On Running, HOKA, Newton Running, NNormal, Hylo Athletics, NOBULL, Tracksmith are all brands gaining traction in a saturated marketplace. These brands looked towards the general and accessible sports: training, running and fitness to capture marketshare. These sports don’t have an age cutoff or limitations on who can compete or participate. Anyone can lift weights or walk out of the house and jog. There isn’t a special skill required to move slowly from couch to 5K. This is why running and training brands have been able to quietly and slowly chip away at the mountain of Nike.
Running and training were considered niche sports. The footwear was also labeled as such, incorrectly. It makes sense to think of jogging shoes as niche because in the 70s and 80s, brown shoes dominated, and sneakers were generally used for the sport they were made for. The explosion of sneakers into casual wear happened initially when Reebok moved women from jazzercise and aerobics to mall shopping in the Freestyle. This moment showed the potential of niche and also led to Nike being close to bankruptcy. Hip-Hop, Run-DMC and Michael Jordan changed everything shifting kicks into popular culture. The boom of sales from basketball laid the foundation for the importance of basketball sneakers to the growth of sports brands.
This is why new entries into the market are obsessed with basketball although the market for performance hoops shoes has become seasonal and sales are slowing considerably. New brands look to the rise of And1 and they witnessed Nike and adidas pour money into signature sneakers in the 2000s. Since then, brands have longed to mimic the meteoric rise of And1. I even followed suit with my licensing of Sho-Shot, which was successful, but I failed to understand licensing and the brand was pulled away, the name was changed and the brand was sold when it became valuable. My small success in basketball shoes was because I had an incredible system. I discuss that success in the article below.
Right now, Skechers, Crossover Culture, Brand Aces, Moolah Kicks, Q4, Ethics and HOLO have thrown their hats in the ring. Skechers is different than all of the other brands because they are a billion-dollar company taking a calculated risk rooted in the fact that they have stores in the Chinese market and are considered comparable to Nike in the international market. They have the ability to succeed because they aren’t only selling in the U.S. Skechers is also unique in how they tackled and succeeded at performance running. Their GoMeb running shoe was one of the best products on the market establishing the brands’ ability to seriously take on the performance footwear space.
When I ran Sho-Shot it required a considerable amount of legwork. When I launched ARCH as a footwear company, I partnered with 361 to create this basketball sneaker:
The ARCH 3DT from 2010
Actual production sample
361 Version
361 owned the rights to the design in China and I learned immediately that if you don’t have a person on the ground in China, any concept you create can be reproduced and released. I was underfunded and working alone. I had also launched one of the best online shops on Amazon, so unlike when I ran Sho-Shot, I stopped operating my basketball website. This was in 2010. Without the time to cover sports, I realized I wouldn’t be able to do what I did in basketball with Sho-Shot. I wouldn’t be able to land the college teams and move 1200 pair. Without those tools, I had to transition into casual and I chose performance running. ARCH as a running shoe company performed well.
At one point in my e-commerce sales, ARCH Running shoes were outperforming New Balance and Puma. This discussion can quickly get away from me, but I’m attempting to establish an important point. Where every brand entering basketball is, I went there. It was before the rise of social media and even before the rise of operating an e-commerce platform, but I tackled the battle without distribution or a fundraising round. Right now, venture capital has enabled the startups to take risks because they have cash to burn and this is the most dangerous aspect of these businesses in my opinion. I had one of the founders of one of these companies write these words to me, “And we are cash rich , deep deep pockets.”
Crossover Culture Sniper
The Others and Overlooking the Marketplace
I’ve seen Crossover Culture languishing on the shelves at Hibbett Sports. I’ve done research on almost all of the new basketball brands by utilizing third party data. HOLO is new in basketball. The brand hasn’t even updated its own website to begin capturing visitors’ information for their basketball sales. Which shows the problem with having funding from investors. New brands haven’t had to struggle and learn how to sell. Moolah, Crossover Culture and even HOLO (as an outdoor brand) were able to gain distribution with retail outlets almost right out of the gate. It’s something I was never able to do and not even Allbirds (once valued at a billion dollars) could accomplish this (they chose DTC and opening their own doors. They are just now expanding distribution as the stock sits at around a dollar). Allbirds was a Kickstarter brand initially. Social media has emboldened new brands like these basketball companies, and they aren’t doing half of the work of performance running startups.
