The new investment mantra: Buy low (top), sell high (top)
Shoe exchange StockX, valued at $1 billion, part of burgeoning ‘stock market of things’
Nic 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 per cent profit from more than $1 million (U.S.) 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.
This week, 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 LVMHbacked Stadium Goods for $250 million in December.
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 naive 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 cofounder, 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 centres, 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.
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, modelled after marketplaces like eBay and StubHub. So he decided to offer his help.
He said StockX planned to use the new $110 million in capital to expand internationally and push into selling new products.