Stockx has democratized the retail process by creating a marketplace that functions autonomously and without checks and balances for the seller or buyer. There is a drawback to the ease in which anyone can utilize StockX. The site has diminished the amount of business savvy that could be generated by learning about the resale business and the sneaker industry. If you have a phone and enough dollars, you can participate in the business of selling sneakers. It doesn’t matter that you don’t wear kicks, or that you didn’t draw sneakers on the cover of your books in high school, or that you bought Puma’s because of MC Shan… the history and passion of loving sneakers as a facet of Hip-Hop isn’t a requirement for participating in the financial aspects of the sneaker industry.
The democratization of sneaker resale has not been a bonus for the culture or for the business ecosystem for shoe sales. What’s happened is that there used to be a time when you were learning every aspect of launching a business when you were selling sneakers.
You had to,
- understand packing and shipping
- learn about customer service
- choose and utilize the right tools to make sure packages reached their destination
- learn about and deal with chargebacks and claims
- learn to write copy and develop plans for marketing
- be capable of warehousing and storing shoes correctly
- make decisions on pricing
Sneaker resale in many ways allowed for an education on the sneaker industry that could prepare a person to open a store and utilize a multifaceted approach to getting kicks to the consumer. You had to know your product.
StockX has changed this and I won’t pretend that I’m not benefiting from it. StockX has expedited the ability to sell shoes and made it a much simpler process. In 2005 there weren’t any people in Memphis selling sneakers unless they worked with AAU teams and had access to kicks because of players. Actually this isn’t true. There was a lady from Kentucky, a guy from Arkansas and me. We had full run of the local stores and could buy without any problems. I wasn’t online at the time. I was setting up at the local flea market as the only guy with “real” shoes. I also sold my own shoes under my Sho-Shot brand and then under ARCH. At any rate I was the only person here buying which changed around 2009. As this changed over time, the market for sneakers grew. Today the market is cluttered with Sellers. I’m sure this is the same with any city. This democratization of sneaker resale is unlike any other industry outside of the luxury resale business. In the luxury business and in the sneaker business there is an amount of fear associated with the purchase of a product from an unauthorized third-party location. Websites like The Real Real and StockX capitalize on the fear that customers have of receiving a product that’s not authentic.
The authentication service allows the business to prosper. However, when anyone can participate in the business creating a level playing field because everything is much simpler and more straightforward, the problem becomes the adjustment to the pricing structure of sneakers. MSRP on release day for a shoe is established by the brand; retailers are required to adhere to those MSRP and SRP’s. As more retail locations sprouted for purchasing shoes access to Footwear, from both brick-and-mortar/traditional retailers as well as brands, created a situation where those brick and mortar locations began to compete for the customer via sales and promotions. Retail and brands began to rely on sales to get the customer in the door. Some brick and mortars began selling kicks early. Employees at mainstream stores began scanning barcodes and inputting sales on the release day. These things didn’t initially shape resale, but as more early releases leaked into the market customers decided they didn’t want certain models which lead to the value of those shoes dropping almost immediately after the shoes were released. Think about it like this, if you walk in a restaurant for pizza and the person ahead of you only pays ten dollars for their pizza when the sign says 15 because an employee gave a friend a hookup, the next person won’t be willing to pay 15 and the baseline for that price is now 10. When those pizzas stop selling the store decides to sell the pizzas at 5 each and the price is now set because people realize they can wait and get a better deal.
When resale began it existed as a means of finding rare or limited release sneakers. I could walk in Nike in 2005 and find Jordans; take those same shoes out to the flea market and barber shops and flip them with ease. When I transitioned to eBay sneaker resale was still about hard to find kicks, but as Nike increased stores, urban accounts like The Athlete’s Foot were acquired and mergers began to take place because Nike relied heavily on Futures and they wanted wholesale accounts. They set them up with mom and pops and a ton of new shops. Now this happened in the 90s as well, but by the late 2000s there were hidden pockets of small retail shops. These shops held gems. In an attempt to continue to diversify my own inventory I began traveling which meant I couldn’t set up at the flea market so I moved heavy into eBay. Around 2009 resale was no longer about hard to find kicks, it became about getting the best deal without leaving the couch. Once people began buying on eBay and then on Amazon, mom and pop shops never transitioned to online sales. They didn’t have to, but they did have to contend with more Nike accounts showing up in big cities and small towns. Around 2011 Footlocker began shifting to online sales and Nike.com grew considerably.
