StockX: The Rise of a Sneaker Empire
Once upon a time, most people would head to eBay’s website to resell sneakers. In 2015, the world that “sneakerheads” once knew was changed forever upon the launch of StockX, which is currently one of the most trending resale channels worldwide.
Over the past five years, StockX’s co-founder, Josh Luber, built his company into a billion-dollar empire. I can’t say I’m surprised, considering there are sneakers such as the Nike Dunk SB Low Paris listed for $20,000+ on the website. Since I had been looking into purchasing a pair of Air Jordan 1’s recently (Kylie Jenner may have slightly influenced this decision - don’t judge), I decided to test out the StockX website for myself for the first time. With over 15 million monthly active users reported in 2019, I admit that I’m a bit late to the game!
Upon creating an account and browsing through some sneakers, I realized not only how aesthetically pleasing and user-friendly the app was, but how unique the concept of designing StockX to be a "stock market of things" is. StockX users are able to bid and sell items with prices constantly going up and down according to consumer value, mimicking the actual stock market. As I searched for the perfect pair of shoes, I noticed that all listings for a single item are consolidated into one page. Directly on the page the highest bid is listed to help gauge what price to bid, along with historical prices and a “buy now” option for the more impatient users (yes, this is what I ended up doing—who has time to sit around and wait for a bid to get accepted?!). I found this single listing system and transparent pricing concept (similar to buying shares in the stock market) to be much more efficient than using other resellers, such as eBay.
After choosing the Air Jordan 1 Retros in Dark Mocha, I added them to my cart only to find that the price had increased by $45 due to sales tax, processing fees, and a hefty shipping price (yikes). Although I was bummed about having to pay so much, I felt safer purchasing sneakers from StockX than eBay. This is because unlike eBay, StockX has an extensive authentication process to ensure that the products are real and in new condition. Since I’m nowhere near deeming myself a sneakerhead, I wouldn’t trust that I’d be able to tell whether a pair of shoes from eBay was real or not.
Within two weeks after clicking “buy,” I had received an authentication verification email, tracking information, and my pristine, new shoes on my doorstep. Although that seems like quite some time to wait for a pair of sneakers, the seller first ships the product to StockX, where it then goes through an authentication process, and finally is sent to the buyer (unlike, for example, eBay, where the product is sent directly from seller to buyer). The overall process was a breeze, considering that I didn’t have to interact with the actual buyer in any way—StockX is the professional middleman in all of their transactions. After using eBay in the past and having to wait days for sellers to respond to requests for clearer photos, I appreciated the fact that StockX didn’t need to involve the seller because there were no further inquiries to be had. From the crisp photos to the overall style of the app, it’s obvious that the graphic designers at StockX know what they’re doing.
Although StockX has become an exceptional sneaker reseller, they didn’t stop there—they now sell other luxury items including handbags, watches, streetwear, and collectible items. Since the pandemic hit, luxury retailers have been heavily focused on online sales—Bain & Company recently released that the worth of their online luxury purchases went from $39 million in 2019 to $58 billion in 2020. StockX’s wider product range release came at a great time, as the market for luxury goods is becoming increasingly more competitive (and at a faster rate). While eBay has been doing this long before StockX launched, another competitor, GOAT, has yet to expand their offerings beyond just sneakers. While some may appreciate resale websites staying focused on their niche market, having a variety of items has the potential to increase revenue drastically by attracting consumers outside of sneakerhead networks, a community created via the common obsession of sneakers. Most likely coined in the 1980s amidst the release of Air Jordans creating a new status symbol, this term has sparked some controversy in the sense that it typically refers to males. However, women are becoming increasingly more prominent in this category, moving this term in the direction of becoming more gender-neutral and pushing brands to create more “exclusive” sneakers in women’s sizes.
