How sneaker fans are cashing in on the $2bn resale market for limited edition trainers
The FT meets the key players and influencers in the obsessive world of sneaker resale, where trainers like those from Nike Air Jordan and Adidas Yeezy can make a fortune for entrepreneurs that treat shoes like stocks on platforms including StockX
Directed, filmed and edited by Donell Newkirk; additional camera Ben Marino, Willie Garrett Newkirk; original soundtrack and music by Dirty Blonde
Transcript
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[MUSIC PLAYING]
JOE LAPUMA: The reselling aspect of sneaker culture has changed everything
PJ TUCKER: I think, now, is the biggest time for sneakers in maybe it's ever been.
JOHN KERNAN: There's people taking money. And rather investing in a traditional asset classic stock or bond, they're buying sneakers. And they're investing in that sneaker. And they're selling it on an exchange later.
UPSCALE: There is a lot of money to be made in this game. You could make 50 grand in a weekend, man. I've seen people do it.
JOHN KERNAN: We estimate that there's over $2 billion in gross market value overall. Footwear being resold, we think StockX is the leader in this market with gross market value north of $1 billion.
JOSH LUBER: We connect buyers and sellers the same way that the world's stock markets connect buyers and sellers.
SCOTT CUTLER: Just like Apple doesn't trade at the same price every single day in the market, nor does a particular sneaker trade for the same price from day-to-day.
JOE LAPUMA: Some people's closets, you look at it, and it's stock portfolio.
JAYSSE LOPEZ: There's some shoes I love so much, I got 41 pairs of the same exact shoes.
WILLIAM DEBORD: Resell's all about product allocation. It's all about who can get it and where you sending it that the person is willing to pay you more.
JOHN KERNAN: We think this market can grow from $2 billion to $6 billion in a relatively short time period.
[DING]
[MUSIC PLAYING]
[? JOE LAPUMA: ?] These days, sneakers are more like stocks than your average trainers. Prices up and down like Wall Street, some experts buy the sneaker resale market at over $2 billion. And it could be $6 billion by 2025.
[MUSIC - KIRKO BANGZ, "DRANK IN MY CUP"]
(SINGING) Uh, got this drank in my cup. Oh, I fill that cup, I fill that cup.
[? JOE LAPUMA: ?] We're going to take a deep look at the industry, show you who and what is making it move.
(SINGING) Is it lost, baby, tell me what you plan on it.
JAYSSE LOPEZ: I had lost a job and something that I enjoy doing. And I was just trying to find another job, and I figured selling sneakers would hold me over until I found that other job. Well, that other job never came. And we wind up opening this bank account, get a little $2,500 lot of credit line. And the day I signed the lease to my store, I had $40 to my name.
[MUSIC PLAYING]
So in four years, it jumps from $40 to 20 million in sales to 2019. We wind up teaming up with American Eagle, and I sell part of my business to American Eagle. And I got Urban Necessities inside American Eagle.
JOHN KERNAN: There's ultimately some companies here that are earning very good economic returns on facilitating these exchanges. And I think you're seeing investors look at these businesses very seriously.
[MUSIC PLAYING]
UPSCALE: ComplexCon, 6:00 AM right now. There's literally nobody here yet. I will be the first person to purchase the Safari Pack that is coming out-- three new different shoes, should be very profitable. They cost around, I think, $230, retail-- should be able to sell for about $600.
Let's see how many we could get. We're also going to be heading to Chinatown market. Converses are going to be $100. Should be able to sell those for about $400 to $500. But yeah, I can't really disclose how I'm here so early. But shout out to the plug. Thank you.
JOSH LUBER: The amount of money you can make is essentially unlimited.
JOHN KERNAN: And there are sneaker resellers that we've seen, they're earning several hundred thousand dollars a year.
JOSH LUBER: The way to make the most money is if you can acquire these shoes at retail.
JIMMY: We find out where is it going to release? Who has the shoe? What retailers? How limited is the shoe? And if we possibly get it before anybody else, we are the ones that create the market.
UPSCALE: There's this thing called "backdoor" now. Backdoor is pretty much getting a shoe early from a retailer or somewhere like that or someone that works inside.
JOSH LUBER: The chances of any average person being able to buy a pair of the shoes that are highly coveted is effectively zero.
PJ TUCKER: I have no idea how kids get on there. On the resell, it's like, yo, what are y'all doing? It's crazy.
