Understanding the Sneaker Market
Written by: Hayden Mersberger
Brands such as Nike and Adidas are very well known in our current day society, but most don’t know about the underground sneaker market. The underground sneaker market consists of sneakers that are very limited and have in some cases extremely high resale value. Most sneakers with the high resale value are either Nike collaborating with another designer brands such as Off White or Adidas’s YEEZY series. For many people, flipping sneakers is a passion along with a source of income. While some understand the sneaker market and play the market pretty well, there are others that try flipping sneakers without understanding what they are doing which can lead to losing a lot of money. There are two main methods used to flip sneakers. One way is more of a side source of income, while the other is more of a business.
Before we dive into the two main methods used to resell sneakers, you have to understand what makes a shoe valuable and what factors determine its resale value. One main factor of determining resale value is the reputation of the brand designing the shoe and that brand's average cost of other products it produces. For example, Nike has done a lot of collaborations with Off White. Off White is a well-k;nown designer known throughout the sneaker community, they also have products with extremely high retail prices. So in this case the resale value of a Nike Off White sneaker would be very high. Another major factor is the supply of the sneaker. Like we have been learning in economics supply and demand play a big role in determining prices. For the sneaker market, when a sneaker has a lot of publicity or “Hype” with a low supply and a high demand, the resale value for the sneaker will be through the roof.
The first method is buying sneakers of a drop (Release) and hitting a sell now button on GOAT or Stock X. A question that is most frequently asked is “What is a drop and where can I find it?” When dealing with Nike, drops can be found on Nike’s SNKRS app or in some rare cases, other retailers such as Footlocker or Champs. The first and hardest step of this method is to purchase a sneaker off the drop. Purchasing a sneaker off of a drop is just the skill of speed, this puts one to the test of fast online checkouts. Once you purchase a sneaker off the drop you will receive it in about a week from whatever site you bought it off. Once received it is as simple as hitting a button and taking the sneaker to your local UPS store to be shipped to the buyer. Once your sneaker is authenticated your payout will be released to you. This method is nice because it has no risk with good payouts, but you would be lucky to get one shoe off a drop per month. This method is not great for the person looking to make a business out of the sneaker market.
The second method isn’t used by many people because it has a much greater risk and lower profits off individual sneakers. In this method, one would purchase a sneaker in the market, not from a retailer. Then one would have to advertise and sell this sneaker back into the market for a little more. Depending on the sneaker you would really only be making $30 to $100 per sneaker. This is most like investing in a stock. You would purchase a sneaker for its current resale value hoping it will go up in value later in time. While this method has a lot more risk overall profits are higher because you would be able to purchase more sneakers. This would be more of a business rather than a side source of income.
So how does this relate back to our day to day life and in the economy? Well, Nike and other retailers who produce these “Hype” sneakers have created a whole new market in which they are the only companies with the supply of these highly demanded sneakers. Nike has the ability to release a sneaker that retails at $2,000 because the people in the sneaker community have the ability to flip that sneaker for much more. With this power over price Nike and other retailers basically have an oligopoly over the sneaker community. These sneakers they release always sell out and it doesn’t matter what the resale value is because the retailers have already had insane profits from that sellout. The only thing these companies have to do is continue the “Hype” and sellouts to be multi-billion-dollar companies. This also influences spending of income throughout the economy which is also great for an economy.
Work Cited
“Sneakers, Streetwear, Trading Cards, Handbags, Watches.” StockX, stockx.com/.
Welty, Matt. “What's the Best Way to Resell Your Sneakers? A Definitive Guide.”
Complex, Complex, 11 July 2018,
www.complex.com/sneakers/2018/07/best-way-to-resell-sneakers/.
“Yeezy Resale Prices: The StockX Guide on Reselling.” NikeShoeBot,
www.nikeshoebot.com/yeezy-resale-prices-the-stockx-guide-on-reselling/.
When you do think about sneakers you don't see them as a revenue making method, people think that when you spend a upwards of $200 on a sneaker they are a rip off and you don't need shoes that expensive. But once you realize that you can flip that sneaker to a profit of $200 and double your money it isn't a waste of money then. The thing that I feel really relates to reselling sneakers is the stock market. When you put in money for stocks, its an investment. If the stock is then good the price goes up and you can make a lot of money. Same thing with sneakers as once you buy a sneaker you invest and sit on it, wait for it to become "hype" and make loads of money.
