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The sneaker industry needs nuance. Instead, the business is often looked at in extremes. Either, The sky is falling, or kicks are the hottest alternative commodities in the world. Discussing the reality of the industry isn’t exciting. It’s much easier to capture attention with complaints or praise.
I’ve discussed in the past that resale was trending down, but with every news outlet discussing the growth of the category, it was hard to explain how that growth was trending down as revenue grew. Dollars are fluid. They move to trends. The growth of sneakers meant companies like Levi’s and mall favorites like American Eagle were losing dollars. Athleisure by default was a move away from preppy apparel and denim. Did sneaker sales increase? Yes, but this was not growth created by need. Trends dictated the revenue increase. Trends don’t sustain and inside of trends data can be misconstrued.
That’s another discussion. This is about Sneaker Resale. The dominant brands in retail also dominate resale. Nike leads and others follow. At retail, brands like On and HOKA designed performance sneakers, so by default they moved forward via innovation (although consumers weren’t using the trainers for running). Nike did not rely on performance led growth. They mostly bought into their own hype and a market stimulated by both government support and the dream of sneaker entrepreneurship. Sneaker resale seemingly exploded, but the truth has been that the hustle of sneaker resale was miscalculated and has been trending down for over ten years. (See the article below)
There is a cyclical nature to discussing the demise of resale, especially when so many people are involved in the business. As resale shops collapse and close across the country, it’s important to understand why people failed to understand the stark reality that existed the moment Amazon opened Seller Central Marketplace up to more sellers in 2013 and the average person realized they could float between eBay, Amazon and Kixify to flip sneakers or use Flight Club and Stadium Goods to consign kicks.
Sneakers/Sneaker Resale at one point traveled a narrow sales path in e-commerce and it was supported by a wide path in brick and mortar.
Think about water pressure and pipes. If water is flowing at a high rate and a pipe is narrow, and a crack happens on the top of the pipe, when the water finds the crack, it will explode upward. If a pipe is wide, even if there is a crack, there isn’t as much pressure. The water simply exits and spreads. This is sneaker resale. The resale market has been spreading since around 2013. It’s been slowing down, but there are anomalies which function like the tightening of a valve constrictor on a pipe. The flow of water (sneaker resale) found cracks in a narrow pipe in a few unique ways which saw the stream of water rise and fall over the years.
- eBay controlled the market for years. (narrow pipe)
- In 2008, Amazon purchased Zappos and learned the sneaker business. In 2010 they opened Seller Central Marketplace to sneakers. (narrow pipe)
- In 2013, Amazon Seller Central made it easier for sellers to qualify inviting in a ton of counterfeits. (wide pipe)
- Nike saturated the market in 2014-15 (the pipe was wide, and resale continued to drop)
- ZX Flux, NMD and UltraBoost gained steam after Yeezy’s arrival. YZY was dropped in 2016 in small numbers. 2014-2017 (valve constrictor)
- Campless became StockX and GOAT and Grailed entered the market. 2016 (valve constrictor with a faulty valve shutoff. These platforms were actually cracks in a wide pipe with the water slowly eroding the area around sneakers.)
- Stadium Goods garnered considerable investments. 2017 (wide pipe – investments made sneaker resale a hot topic inviting more sellers into the plumbing corroding the system)
- 2017 Nike adjusted and resurged as adidas failed to really capitalize on NMD. NMD and UltraBoost moved into a wide pipe. YZY took over creating an imbalance, but opening a door for smaller brands and a resurging Nike)
- 2019 YZY began cooling as adidas ramped up production.
- 2020 – 2022 Covid (narrow pipe) led to a flood of new people in sneakers (wide pipe that was force fed into a narrow pipe by Nike removing small accounts which had enabled resale to have arbitrage. 2022- Today: As Nike closed accounts and retail consolidated, arbitrage died -valve shut off, resale cooled). The new consumers, fueled by Dirty Air Force 1 and TikTok trends, were just visiting, but brands believed in the hype leading to extensive corrosion and erosion… cracks are now in multiple sections of the pipe and water is everywhere.
Stadium Goods raises $4.6m with Mark Cuban – That’s Two NBA Owners Invested in Sneakerhead Resale
Sneaker Retail and Sneaker Brands Can Align With ‘Resellers’ To Better Gauge Brand Trending
Made to Be Discounted
One of the most important aspects of Sneaker Resale being a wide sales market is Nike’s decision to increase prices across the spectrum of their catalog. Railyard strikes, theft, port strikes, Nike had excuses to increase pricing. The truth in my opinion was greed and logical fallacy, “If customers are willing to pay resale for our products, they can handle price increases.”
In 2021 the Nike Air Force 1 SRP was $90.00. In 2024, the exact same sneaker, no technical updates or improvements retails at $115.00. Nike introduced the JA 1 basketball sneaker at $110.00. Six months later Nike no longer placed the price on their labels and the price of the JA 1 was $120.00. Air Max 90 inflated to $130 from $100. The Pegasus was once a Nike cash cow. The running shoe retailed at $120 dollars. The Pegasus Plus retails at $180.00. Almost all of Nike’s running shoes are over $140.00. This wouldn’t be a bad thing, but as Nike increased prices, they didn’t really improve on the aesthetic design. The sneakers worked, but they still looked the same. ON, HOKA and Brooks all looked like true running sneakers. They arrived in bold colors with chunky design elements and interesting design details. Nike still performed and most brands followed, but with so many options flooding the marketplace Nike no longer worked efficiently through small pipes. Nike ate its way to erectile disfunction.
The consumer no longer had a fear of missing out. TikTok trends shifted to anti-shopping movements. Terrace culture grew, which helped adidas classics, and Nike had made their best-selling sneaker in the Air Force 1, 20-50 dollars higher than a Samba or Gazelle. Nike’s sneakers have become Made to be Discounted. It’s important to know what a platform like StockX is saying about how things have changed, which requires another post to prevent this from being too lengthy. Up Next: Analyzing the State of Resale 2024.
Continue Reading this Series
StockX Adjustments in a Cooling Resale World – Part 1
The Death of FOMO in Sneaker Resale – Part 2
Made to be Discounted and the Arbitrage Snitch -Part 3
How the Year over Year Reports on Resale Provided Hints of the Reality – Part 4
