Diversifying your portfolio with sneakers? #makerbusiness

The secondary market for sneaker sales has been around for decades, and no shoes have been bought and traded more than Nikes. The digital age made it easy to buy and sell shoes that had limited releases, but it wasn’t until the last few years that things really started to change. The Los Angeles Times ran a story about how businesses like StockX have unified the market, turning sneakers into an easily tradable and speculative asset.

Dittrich said he was inspired to write the book when he saw the Sean Wotherspoon Nike Air Max 97/1 suddenly $100 off its asking price of more than $600 on StockX on news of a fresh production run.

“It happened in a day or two, a really quick reaction for something you wouldn’t think would adjust so quickly,” Dittrich said. “I was seeing true stock market style dynamics.” The shoe that originally retailed for $160 has since recovered, most recently selling for $950.

This is actually more in line with commodity trading. If this was like stocks, or an investment in a corporation, an increased production run should boost the value of the thing. But like commodities, an increased supply means lower prices. Nikes are trading like soybeans.

You might look at this and think, well, what the heck is Nike thinking? They are leaving a ton of money on the table by selling sneakers at below market rates. But Nike doesn’t want to be seen as a soybean trader, or for that matter, be seen as gouging its customers. It’ll leave that to its resellers.

“There’s been a lot of reasons for Nike to distance themselves from the secondary market,” Luber said. “They never wanted to say, ‘Oh, I want that extra $300.’ This is the major wedge in our relationship.

Nike is happy to make standard markups on its products, and counts on secondary traders to increase excitement for its rarer shoes, thereby making the brand that much more coveted. According to the LA times article, the secondary market is only about 1% of sneaker retail, which is a small price to pay for clean hands.

Read the whole article here.

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1 Comment

  1. Great editorial point, I love the additional perspective y’all bring to stories like this. Keep up the good work! ~Joe

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