Sneaker fanatics have been around for decades, with swaps and buys of high-end shoes largely happening on eBay or as personal transactions. But it’s only in the last few years that the reseller market has accelerated and gone sharply upscale.
To walk into the 3,000-square-foot Stadium Goods store in the SoHo neighborhood of New York City is to be confronted by rows and rows of pristine, shrink-wrapped athletic footwear. Look closely and you might be a little stunned by the price tags.
On a recent afternoon, for instance, a pair of white Nike Jordan 1s by fashion designer Virgil Abloh (Off-White, Louis Vuitton), originally priced at $190, was selling for $2,750. (No wonder it was enclosed in a glass case.) Nearby was a rare pair of Adidas PW Human Race NMD TR, designed by musician Pharrell Williams. Price tag: $12,350.
This is clearly not Foot Locker.
The high-end sneaker market is big business these days, and the 3-year-old Stadium Goods, a consignment reseller of rare or limited editions, has established itself as the Tiffany & Co. for sneakerheads.
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Sneaker fanatics have been around for decades, with swaps and buys largely happening on eBay or as personal transactions. It’s only in the past few years that the reseller market has accelerated and gone sharply upscale. John McPheters, who co-founded Stadium Goods with Jed Stiller, says the shift has been driven by “men who are now learning from childhood how to treat fashion as a sport — the way that women have always treated fashion.”
The point is not utility, but rather about expressing identity. “Sneakers are the single most flexible and acceptable way to communicate personality for these new shopping-obsessed men,” McPheters said.
Stadium Goods is clearly riding that wave. In January 2017, it secured $4.6 million in new equity funding by Forerunner Ventures (backers of, among others, Warby Parker and Bonobos) and the Chernin Group. This year, the European luxury group LVMH (Louis Vuitton, Dior, Givenchy) bought a minority stake for an undisclosed amount.
And May 2, Stadium Goods announced it had completed a distribution deal with Farfetch, the luxury e-commerce marketplace, offering a selection of sneakers that will be available exclusively to those customers. (Stadium Goods will also continue to sell its merchandise through eBay, Amazon and Alibaba, among others.)
The demand for collectible sneakers and streetwear is particularly fervent in China, McPheters said, adding that he got his first taste of that market’s potential when a Chinese customer dropped $10,000 in a single spree at the Stadium Goods store. “Often, the shoes they want were never available in their country,” he said.
He and Stiller seized an opportunity to enter the market early, launching a brand page on Alibaba’s TMall platform in 2016 just a year into its business.
Since then, sales have taken off. During Alibaba’s last Singles Day promotion (a 24-hour shopping spree on Nov. 11 that rivals Black Friday in the United States), Stadium Goods raked in $3 million in sales.
McPheters went to China to help ring the opening bell at the Shanghai Expo Center. And overall, the company brought in $100 million worldwide last year in gross merchandise volume, a closely followed measure of total website transactions.
While online sales fuel the bulk of Stadium Goods’ business, the company is also exploring an increased brick-and-mortar presence, including a shop within a shop at the newly opened Nordstrom menswear store in Midtown Manhattan.
The partners believe the future of sneaker retail will be a hybrid model combining traditional channels and aftermarket selling. “We’re a microcosm of what’s hot,” Stiller said, noting that in the sneaker world, what’s trending is not necessarily the newest item. “Where a lot of retailers are dependent on what brands are releasing at the moment, we’re not. Ninety-five percent of our stock are styles that are no longer on the market.”
Stadium Goods is not the only player in this fast-growing field.
GOAT (derived from the popular sports acronym, Greatest of All Time) has raised $97.6 million from investors like Alexis Ohanian, Ashton Kutcher and Guy Oseary and venture-capital firms like Accel Partners and Upfront Ventures. The Culver City, California, company started in 2015 as a mobile-focused marketplace with what’s called a “ship-to-verify” model. (Once a sale is made, the seller sends the product to GOAT distribution centers for verification, after which it is sent to the buyer.)
With hot sneaker styles costing $300 and up, “the last thing you want to be spending your money on is fakes,” said Eddy Lu, a founder and the chief executive officer.
“For us, it was let’s build something that solves the growing problem of counterfeits and fakes,” he said.
In February, GOAT merged with Flight Club, and the new company has since been valued at $250 million.
StockX, founded by Josh Luber, a former IBM consultant who created Campless, a sneakerhead data site, and Dan Gilbert, the owner of the Cleveland Cavaliers, is a reseller model built on the concept that prices of in-demand items vary like the stock market. The company counts among its investors actor Mark Wahlberg and rapper Eminem. With an authenticity program akin to GOAT, StockX also adds the element of transparent pricing.
It’s built for the casual sneaker enthusiast looking for a good strike price on coveted Yeezys — like getting the Adidas Yeezy Boost 350 V2 Cream White when it is selling for $380 (original price $220) and not, say, $560 — but also for those who think of sneakers as a portfolio investment. “We’re an evolution of eBay,” Luber said.
He added that StockX is bringing in $2 million a day in gross merchandise volume.
As with the stock market, the prices fluctuate in real time (GOAT/Flight Club and Stadium Goods offer fixed pricing). There is also the possibility of a “sneaker IPO,” Luber said, pointing to a very-limited-release sale of new LeBron James 14 Nike shoes that StockX held last January. With just 46 pairs offered (23 of the LeBron 14 and 23 of James’ rookie-season sneaker style), bidding was opened for three days, with all pairs selling for an average $6,000 each.
“After that, we allowed seven people who bought the shoes to resell without even touching the product,” Luber said. “That’s like true day trading.”