Will the Sneaker Resale Bubble Burst?

It is predicted that by 2030, the sneaker resale market will reach $30 billion. Seems like things are on the up… and up again for resellers, but what happens if the perceived value of rare sneakers disappears? With the effect that COVID could have on trade and supply, and with a change in consumer spending since the pandemic began in 2020, things may change. Obviously, this is a worry for resellers the world over, but for us genuine sneakerheads, it would actually be a good thing, right? We would still buy sneakers but actually be able to secure pairs at retail. However, to what extent are the brands complicit in letting this resale market continue to thrive, and what could they do to change it?

Sneaker resellers have been plying their trade for a long time, it’s just that in the past few years, since the introduction of apps like StockX and GOAT in 2015, it’s become a lot easier to shift your kicks, and there are plenty of entrepreneurs now making a living from it. Although possible to sell without the aid of the apps too, we can’t all be Benjamin Kickz; infamous in the resale business for his celebrity clientele. He fell in love with sneakers in 2013 at the age of 13 and by age 15, he was reselling. One year later, he made his first million. DJ Khaled, his first major client, put him in touch with the likes of P. Diddy and Drake, and the rest is history. Not everyone can secure that sort of high-profile network, so these new platforms are a massive draw for countless sneakerheads who have amassed collections throughout the years, as they now have an easy, safe means to make more than a pretty penny from their unworn sneakers.

Prior to the apps, punters had to buy from the likes of eBay where sneakers weren’t authenticated, you didn’t really know who you were buying from, and you weren’t sure if you were paying above and beyond the sneaker’s market value. You can now buy from StockX, where their three pillars are anonymity, transparency and authenticity – a model that seems to be working; in 2020 alone, they had 7.5 million trades, making them $1.8 billion. It’s a trend that doesn’t seem to be slowing down, with the global sneaker resale market estimated to be worth a staggering £4.2 billion as of 2019, which is a far cry from the $388 million eBay’s annual sneaker trade was worth in 2014.

StockX, founded by Dan Gilbert, Josh Luber, Greg Schwartz and Chris Kaufman, was valued at $1 billion in 2019, and as of April 2021, the value stands at $3.8 billion. This gives a clear sense of exactly how big this reselling beast is, and how fast it’s growing.

If you were lucky enough in 2012 to get your hands on a pair of the Nike x Kanye West collaboration Nike Air Yeezy 2 Red Octobers, which originally sold for $245 (£170), you could now resell these for just under £17,000 (Size US12). This shows explicitly the effect that hype, limited release and the right collaboration can have on the value of a pair of sneakers.

Diverse collaborations in particular have benefited the reselling world immeasurably. In the '80s and '90s, it was mostly professional athletes who would sign their name to a sneaker.

Nowadays, brands are collaborating with everyone from artists and rappers to fashion designers. This casts a much wider net and therefore increases revenue for the big brands as they continue to reach previously untapped consumers. Also, with more and more companies opting for casual office attire (think The Sole Supplier’s #tracksuitsnotsuits initiative), there is an increased need for variation in people’s sneaker collection.

Footwear is also top of the list when it comes to seized counterfeit goods. Worldwide, it accounted for 22% of all counterfeit goods seized by customs (according to statista.com); not all of which would be sneakers of course, but as recently as August 2020, a shipment of counterfeit Dior x Air Jordan 1s was seized in the US, valued at $32 million. That’s one seizing, of one shipment, of one model. Nike announced in 2020 that they would be working with US Customs and Border Protection by donating technology to help identify counterfeit sneakers. This is a major move by Nike, hoping to improve brand trust by ensuring their customers are receiving authentic goods. However, this is all interlinked. If Nike creates hype by limiting hyped collaborative releases, causing resale prices to skyrocket, it’s also having a mirrored effect on the counterfeit market too, further cementing reselling as a viable trade. For more information on the fake sneakers industry, make sure to read our full report here.

It’s been said that the resale market is out of the hands of the big brands, with resellers consistently using bots and teams of “cook groups” to flood apps and platforms, with brands unable to stop it. That’s not to say they haven’t tried. Some brands and retail stores have tested different methods of selling in the hope of getting the product in the hands of those who will treasure and wear them; such as online raffles and draws, and old school line-ups with the requirement that you wear your sneakers out of the store.

Although companies would leverage data to inform production levels, perhaps they worry less about whether or not true fans of the sneakers get them and more about fuelling the desire for sneakers as a commodity. There’s clearly an economic reason for it all, and big brands know what they're doing, but first and foremost, they’re businesses who need to turn a profit, especially in the uncertain world of today.

Unless the big players do something to combat the resale market, as Nike is with the counterfeit market, it will continue to thrive, just as the research companies are forecasting. Although, as these giants of the sneaker industry continue to grow exponentially, is there a reason for them to change at all? If they did change it, what would this mean for the brands? Would previously hyped models still be sought after? Would releases still be as highly anticipated? Would the need for counterfeit sneakers still be as prevalent as it is today? I don’t think so. And that’s the problem.

With Cohen Equity Research valuing the global sneaker market at $100 billion in 2020, and for the resale market, growing year on year, adding its own sizable contribution, it seems to be here to stay. So, hold tight on the thought of buying those hyped sneakers you want, when you want; that day is still a way off.