Shoes have evolved beyond mere footwear to become a thriving investment market. Sneaker resale has grown into a multibillion-dollar industry, providing an opportunity for individuals to turn their passion for sneakers into a profitable endeavor.
Whether you are an avid sneaker enthusiast or simply seeking to generate additional income, investing in sneakers can be a rewarding venture. However, it requires knowledge and understanding of the resale business.
In this article, we will explore the ins and outs of investing in sneakers, from finding valuable pairs to selling them for a profit.
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What does investing in sneakers mean?
Investing in sneakers is a unique way to make money by buying shoes and selling them at a higher price. It takes advantage of the growing sneaker resale market, which has seen impressive growth in recent years. According to research firm Cowen, the global sneaker resale market is projected to reach a massive $30 billion by 2030, with North America alone accounting for over $2 billion in sneaker resale as of July 2020.
The Evolution of Sneaker Resale
Sneakers have transcended their fashion status and transformed into sought-after collectibles and investment assets. This shift can be attributed to the influential partnership between Michael Jordan and Nike during the 1980s, which elevated sneakers to iconic status. The establishment of Sneaker Con in 2009 further solidified the sneaker culture, creating a platform for buying, selling, and trading sneakers across the globe.
The Rise of the Sneaker Resale Industry
Online platforms like eBay played a pivotal role in the growth of the sneaker resale industry by providing a global marketplace for enthusiasts. Companies such as GOAT Group and StockX have revolutionized the landscape even further. GOAT Group, backed by a $100 million investment from Foot Locker, offers both online and retail options for buyers and sellers. StockX, known as the world’s first stock exchange for consumer goods, has facilitated millions of sneaker trades.
Popular Sneakers in the Resale Market
The Air Jordan line, associated with Michael Jordan, continues to dominate the sneaker resale market despite his retirement. Retro Air Jordans remain highly sought after, with Nike consistently releasing new versions and colorways each year. Other sneakers gaining traction in the resale market include Nike Dunk Low, Hoka One One, and Adidas Yeezy Slide. The value of these sneakers has skyrocketed, with some pairs fetching thousands of dollars above their original retail price.
Market Potential and Challenges
Research firm Cowen predicts that the global sneaker resale market will reach an astounding $30 billion by 2030, with North America alone accounting for over $2 billion in sneaker resale as of July 2020. However, investing in sneakers poses challenges. Limited releases and high demand make it difficult to secure desired shoes for resale. Online releases often entail fierce competition with global buyers vying for the same limited supply. A sneaker’s potential increase in value depends on factors such as consumer demand, limited edition releases, and the condition of the shoes.
Success Stories and Strategies
Entrepreneurs like Ryan and Lindsay, who run the shoe resale business RNZY, have built lucrative enterprises by leveraging their knowledge of the market and utilizing platforms like YouTube and podcasts to share their insights. Successful sneaker investors emphasize the importance of staying informed, putting in effort, and cultivating a deep understanding of the sneaker resale landscape.
Pros and cons of investing in sneakers
Pros
- Potential for extra income
- Possibility of turning it into a full-time endeavor
- Opportunity to network with other sneaker enthusiasts and expand knowledge of sneaker history
Cons
- Highly competitive market
- Upfront costs, including buying shoes and necessary supplies
- Resale platform fees and limited availability of certain popular releases
How to invest in sneakers: 3 Steps
If you’re keen on investing in sneakers, it’s essential to grasp the intricacies of the resale business. Here are the steps you should take into account:
1. Understand the factors that affect sneaker demand and profitability
Identifying the most profitable sneakers to invest in requires understanding several key factors that influence demand and profitability. Consider the following:
Brand: Established brands like Nike, Puma, and Adidas generally have higher demand, making their sneakers more valuable. Collaborations between popular brands and public figures or celebrities often generate significant hype and increase the desirability of their products.