ReplyDeleteI agree that getting a shoe off the drop is very rare but when or if you do get one it can be huge in profit. One other thing that affects the resell market is how long you have been holding a dead stock shoe. dead stock means the shoe has never been worn or brand new. The longer you hold on to a never worn shoe with resell value if you do your research and put time in to watch the shoe it could take off in value as many of these limited sneakers start to be bought sold and worn. For example the yeezy cream release 100,000 pairs ans had a resell value of around 400 then another 1,000,000 pairs were released and everybody thought they would get a pair ans so many people bought the shoe ans the resell went down to almost the retail price but then after about a month there were little dead stock creams left and the resell price went back up to around 300-350 dollars
ReplyDeleteThis is really interesting. My cousin is really into shoes and loves to do the first method that you talked about. I didn't know much about it before this article, so what you wrote was really insightful and intriguing. I think it is kind of crazy how much money people are willing to spend on shoes, but it's good for those trying to make a profit off of it. Investing in the sneaker market seems like it takes a lot more time and money, but over time I think it results in a better profit. As long as a company or brand doesn't ruin its name, people in this market should be doing good, but it is held together by chance and really in hands of someone else, so it is risky.
ReplyDeleteI like that you talked about this because I think that this is a topic that not a lot of people consider. People can easily go on numerous websites in order to place orders for shoes that cost way less, not taking into consideration that the website may not be dependable.
ReplyDeleteIt is interesting that despite sneaker companies having an oligopoly, people are still able to create whole businesses off of the sneaker market. In this aspect, the sneaker market is unique, because in almost no other market is it possible to make money off an oligopoly. It really is insane how much people are willing to spend on shoes. I wonder when diminishing returns starts to take effect...at what point does it become inefficient to reinvest in a shoe? Perhaps this is what makes navigating the sneaker resale market so complex. Fakes, drops, retail prices, rarity, and resale value all add up to one of America's rising markets.
ReplyDeleteI think it's interesting how reselling shoes, exclusive clothing items, sports memorabilia, and other rare or exclusive items can make such a big profit for the seller. Exclusivity drives up the prices, since high demand and low supply results in higher prices. And as the release date of the items falls further into the past, the shoes might go up in value because they're seen as more rare. Is there any situation where the shoes would be too old to garner much profit for the seller? For example, could shoes released in 1970 go down in value, since they were released over 45 years ago? Or does the value continue to go up as they get "older"? I feel like as styles change, people may be less inclined to buy exclusive shoes from a long time ago. They aren't likely to fit in with current style trends.
ReplyDeleteThe idea that people would spend $2000 on a pair of shoes sounds ludicrous to me, but hey if it makes money maybe I'm the fool. I get that the limited runs are part of what make these shoes worth so much but there has to be a point where people stop and think about how much money they're really spending. On the flip side though could shoes like these be considered to be a more modern version of investing in precious metals like gold and silver? And could stocking up on these shoes now possibly lead to an easier retirement?
ReplyDeleteIs this something that can effect our economy as a whole? or is this just it's own little economy? How would one effect the other? You explained how the resell game works very well to one who might not know but what about the economic standpoint. Like how Stock X can greatly be effected by the value in a shoe plummeting, or how maybe Stock X deems a shoe to be worth a lot less so it influences the price of buying it retail.
ReplyDeleteI really enjoy this piece as you integrate aspects of market structures/supply & demand into a modern market that so many people are familiar with. Since the sneaker market is its own little economy in a nutshell, you can simply make comparisons between large market factors and simple concepts of the sneaker market. I also enjoyed how you modernized some terms that are interchangable with sneakerhead terms such as substituting "high demand" for "hype" to see how economics is utilized in everyday life. I question your take on its effect on the US economy though. Despite the sneaker market being big among youth, do you really believe it has that much influence or is it just its own tiny seperate market?
ReplyDeleteI used to consider myself a 'sneakerhead' a few years back and I still have the hundreds and even thousands of dollars of shoes I worked for; therefore I can relate to this topic and I must agree the sneaker resale game is a difficult but a rewarding system. I found this topic also really entertaining and I am also impressed that you have seemed to master the market and understand the resale game.
ReplyDeleteThe idea of shoes selling for in some cases thousands of dollars over there original sale price is still insane to me. I tried to get into the shoes market but never really got fully into it and ended up loosing money.
ReplyDeleteI like the in depth explanation about the different ways that the average person can become involved in reselling sneakers.
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ReplyDeleteI think this is an informative post and it is very useful and knowledgeable. therefore, I would like to thank you for the efforts you have made in writing this article. Snkrs bot
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