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StockX is part of a burgeoning group of online marketplaces that have turned resales of sneakers into a kind of currency—and an increasingly big business

Buy low-tops, sell high-tops: StockX sneaker exchange is worth $1 Billion

 Scott Cutler, left, chief executive of StockX, and Josh Luber, founder, at the company’s headquarters in Detroit, June 24, 2019Image: Nick Hagen/The New York TimesNic Wilkins started selling parts of his  sneaker collection online two years ago as a way to make some extra cash  in college. The hobby took off and this year he expects to move 10,000  pairs of shoes. His anticipated take is a 25% profit from over $1  million in sales.The main website enabling Wilkins’ now full-time business? StockX, a  site that treats coveted consumer goods like sneakers as tradable  commodities.Sneaker collecting and trading “just keeps growing,” said Wilkins, a  24-year-old San Francisco resident who recently hired a business partner  to manage his shoe inventory at a warehouse in upstate New York. “It is  absolutely wild.”StockX is part of a burgeoning group of online marketplaces that have  turned resales of sneakers into a kind of currency — and an  increasingly big business. Other sites like GOAT Group, Stadium Goods  and Bump, which also resell sneakers, streetwear and other goods, have  raised more than $200 million in venture capital funding. On Wednesday,  StockX said it had hired a new chief executive to expand its business  and garnered a fresh $110 million in financing that values it at more  than $1 billion.The rise of these online marketplaces is now pushing sneaker  retailers and brands to rethink the potential of resale sites — once  deemed a quirky niche for enthusiasts — as serious distribution  channels. In February, Foot Locker invested $100 million in GOAT Group  and said the companies would “combine efforts across digital and  physical retail platforms.” And the luxury site Farfetch acquired the  LVMH-backed Stadium Goods for $250 million in December.The fervor for sneakers has been fueled by “sneakerheads” and others  who regard the shoes as investment assets. All told, the market for  resale sneakers and streetwear in North America is projected to reach $6  billion by 2025 from $2 billion today, according to Cowen, an  investment bank.“The internet and eBay made reselling into a cottage industry,” said  Matt Powell, an analyst at NPD Group. “Platforms like StockX made it  into a business.”For sneaker brands like Nike and Adidas, sites like StockX add a  twist to the ecosystem around their most desired shoes, like Jordans and  Yeezys. So far, the companies have taken a hands-off stance to the  online marketplaces, with Nike’s chief financial officer saying in March  that the company was not focused on reselling and had no partnership  plans or business strategy for it.But while the sneaker brands are not capturing any resale revenue,  they benefit indirectly because that market generates buzz for them. So  they carefully — and secretively — manage the supply of their hottest  items, leading to wild spikes in resale prices, said John Kernan, a  research analyst at Cowen.“Keeping Jordans or Yeezys in cool markets, with demand far  outstripping supply, is making them more relevant in the mass market,”  Kernan said.Nike teased the resale market last November when it released a pair  of $160 Jordan 1s that bore a message: Their tongues said “WEAR ME,”  their toeboxes said “PLEASE CREASE,” and their midsoles said “NOT FOR  RESALE.” In a few cases, shop owners required buyers to wear the shoes  out of the store, a move that damaged their resale potential since most  of the resale sites sell unworn sneakers. But the attention only fueled  demand: The Jordan 1s immediately appeared on StockX and have sold for  prices as high as $1,000.Nike declined to comment.Scott Cutler, the new chief executive of StockX, said more brands  would eventually have to pay attention to resellers. “Nike, Adidas,  Louis Vuitton, Gucci, Rolex, whatever it is, they’re certainly not  ignoring marketplaces and are not naïve to the fact that their  distribution channels are evolving,” he said.StockX grew out of Campless, a website that Josh Luber, a former IBM  consultant, built in 2012 to track sneaker resale prices on eBay. After  Luber delivered a popular TED Talk titled “Why sneakers are a great  investment,” Dan Gilbert, owner of the Cleveland Cavaliers, and a  co-founder, Greg Schwartz, acquired Campless.Campless eventually transformed itself into StockX, a marketplace to  buy and sell sneakers. From the beginning, it also positioned itself as a  “stock market of things.”On StockX, that played out with buyers bidding on items or purchasing  them for the lowest asking price from sellers. Once a bid was accepted,  sellers shipped their items to one of StockX’s four authentication  centers, which make sure the shoes are not fake brands and then send  them to the buyer. StockX makes money by charging sellers a transaction  fee. The company said its revenue had more than doubled in the last  year, with gross product sales topping $100 million a month. It has  expanded into streetwear and luxury goods like handbags and has more  than 800 employees.The site does not carry user profiles and ratings, but includes  detailed sales and pricing history for each item, making it more like a  stock market than eBay. In total, StockX has raised $160 million, with  its newest investors including General Atlantic, DST Global and GGV  Capital.One customer has been Usman Hasib, 32, of  Houston. A sneaker collector since he was 13, Hasib has used StockX to  amass 56 pairs of shoes worth around $25,000, according to StockX’s  “portfolio” tracker. He rarely sells his purchases.“I try to wear a different one every day,” he said.When Hasib recently was unable to score Nike’s Off-White Jordan 1  sneakers in retail stores, he paid around $1,050 for a pair on StockX.  Prices later surged to nearly $3,000 on the site. “It literally is like  playing a stock market,” he said.Cutler, who previously worked at eBay,  StubHub and the New York Stock Exchange, became an adviser to StockX in  2016. That was when he read about the company’s plans to create a Big  Board for commerce and products, modeled after marketplaces like eBay  and StubHub. So he decided to offer his help.“I immediately reached out and said, ‘Interestingly enough, I am the  one person on the Earth that knows all of those companies intimately  well,’” he said.He said StockX planned to use the new $110 million in capital to  expand internationally and push into selling newly released products.Luber, StockX’s founder, said he was stepping down as chief executive  but would continue to be the company’s public face. In a phone call  from Paris, where StockX was involved in Fashion Week, he said he now  had an even bigger vision than dropping new Jordans on StockX: He wants  to replace static retail prices — an “antiquated concept,” he said —  with a stock market style of shopping. In this setup, shoppers place  bids on new items and prices are determined entirely by supply and  demand.Luber said he recognized the concept might initially be a stretch.  “To tell all these brands that our idea is to get rid of retail prices  is crazy, but that’s the slow, big idea behind it,” he said.StockX is already moving ahead with the  notion. In January, it held an “IPO” — that’s initial product offering —  for a limited run of slide sandals created by Ben Baller, a celebrity  jewelry designer. The company used a complicated Dutch auction to  determine which bidders got to buy the sandals and at what price. It  resulted in an average price of $210 a pair — three times as much as  they would have cost at retail, but lower than the majority of the bids.After the release, other brands inquired about similar deals. StockX  now has half a dozen such releases in the works with other designers,  Luber said. “It’s not going to be an overnight thing, but it is  absolutely logical,” he said.In the meantime, StockX is expanding further into secondhand sales of  luxury goods such as handbags and watches, an area currently topped by  The RealReal, a San Francisco startup that plans to go public this week.Wilkins, the power seller of sneakers, said he didn’t plan to trade the shoes forever, but “right now it’s awesome income.”There is one drawback, he acknowledged. Once his hobby became a  business, he lost interest in getting the hottest shoes for himself.  “The more and more you sell shoes, the more and more you dislike shoes,”  he said.

Buy low-tops, sell high-tops: StockX sneaker exchange is worth $1 Billion

StockX is part of a burgeoning group of online marketplaces that have turned resales of sneakers into a kind of currency—and an increasingly big business

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