Blaming StockX or GOAT for damaging resale/retail is a fallacy. The foundation for sneaker resale began as more accounts were granted by brands. These accounts failed to hire people who actually knew what they were selling and the store experience was based on newness as opposed to education. The consumer began to see that brick and mortar stores held sales and they saw big box warehouse stores getting better product. They also saw sneakers at off price stores like Ross, Marshalls and Kohls. Parents became more judicious with their dollars and small accounts began relying on “urban” cash buyers because these are people who simply wanted the coolest pairs. That moat became a safety net, but the brands around 2014 began to see the growth of online sales and as they began implementing strategies they also opened more brand doors themselves. This shift to brand doors meant that smaller accounts were going to suffer. This was good for sneaker resale because there were deals to be made.
Something funny happened along the way… the promotional environment that enabled million dollar resale to take place also reduced the ability for resale to take place from mainstream stores such as Footlocker and Finish Line. A battle began for the best shoes. Relationships became about greased palms, people were fired, connections were lost and then remade and the entire time third party resale online was being shook up by Amazon and encroached upon by the new third party, StockX and GOAT, which was good initially because those channels were about premium sales. Those sites have quickly shifted and a race to the bottom has begun because sneaker resale is now about who can get what the cheapest and quickest.
The democratization of sneaker resale in the third party marketplace is now a war to get to the dollar faster than the next person. StockX as an open market place allows for the bid or the price to be set by the consumer and that’s great for the consumer however when a product can be purchased prior to release or on the day of release below the MSRP of brick-and-mortar stores it creates a situation where money rules the roost, love for the sneaker hunt is abandoned and seasoned resale vets, who can tell you almost anything about the history of kicks, are fighting old White men and old Black men in khakis and button downs with their phones out buying ten pair of Fear of Gods because they saw them first. Those men then return the shoes in a few days because they accepted the lowest offers and the shoes aren’t selling anymore.
Does this sound personal? Yep.
Is it StockX’s fault? Kinda
A democracy is a beautiful thing, until you walk into your favorite stores and have to deal with 20 new people standing in front of boxes with their phones out grabbing kicks and then having to take whatever on those kicks because they need the money back to pay bills. A democracy is a beautiful thing until an entire family, mom, dad, grandpa, grandma, and every kid show up everyday to buy every pair of a Jordan 1. A democracy is great, but sometimes the people who own the ship shouldn’t allow the crew to have a voice, they need to make executive decisions. These decisions have to be made because the market can no longer correct itself. This should make both brands and retailers worried. When the market can’t correct itself it stays trending in the direction of momentum, with small anomalies thrown in.
Just because it’s a great time to be a collector because it’s easy to find kicks, doesn’t mean it’s a great time. The sneaker biz is more impersonal and disconnected.Regular stores are paying the price of competing against machines with investment capital who advertise more than any of the brick and mortar accounts can afford to. Because 3rd party sites like StockX can continuously promote, they are reaching pockets of the population I don’t think the sites intended. This is diminishing the per transaction at retail and online.
Data time: Dates per 100 transactions
8/1/2019 – 8/8/2019
$87.01/Transaction
7/28/2019 – 8/1/2019
$91.01/Transaction
7/24/2019 – 7/28/2019
$95.87/Transaction
7/19/2019 – 7/24/2019
$104.88/Transaction
7/12/2019 – 7/19/2019
$102.19/Transaction
You Can Purchase a Custom Data Set from My Sales by e-mail cburns@arch-usa.com. Information Available: Styles, Dates, Sold Price, Final Payout. All information can be adjusted to your request.
In my book, Nike’s Consumer Direct Offense, Amazon and StockX: The Disruption of Sneaker Retail, I shared my per transaction for 2018. Here is the paragraph from the book.
$583,244 / 4270 = $136.59 hints at what the chart above establishes. StockX has shifted demographics. The site is no longer pulling in people because of shoes that have hit resale, or are limited; the site is capturing sales on a considerable amount of “non-sneakerhead” shoes listed on the site. I happen to think the least expensive shoes sold could be higher from 30-100, but the site does not list a lot of shoes.
In this paragraph I discuss that the sales could be higher in the group of shoes priced from $30 dollars to $100 dollars. While the data above is from the slower summer weeks, in 8 months my average sales priced has dropped considerably. On a daily basis more sellers are being added to the equation which will undoubtedly shape retail even more. StockX should consider becoming a monarchy, because when this market self corrects, it won’t be a pretty site for brick and mortar stores.