Q4 LG9
All of these new brands are working in reverse in an attempt to ensure the most positive outcome, Ethics is owned by a former NBA player in Langston Galloway. Here is the irony, the sneaker above is named the LG9. It was made for Galloway. He left Q4, which also boasted player exclusives with Etwann Moore, and founded Ethics. Q4 launched with venture capital and NBA players. A reverse strategy which crippled the brand. Moolah has aligned with WNBA athletes. Skechers obviously has Julius Randle and Terrace Mann, and HOLO is launching their basketball sneaker with Isaac Okoro of the Indiana Pacers. The funding and connection to distribution and athletes gives these brands what they see as a better chance for success than at any other time in history. The problem is every one of these brands seems to be completely unaware of the current market trends. More important, unlike Sho-Shot none of these brands has grassroots as a foundation.
When I wrote the report above it was to predict the success of the Nike JA 1. What I discovered in writing it was critical to any brand deciding to make basketball sneakers. I compiled every basketball sale on my e-commerce channels since 2017. It is the most comprehensive report available on hoops shoes. This is important because it shows pricing of Nike basketball sneakers across all price levels for the brand. It also shows the seasonality which has disrupted basketball sales. Unlike performance running, where a brand can create community like Tracksmith and Newton Running, basketball is rooted in youth culture. Basketball is a young person’s sport. It’s also a specialized sport. This severely limits the market. The sneakers tend to be stiff and made to withstand the explosive movements of the athletes. Hoops shoes don’t feel as good as casual and walking sneakers.
While basketball was once the leader in sneaker sales, options have grown. Retro is trendy, Terrace Culture and classic basketball looks dominate the marketplace. Basketball is now utilized for basketball, except hyped limited release sneakers like Kobes and Jordans. When you factor in grassroots with EYBL, Gauntlet and The Association, the fact that kids have to be associated with a specific program to get a college basketball scholarship and basketball becomes an even smaller segment. Brandblack is one of my favorite startups. They make incredible sneakers. When they launched they made a J Crossover signature sneaker for Jamal Crawford. Brandblack has since rebranded into a performance running and fashion brand. If Brandblack made this transition it would seem that other startups would do the math. If they won’t, here is my constant measure for the potential success of a brand, 3rd party. When a brand is healthy, there are going to be markdowns of older product. If a brand has verifiable sales in 3rd party this means people are willing to give them a try. To complete this discussion, I’m posting data from each of the brand’s mentioned here. I’d like to get your thoughts and hear your position on basketball as a segment and if these brands have a fighting chance.
3rd Party Data
Crossover Culture
Ethics
Moolah Kicks
Q4 Sports
Things to note in the data above: HOLO is concerning because they have launched a basketball strategy with nothing updated on their own platform. This brand is consistent in how they approach the market because I found the same thing to be true when they launched in outdoor wear. I have to think the connections the founder has makes them feel almost overconfident because they have a lot of investors and believers in the people behind the brand. My problem is I’ve witnessed extremely smart people like Jason Mayden get 2 million dollars and distribution with Foot Locker only to close down Super Heroic, so I’m a skeptic. I don’t have the sales of the other brands because they are all privately held.
Q4 never had big box distribution so the shoes won’t show up in 3rd party, but there aren’t any broken sizes on the brand’s website. Moolah did DTC until they became distributed at DSG. The sneakers aren’t marked down on the site, so there aren’t many pair being purchased on discount, but it’s intriguing to see over 143 pair sold on 3rd party and it’s disturbing to see the price at $30.22. Crossover Culture is also new to distribution at Hibbett Sports but they are beginning to trickle into 3rd party due to the deep discounts. In the link above the shoes are at 59.99, but in stores I’ve seen them at $19-29.99 hence the average sold price of 39.19 for those who took the risk on flipping them. Ethics hasn’t been around long enough and the $82.07 is an anomaly based on the sale of a limited pair. The details here don’t bode well for any of the brands, but if I was asked who should be doing better it’s Crossover Culture. This is a brand which could be very similar to Sho-Shot based on the design and the apparel.
