Shop sneakers with confidence—just look for the Authenticity Guarantee checkmark. images via eBay
The discussion around excess inventory in various segments of retail is focused on slow sales due to a glut of product. In the sneaker segment, one of the narratives has been that Nike, who saw in increase to 44% on their inventory in their last quarterly report, would see a decrease in full price sell through as they allowed wholesale partners some of the loosest terms for MAP. With so many Nike and Jordan Brand shoes being marked down, the prediction was that the Swoosh would encounter a consumer unwilling to pay premium prices when other Nike products are available. The reality is much different after seeing Nike Stores and the lines at these locations throughout the Black Friday weekend. Nike’s inventory has always shaped resale, but an overlooked aspect of sneaker retail sales data is how Nike Direct is contributing to resale issues. One Google search on sneaker resale invites a bevy of articles talking about kicks as an asset class and how sneaker resale will be an 8-billion-dollar segment. This has inspired people from every walk of life to try their hand at flipping sneakers for profit. It would be easy to think this is a good thing for resale, but the reality is resale has been a strange and inconsistent market. This is because resale is reliant on the ability to acquire sneakers. It was also built on the idea that the brands were not interested in this area. That has changed, but isn’t yet shaping resale:
And Just Like That… Resku is Shutting Down This Month as Nike Refurbished Ramps Up
Investment into the Resale Market
As Foot Locker and companies like FarFetch make investments in companies like GOAT and Stadium Goods, Resale is being seen as an economic opportunity. Investments have slowed in venture capital, but new platforms seeking funding in the sneaker resale space are still garnering multi-million dollar valuations. The slowdown in venture capital investments are rooted in new companies finally being considered based on actual revenue vs potential. In the sneaker space, there hasn’t been a lot of due diligence on sneaker resale businesses. If there was the hype wouldn’t be as high. By my data resale has been trending downward, but there have been several important events which led to spikes in the resale market leading to a misconception that resale is a growth area.
Technology is the biggest disruption to the market. The creation of StockX shifted resale considerably and also simplified the process removing risk from the equation. This has given all people the ability to participate. Another problem contributing to an inconsistent marketplace was the 2020 Covid quarantine. The great tech layoff of 2022 is a direct reflection of the growth in tech and digital that happened from 2020 to 2021. Stimulus checks and problems with the supply chain have created other spikes in resale giving the illusion of growth when the reality is resale is in trouble. One of the most overlooked aspects is Nike’s continue advancement of Consumer Direct Acceleration via store openings. I’ve written on a number of occasions that Nike’s Direct growth will not only shape retail, but it will take away aspects of resale.
Sneaker Resale is Broken: A Year over Year look at a Month on eBay is Astonishing
Will eBay Sneakers’ Investments Counter the Trend?
I began to analyze eBay a year ago after a consulting session with the company. What I’ve discovered wasn’t shared. The consult was limited as their new eBay Sneakers team decided to go all out by acquiring SneakerCon and developing their own strategy. I also understand how difficult it is to listen to a negative report with a new team taking shape. eBay’s antiquated platform in contrast to StockX’s ease of use and smooth UI/UX offers insight into the resale slowdown. The report above was a year over year analysis of only one month on eBay, but it allows me to stand strong in my analysis. eBay has continued to decline as StockX grows. Quick question, do you think Nike’s increase of inventory is positively or negatively shaping eBay? Logical conclusions would be that the promotional environment for the biggest brand in resale, would lead to a spike as it did post Covid quarantine, right? There is a major difference in the rebound and spike in resale from 2020 to 2021. That growth is rooted in people being unable to get out for over a quarter of the year which ramped up online purchasing and then led to a return to stores. Nike’s inventory issues arrive without any “stipulations”. While Covid is still a factor, fewer people are dying from the virus. Consumers have had a year to adjust, and things are returning to pre-Covid numbers, which means resale is again slowing down. What does this mean for eBay in a microset of data focused on Black Friday with so much product available and no pent-up consumer behavior?
Guidelines for eBay Black Friday research uses the keyword “sneakers” Dates are from 12 am on Black Friday to 12 am Saturday Night, a 48 hour window for one of the busiest shopping holidays of the year. In the following chart are the sales by hours and how they compare from last Black Friday to this year:
- In 2021 on Black Friday: 57,233 items sold at $6,431,272.21 an average sold price of $112.37
- In 2022 on Black Friday: 46,939 items sold at $4,400,061.86 an average sold price of $93.74
When I wrote the “Sneaker Resale is Broken” post, I used the slowest month of the year for sneaker sales, April to May. In that month I found that year over year eBay sales decreased -25.96%. On retail dives during Black Friday I made an observation and it was reinforced by an observation by a peer. Nike Outlet Stores had lines long before they opened and those lines remained long throughout the day on Black Friday. I made this statement, “Nike’s excess inventory means a decrease in sales for every other brand. Consumers who would have visited Journey’s or RackRoom, bought Nike product because it was cheaper than it’s ever been on any Black Friday. Nike’s excess inventory is a disruption for every sneaker brand.” The following chart shows that in resale Nike’s ability to move more people into their digital funnel is also affecting resale platforms… or is it? In the next post I will deliver data on the site is directly contributing to the slowdown on eBay in the sneakers category and the numbers are mindblowing. Here is the year over year for eBay’s Black Friday:
(see this link for posts and reports on eBay)
Read Part 2: