About 4 years ago I wrote an article about adidas and Nike in regard to the NMD’s rapid growth both at retail and in resale. In it I used a micro to macro comparison utilizing the research available to me within my Amazon.com account. Amazon supplied a detailed backend system with items like: reach, average price, views and impressions on shoes in inventory. It is one of the most effective data sets in the sales industry. In the article I made a statement that, “Nike still dominates the market and Adidas has to spend a lot to maintain, but it’s interesting to watch how Nike attempts to reestablish itself when Adidas is now capturing the resale market which is a lot more important than anyone wants to believe.” The important part of this statement was my stressing that the resale market is more important than people want to believe.
Resale is seen as a small thing that only deals with high end or hard to find sneakers. The problem is those who believe this don’t understand the resale market as it relates to online shops like mine and a host of other third party platforms who sell more than just the hot shoes. More important, analysts and people who overlook resale are also overlooking one of the hottest trends in venture capital investments. The inherent value in resell/resale is not in how much money is generated; it’s in why are resellers capable of operating in a system that should be dominated by brands and retail outlets.
In the title of this post I state that brands and retail outlets should probably be spending time with resellers. This doesn’t seem reasonable considering there are companies that provide POS data and information that establishes what is selling. POS Data has long been the go to for predictions and trends. It works, but the sneaker market shifts quickly and in many instances the data we collect for our online shops has stronger data points for actually recognizing the upcoming trends. The Resell/Resale market for “hyped” shoes may not be commercial, but the shoes that are a tier below the hard to find models from adidas, Nike and other brands definitely show moves in footwear that predict the rise and fall of brands.
What am I saying? Resellers, smart resellers willing to open their books are a source for brands and retail outlets because inside of the data of the reseller is evidence that where the market trends for resale, the rest of the market tends to follow. Over the last 9 years of operating the ARCH Online Shop I have found markers in my data that show which way a company is trending based on numbers in resale.
In 2015 I saw a shift in adidas. That shift was a predictor of the Three Stripes current growth from 2016 to 2017. In the article I discuss how the resale market delivered data on the resale value of the adidas ZX Flux. In this same post I discuss that Nike doesn’t have any new tech and while they were controlling the market they were relying too heavily on old running and cross training tech with the Nike Huarache. It was a similar thing that they did with the Nike Roshe. This allowed me to realize that like the Roshe the Huarache was going to remain a strong seller, but the reliance on the Huarache left an opening that adidas ran through like a thunderstorm in Memphis. That article also showed the rise in resale value of the NMD which solidified the fact that adidas was about to make a serious move in the market at every level.
In May of last year while adidas was at its peak and growing steadily I noticed a similar pattern to what happened with Nike and the Roshe. I had an interview with my partner at Housakicks where we discussed this in detail.
I’m writing this post today because my partner at Housakicks did a follow up yesterday (4-10-18) on our discussion last year. In his post he discusses that the adidas NMD has slowed down in resale completely and that at retail the shoe is marked down to prices below the wholesale price. As I stated in the title, sites like ARCH and Housakicks (AHN) have data, researched articles and sales evidence that could provide brands and retail outlets an opportunity to find out just exactly what they are missing in marketing and at retail. When the Curry 3 released Foot Locker killed the shoe and said that the shoe wasn’t selling at all. Under Armour also failed the Curry 3 in their lack of marketing materials. AHN wrote articles and delivered information explaining that our channels were actually selling the Curry 3 above retail. In this instance our data didn’t show that UA was going to see a sales increase. It showed that UA had gaps in the delivery of the product that would have increased sell through of the product.
In September of last year I wrote a post about adidas and how the brand is entering a period where the shoes are not going to perform in the same way. In my analysis and prediction for 2018 I said that the brand will have ‘residual’ growth in 2018 and that sales were going to slow down considerably. The only reason they will see some growth is due solely to momentum. While everyone else was touting and are still writing about adidas’ growth in the resell market by December something interesting had happened. adidas began to lose all momentum. In my own data for the 1st Quarter of 2018 Jan-Mar, I’ve done 100K in sales and adidas has made up 3% of the resale market for me. Even the Yeezy is barely selling for 100 dollars over retail… now some releases are doing better, but in the second tier (shoes that are GR, but considered ‘hot’ shoes) those shoes have no resell value at all. When I wrote the article below on the impending slow down of adidas Nike had yet to introduce their CDO or three pronged Running approach with React, VaporMax and Nike Air. In the last three months Nike has completely overtaken adidas in the resell of GR footwear.
While there are number of consultants and data analysts out there, none of those companies are as intertwined with every aspect of sneakers as a reseller, a good reseller, is. There is a unique opportunity there and companies like City Gear, DTLR, Finish Line and brands like Nike and adidas should seriously consider sitting down with a reseller as opposed to trying to figure out how to stop them. Find out why the opportunity exists and companies can find out how to correct problems with their businesses.