[MUSIC - DIRTY BLONDE, "DEMONS"]
(SINGING) Demons in my heart, surrounded. But they'll never take me. Drowning, you're my lifeline. I'm drowning. You're my lifeline, baby.
UPSCALE: Buyers reach out to us. It's because they know the shoe is going to go up in value, and you know what the hype is about, especially now with all the marketing that's going on with social media and stuff like that. We're tracking the markets, let's say the StockXes, the GOATs, eBay, and we're trying to compete with their prices. We try to buy every pair that comes out of the store.
[INTERPOSING VOICES]
[? CONVENTION WORKER: ?] Get your ticket.
UPSCALE: Thank you.
[? CONVENTION WORKER: ?] Remember, you guys heard me already?
UPSCALE: Chinatown market. Number one, going to be getting these Chucks.
[? CONVENTION WORKER: ?] Are y'all ready?
UPSCALE: Hey, yeah, yeah. Yeah. So, right now we're getting the Chinatown market UV Chucks. They actually change colours, pretty dope shoe, $100 retail. What's going on, man?
CASHIER: What can I do for you?
UPSCALE: I'll take a size 10 high. So I just got a size 10, high, in the Converses, a very, very dope shoe. As you can see, retail is $100 on the shoe. Should be reselling for about $500, $600. If you have a lot of capital, you're able to hold onto them, and then eventually they'll end up going up, stuff like that. This is the shoe right here. You want to flash the UV light? They change colours.
DYLAN ARYVAND: I'm Dylan Aryvand, I'm 13 years old, and I started reselling when I was eight years old.
INTERVIEWER: How much money do you think you've made since you started reselling, if you could estimate?
DYLAN ARYVAND: Probably in the five digits. I mostly sell on StockX, Goat, and the Sneaker Con app.
SCOTT CUTLER: We have a marketplace of buyers that come to our sites and look for the most sought after sneakers. Those buyers have the opportunity to either buy it at its market clearing price, or to be able to set a price at which they are willing to buy that item. On the other side of the marketplace, we have a really dynamic marketplace of sellers. Consumers, individuals, businesses, brands that are essentially selling that same product, and also choosing a price at which they want to sell at.
JAYSSE LOPEZ: I think it's great, because it's become the Kelly Blue Book of sneakers, and now everybody has a fair guideline that everybody has to try to abide by. Because although you might be able to get someone to justify your added expense or different price, this polices what is essentially like the wild, wild west.
JIMMY: If you think the sneaker business is worth $1 billion, just imagine what the counterfeit sneaker business is worth.
UPSCALE: The counterfeit business is insane right now. Literally, you see every single shoe being counterfeited, and they sell. People in the streets are wearing them, and you can't really tell. We literally only buy from stores.
SCOTT CUTLER: The only thing that can really sell on our platform is somebody that has bought and held a shoe that's in perfect condition, that we then authenticate to the buyer.
JOSH LUBER: Seller sends it to us, we authenticate it, and make sure not only that it's real, but it's the right size, the right condition, it is what it's supposed to be. And then we send it to the buyer.
JAYSSE LOPEZ: StockX, I love y'all, for real. Love y'all. They changed the whole way I operate.
UPSCALE: We end up finding a way to get multiples of these shoes. It's literally crazy the way we get it, but we get a lot of numbers in there.
[MUSIC - DIRTY BLONDE, "WOAH VICKY"]
(SINGING) I've been my pack, baby. Virgin Louis V on my back, baby. Living fast, dying slow, that's the catch, baby. Suicide doors, [MUTED] around and crash, baby. I do the dash, baby.
UPSCALE: These are some of the purchases that we made. A lot of Converse, these were pretty much the two sneakers of the event that are actually profitable. Yeah, I ended up getting a lot of pairs. Yeah, this was pretty crazy, I ain't even gonna lie, especially for being by myself. None of my team is out here, so I literally did all of this by myself. $870 off Converses, that's pretty good. That's good, right there.
[? JIMMY (ON PHONE): ?] Yo, where you at?
UPSCALE: I'm at the hotel. Yeah, I'm at the hotel.
[? JIMMY (ON PHONE): ?] Yo, go back to ComplexCon.
UPSCALE: I'm going back right now. There's going to be a stash, right?
[? JIMMY (ON PHONE): ?] Yeah, go back there now. Hurry up.
UPSCALE: All right, I'm coming now. I'm coming now.
[MUSIC - DIRTY BLONDE, "WOAH VICKY"]
(SINGING) I don't want no drama.
UPSCALE: They're allowed? No?