As of June of 2019, StockX hit the $1 billion valuation mark, while GOAT has officially been valued at $1.75 billion as of September 2020. Although we can’t be certain, this valuation difference could be in part due to the differences in marketing tactics between StockX and GOAT. While StockX has invested in expanding their marketplace, GOAT has taken a different approach by continuing to focus on their niche sneaker market. To do so, GOAT Clean was launched in 2018, which offers worn, rather than brand new, sneakers that have been professionally cleaned and graded on condition. Additionally, in 2018, GOAT merged with Flight Club, a sneaker consignment shop with physical locations, in order to attract retail audiences as well as the digital market. While the $750 million difference in valuations is a huge deal, it’s possible that StockX could catch up to, or even surpass, GOAT due to their broadened range of product selection creating traffic from more than just the target market of sneakerheads (or vice versa… Battle of the marketing strategies?).
Aside from this extension to StockX’s product range, in 2019, they did something no other reselling marketplace has yet to replicate—they launched the Ben Baller Did The Chain slides, their first ever “IPO” (initial product offering). Within the three days that these slides were active on StockX’s website, 10,439 bids were placed, although only 800 pairs were made. While bids ranged from $50 to over $1 million (?!?!), StockX decided to get creative by implementing their unique take on a blind Dutch auction. The price of the slides was not determined until all bids were made, a method used to find the “fair” selling price according to supply and demand. To explain, for each size and color of the slides, a certain amount of bids “won.” The lowest bid of that quantity, called the clearing price, is what the highest bidders of that specific size and color of those slides paid. It’s safe to say the $1 million+ bidder was overjoyed to find out that they would only be paying in the hundreds for these slides.
This shoe drop was a clear example of how StockX’s marketing tactics have made their target consumers insanely predictable in which they’ll bid their life savings on an item if it has any association with being “exclusive.” Although StockX works to make their products accessible to the general public, I’m sure you can guess who their main consumer base is: people who care about rocking the latest trends, whether it be sneakers, streetwear, or handbags. StockX has seen their customers tend to be millennial and Gen Z. Their market research indicates that 33% of Gen Z men and 26% of Gen Z women would refer to themselves as sneakerheads, and that upper-income Gen Z men rank StockX in their top 10 favorite websites.
With the rise of the internet, and specifically social platforms, it only makes sense that these populations would be so invested in the streetwear culture that is reinforced by platforms such as Highsnobiety, which inform users on the latest and most exclusive news in fashion. We all know that person who has their Nike SNKRS app notifications on at all times and has four different electronic devices in front of them when a dope pair of shoes drop, and with internet being so quick and accessible, news of these trendy items reaches an exponentially higher number of consumers than in past decades.
But this begs the question, how ethical is it to resell a pair of $180 sneakers for $3,000 just because only a limited quantity was released? Is this cutting off lower to middle class consumers, making the “exclusive” factor a symbol of status and wealth? Is this an unfair way of stealing profit from the manufacturer? Although putting it in this light surely makes the sneaker resale industry seem doom and gloom, others may shine light on the fact that this is the law of supply and demand. If companies are going to be innovative and make trendy pieces, an unlimited amount cannot be supplied. This initiates a cycle of everyone buying the exact same item only to become sick of it, because the uniqueness factor has been taken out of it. Quickly, these consumers will move on to buy the next “cool” item, leaving that one in the dust. While, as consumers, feeling the need to constantly keep up with trends is highly exhausting and expensive, from the producer aspect of it, this is what makes many companies thrive. From Josh Luber’s perspective, saving up for a pair of rare sneakers is the route to take, as "Sneakers are worth more than gold today, and will always be worth more than gold. Always and forever..."
As e-commerce markets have continued to expand, consumer power has followed suit. The options for selling and buying secondhand items is endless—from eBay, to Mercari, to StockX, to Facebook Marketplace, there’s bound to be a website that fits everyone’s likings. This freer marketplace that has been created has given consumers their own choices in terms of navigating the resale process. This is not only beneficial to consumers trying to make a profit, but also for StockX and other up and coming resale websites that are able to alleviate the stressful aspects of selling items on the internet.
With the global sneaker retail industry predicted to be worth $30 billion by 2030 and StockX soaring to the top of the food chain in recent years, it’s hard to bet against them. If you’ve saved up some money and are in the market to buy a new pair of sneakers or handbag, StockX might interest you. Is it expensive? Yes. Is it worth it? That’s based on personal preference. Will the classic symbol of love shift from gifting gold jewelry to a pair of rare sneakers come the rise of the next generation? Only time will tell…