Source: Foot Locker is investing $100 million in Goat Group to create exclusive customer experiences
Nothing can make you feel more right, but more frustrated than an investment that you got right, but not quite… especially when the book you’re releasing in a week is on the topic. I’m in the process of writing a book titled: Nike’s Consumer Direct Offense, Amazon & StockX: The Disruption of Sneaker Retail. In the book I discuss how Nike disrupted Foot Locker’s eCommerce growth in 2012. I also explain how Amazon played a part in this disruption. I make this statement at the transition of the book, “The only area of growth remaining for traditional retail/brick & mortar is eCommerce.” I give this statement a foundation in the recent ability of Hibbett Sports to correct their ship with the launch of their eCommerce:
My focus in the book capitulates in a discussion on StockX because I spent a year on the platform researching everything that makes it one of the best third party resale platforms in the business. I mention GOAT, but because I didn’t use GOAT, I refrained from delivering my opinion about the platform and relegated it to the discussion on their investment in Flight Club. I explained how the addition of Flight Club gave GOAT the first true transition to omnichannel for third party retail. While I was speaking with the host of Sneaker Box Podcast this week I told him that Foot Locker would be making an acquisition or investment this week, but I thought it would be an acquisition of DTLR/Villa… I was right about the investment, but it makes perfect sense for Foot Locker to invest into GOAT. I no longer see the DTLR acquisition happening.
eCommerce is the last area for growth by traditional retail as I mentioned, and the recent numbers on online growth by every sneaker brand creates what I explain as the perfect storm for sneaker retail. Foot Locker is addressed directly in the book because it is symptomatic of the reason brick & mortar has so many issues. Because Foot Locker pays its sales leads 7.25 an hour plus commission, the only people willing to take those jobs are high school kids. In a world where information is the foundation of shopping experiences, the kids working there lack any real depth of knowledge about the products they are selling. This has created a situation where Nike leads by default because they educate their consumers more than other brands. As Nike focuses more on DTC, Foot Locker is realizing that soon Nike will be its best competitor. Not JD Sports or Hibbett Sports or Dick’s… Nike is the threat to sneaker retail and GOAT and StockX have already proven that their platforms are outperforming traditional brick and mortar eCommerce sites (growthwise). The website traffic section of my upcoming book verifies this.
I realize now that even if I put the book out today, by next month an entirely new section would need to be added. Foot Locker’s eCommerce growth was slowing considerably. A few months ago when I began work on the book I got an e-mail from Liz at GOAT. Here is what she wrote,
Our sellers have been doing very well on GOAT. The combination of GOAT and Flight Club has created the largest and most liquid sneaker marketplace in the world. At the end of 2016, our top sellers sold 800k worth of sneakers. Then, by the end of 2017, they sold over 2 million, and already this year, those same top sellers have sold over 10 million.
Two years is all it took for sellers on GOAT to elevate to the 10 million dollar ranges. The growth there is incredible. This is why Foot Locker added the GOAT Group. Foot Locker’s UI and UX is horrible on their dot com. Their search is flawed and frustrating. GOAT’s delivery system is better. GOAT’s investment in Flight Club goes directly to what I discussed here:
I recently explained that Foot Locker’s Power Store was a mistake. Sneaker stores shouldn’t be getting bigger, they should be getting smaller. GOAT recently opened a ‘pop-up’ in Miami. I explained that this was not a temporary pop-up and that as GOAT continued to develop its physical footprint, traditional retail would be in trouble because although Nike is reducing wholesale, it was going to be inevitable that Nike would begin to look towards GOAT and StockX as potential partners.
Insider Ties Episode 139 | Footlocker Goes Big, Nike Goes Small With New Store Openings
You want to know why Foot Locker just dropped 100 million into the GOAT coffers? They immediately benefit from a better online experience once the tech is integrated. They gain two of the best sneaker experiences in retail with Flight Club and they’ve cut off the growth of what I thought could become their biggest competitor in two years. That should be reason enough… but when you add in that Foot Locker also invested in Pensole and they have designers, the thought of what type of shoes Pensole could create with GOAT is extremely scary and should worry both adidas and Under Armour. Nike should feel the ground shaking a bit as well.
Amazing times.
GOAT’s FUNDING HISTORY
Founded in 2015 with $7.6M funding
from Y Combinator, Upfront Ventures,
Andreessen Horowitz, Alexis Ohanian
and more.
SERIES A
$5M in Aug. 2016 led by Matrix Partners,
with participation from Upfront Ventures
and Webb Investment Network.
SERIES B
$25M in Feb. 2017 led by Accel, with
participation from Matrix Partners,
Upfront Ventures and Webb Investment
Network.
SERIES C
$60M in Feb. 2018 led by Index
Ventures, with participation from Accel,
Matrix Partners and Upfront Ventures.
SERIES D
$100M strategic investment in Feb. 2019
led by Foot Locker, Inc.