[MUSIC - DIRTY BLONDE, "WOAH VICKY"]
(SINGING) Don't put up with no [MUTED] drama. I got the heat of a [MUTED] conner. And you keep the heat while I keep you hotter.
UPSCALE: Where's he got-- where's that?
SUBJECT: Where's parking lot 41?
UPSCALE: I don't know. Wait, let me think. Where the [BLEEP] is that at?
JAYSSE LOPEZ: Through Sneaker Con, I've been able to-- I've come to every single show for the last four years. And in the last two, three years, I've probably spent $10, $11 mill buying shoes. Now keep in mind, I started with $40.
WILLIAM DEBORD: We just wanted to come together and start, create a place where resellers could come together with buyers and just buy, sell, and trade.
JAYSSE LOPEZ: This is the only industry in the entire world with anything that has to do with buying, selling, trading a good that accepts all walks of life. Certain retail, you walk into the store, the second you walk into the store, no matter what-- It don't matter how you dress, it don't matter how educated you are. The second that stereotype hits and you ask for something in that store, they're not going to help you, bro. They not. That happens to me all day long, it's the reason why I dress this way. And more women need more shots.
CUSTOMER: You guys got any other? Other than the zebras, y'all got any other size? I can't find them in the size right here.
JOHN KERNAN: It's a young, male-dominated marketplace at this point. That's not to say women won't, and girls won't become more active in this marketplace. Nike, Adidas, Jordan, they're making great shoes for girls too, and women, and I think that women are a major focus inside Nike in particular.
JAYSSE LOPEZ: That's where the influencers need to go, because those are the people that are going to get more support than the athlete. The days of the athlete being the influencers, those are, that's becoming extinct.
UPSCALE: The way a shoe builds hype or goes from a $200 to a $1,000 shoe or anything like that, I would say first, it's going to be social media.
JOE LAPUMA: The roll-out plans that brands are doing now, and the competition between the major brands to make sure that their endorsers are doing something different to launch a product is just adding hype to this stuff.
UPSCALE: Once the everyday human sees these people wear these shoes, they want the shoe. And that's when the resell comes in, because you can't purchase these shoes, and that's where we come in, because we're going to be the people that have the shoes.
WILLIAM DEBORD: Right now, the reason that a lot of kids, especially the really, really young kids are able to do this, is because everything went digital.
UPSCALE: So the stash, you literally have to run to a location and scan everything with your phone, and that gives you the chance to purchase the shoe. Let's get it. Let's go, let's go. You know what time is it.
JOHN KERNAN: Resellers are making the most money out of this, for sure, right now. The manufacturers, they're ultimately earning, like I said, halo benefits. The hype and the buzz that's getting created in resale is 100% filtering back into the primary markets.
PJ TUCKER: It's going to be interesting to see how the companies start to try to monetize. You see now, they're putting out more pairs, flooding the market with it.
JOSH LUBER: The real business is ultimately working with brands to become an alternate retail channel, to literally IPO products into existence, where brands can release products at a true market value as opposed to this very antiquated concept today, of retail price.
JOHN KERNAN: These limited edition scarce Nike, Jordan, Yeezy, Adidas sneakers are a form of creative self-expression for a demographic, these Gen-Z, millennial consumers that are really obsessed with being unique and differentiated.
PJ TUCKER: There's no shortage of fans, of people that want this stuff now.
JOE LAPUMA: Everyone is always waiting for the sneaker bubble to burst, and I don't think it's going to happen anytime soon.
DYLAN ARYVAND: My love for sneakers will never go away.
JAYSSE LOPEZ: I think I'll forever be tied to Sneaker Con.
UPSCALE: There is a lot of money to be made in this game.
JAYSSE LOPEZ: There's thousands, if not millions of transactions happening online per day. It's nowhere near a bubble, bro.
JOE LAPUMA: I think that as StockX or Stadium Goods get these evaluations, all it does is make people who want to invest money in soaring markets more aware.
JOSH LUBER: We think this is, kind of for lack of a less cliche way of saying it, a truly revolutionary form of commerce. This doesn't exist outside of the actual stock market. And we think that this is, not only will it exist in 10 years, but this is logically how these certain products should be sold.
JOE LAPUMA: Our parents may not have been paying attention to, this Jordan is coming out, or this AirMax is coming out. But when they read something in the Financial Times, or something else that there is a billion dollar industry on the secondary market of sneakers, that's something that they're paying attention to, and it's opened up the eyeballs, it's opened up sneaker culture to the masses.
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