sell shoes with their iPhones. They’re also betting that a guarantee that the sneakers sold are authentic will differentiate them from old standbys like eBay and Amazon. 

No bot? No problem.

If you have a few grand to throw down, you can purchase the necessary software and take a chance on the hottest new thing. But there are other methods too. I’ve met a re-seller who has a side-deal with his local Foot Locker: They sell him five or six pairs on the sly at a slight markup over retail, and he sells them online. Also, there’s the traveling shoe circus known as Sneaker Con, where you’ll find hustlers of all varieties trying to outsmart each other in the trading pit. 

Or you can, via the GOAT and StockX apps, buy and sell on the secondary market, like you’re the wolf of footwear’s wall street. If you want to bypass the hassle, GOAT will hold them in storage after you buy, and ship when you resell. You could own a collection of sneakers you never see.

What should you buy? Nike and its Jordan brand are still the dominant players, but Adidas made big gains last year as its Yeezy line continued to flourish, according to a Trends analysis of StockX sales.

Two up-and-comers? Asics and New Balance. The Asics Gel-Lyte III Ronnie Fieg “Salmon Toe” has sold for 12x over its $130 retail price. And the New Balance 998 Bodega Mass Transit has fetched 5x its $170 retail price, our analysis shows.

Those with limited startup capital tend to cruise thrift shops and consignments stores in hopes of happening upon a discarded gem. Just because a sneaker isn’t “deadstock” — that is, brand new and still inside the box — doesn’t mean it’s worthless. Gently worn sneakers can still command high prices. 

A used pair of Jordan 1 Retro Legends Of Summer, released in 2014. Average sale price: $6,851, via StockX

A beat-up pair of Jordans from the eighties or nineties, for instance, would be worth a mint. Ask your parents if they saved yours (I checked; mine didn’t). 

Once you’ve mastered the logistics, you’re left with deciding which sneakers to buy — and that’s where the process can get really overwhelming. Dozens of new styles drop every month. For instance, one of the new styles released in the last couple of weeks is a variation on Nike’s Air Jordan I designed by the rapper Travis Scott. They went on sale for $175 and right away shot up to $1k on StockX. Bully for you if you snagged a pair at retail.

Others rise more slowly. Right before Christmas, Nike released Air Force 1 Low Off-White Volts, a collaboration with Virgil Abloh, arguably the most in-demand designer around. Nike sold them for $170, but they went for $350 the next day through resellers. Over the last six months, their value has steadily climbed to around $700.  

The 6-month trading price of Nike’s Air Force 1 Low Off-White Volts, via StockX

The hype giveth and the hype taketh away

At the same time plenty of much-hyped shoes tank. Take Adidas’s recent collaboration with high-end Italian fashion house, Missoni. There was lots of fanfare around the three sneakers they released in late April, including a promotional video showing models dashing through city streets to The Who’s “Baba O’Riley.” The shoes feature the wavy knitwear patterns Missoni is famous for combined with Adidas’s popular “ultra boost” sole. Vogue called them “very, very cute.” 

Sneakerheads appear not to agree. The retail price is $250, and they’re selling online for, in some cases, less than half that. As a commenter on Sneaker News put it: “Looking like flea market replicas… shit is dead.”

Likewise, attaching a celebrity to your shoe doesn’t necessarily mean buyers will clamor. While Pharrell Williams has slapped his moniker on a slew of well-received sneakers for Adidas, one recent addition to the line — the Chinese New Year Crazy BYW — has been widely and aggressively panned. Like the Missoni, the Crazy BYW sold off-the-shelf for $250 in January; you can pick up a brand new pair these days for $90. 

The price of Pharrell Williams’ Chinese New Year Crazy BYW has plummeted since their release because… well, look at them… via StockX

Unfortunately, you can’t buy taste

So even if you keep up with the drop dates, buy the right bot and proxy, stand in line at a store — or pay someone to stand in line for you — you still need to get inside sneakerheads’ heads. 

Are they getting sick of Virgil Abloh’s meta-approach of printing words in quotes (like “Air” and “Shoelaces”) on the shoes themselves? Is the trend of ironic dad sneakers played out, or does it have a little life left? Can new sneakers from Kanye West hope to compete with the excitement generated by his earlier, game-changing designs? What about Pumas and Vans, do they matter at all now?

Because, in the end, the trickiest question turns out to be: Does anyone want these on their feet?

Jianhong Zhou analyzed data for this story.

Comments

Leave a Reply

avatar
  Subscribe  
Notify of