Condition: Sneakers in good condition hold greater value. Beware of attempts to artificially age or distress sneakers, as discerning buyers can often spot signs of wear and tear. When purchasing online, carefully review descriptions for any indications of damage or excessive use.
Release Year: Sneakers released more recently tend to command higher prices unless they have historical significance or associations with public figures or sports icons. However, exceptions exist, as factors like materials used can impact a shoe’s desirability.
Limited Edition: Limited edition sneakers have a higher demand due to their scarcity. Buyers are less likely to pay a premium for a pair they can easily find on store shelves. However, be cautious of overproduction, which can reduce the value of limited edition shoes.
Hype: Some sneakers gain extraordinary hype due to their association with celebrities or athletes. Historical significance, limited production numbers, or memorable moments can also contribute to hype. Sneakers associated with these factors often become highly valuable in the resale market.
Collaborations: Sneaker retailers frequently collaborate with public figures, actors, celebrities, and artists to create unique and sought-after shoes. Collaborations generate increased interest and hype, making them potentially profitable investments. Examples include Kendrick Lamar’s Nike Cortez Kenny IV and various collaborations between Alexander Wang, Cardi B, Donald Glover, Justin Timberlake, and reputable brands.
2. Find Profitable Sneakers
To invest in sneakers, you need to identify shoes that have the potential to be sold at a profit. While shoes are readily available, finding those that can generate substantial returns can be more challenging. Here are some strategies to consider:
Retail Stores and Online Platforms: Retail stores and online platforms are primary sources for purchasing new sneakers. Brands like Nike and adidas have developed dedicated mobile apps, such as SNKRS and CONFIRMED, respectively, which provide information on upcoming releases and allow direct purchasing. However, acquiring highly sought-after sneakers through these apps often requires luck, as competition is fierce. Raffles and social media contests are additional methods used by retailers to determine who gets the chance to purchase exclusive releases. Secondary sneaker resale websites are alternatives, but they often come at a premium, potentially reducing profits.
Alternative Retail Sources: Explore retail outlets, discount stores like TJ Maxx and Marshalls, and clearance sections of department stores and shoe stores. These locations often offer quality shoes at discounted prices. Thrift stores can also be a treasure trove, as people selling their old items may not be aware of the hidden value of their sneakers.
Sneaker Cook Groups: Joining a sneaker cook group can provide valuable insights and opportunities for successful investments. Cook groups consist of like-minded sneakerheads who collaborate to purchase and resell specific pairs of sneakers. These groups often share information on upcoming releases, offer tips for sneaker investing, and alert members to potential opportunities. Social media platforms are a great place to find these groups.
Reliable Proxies: When participating in limited sneaker drops, having reliable proxies is crucial. Free proxies may save money upfront, but they often lack the reliability necessary for successful sneaker purchases. Paid proxies provide dedicated support and ensure a higher chance of securing coveted sneakers.
3. Select the Right Resale Platform
Choosing a reputable platform for selling your sneakers is essential to ensure a smooth transaction and avoid payment or fraud issues. Consider the following factors when selecting a resale platform:
Commissions: Resale platforms typically charge commissions on each sale. Evaluate whether the commission aligns with your profit goals.
Transaction Fees: Many platforms impose transaction fees for using their services. Look for platforms that offer discounts or waive transaction fees for annual payments or subscriptions.
Customer Support: Opt for platforms that provide 24/7 customer support. This ensures that any issues with orders or sneakers can be promptly addressed.
Listing your sneakers on multiple platforms maximizes visibility, expands your potential buyer pool, and increases the likelihood of significant sales.
The Bottom Line
Sneaker resale offers a potential opportunity for people interested in investing money and earning additional income. However, it requires careful research, sourcing the right shoes, and a significant investment of time and energy.
For those not ready to commit to the complexities of buying and selling sneakers themselves, you might explore other options on alternative investment platforms. These platforms provide access to a diverse range of investment opportunities, allowing individuals to invest in stocks and ETFs without the specific focus on sneaker resale.
