Sneaker Site StockX Grows into $1 Billion Operation

August 27, 2019

Today’s top sneaker brands like Nike and Adidas are constantly releasing new designs in limited supplies. As a result, many “sneakerheads” often miss out on the latest styles while they’re available at retailers. That’s where resale sites like StockX come in. Unlike eBay, StockX doesn’t rely on straightforward auctions to move its merchandise. Instead, the company treats sneakers like tradable commodities that can quickly gain and lose value. For example, a pair of Nike’s Jordans could debut on StockX at a few hundred dollars and climb as high as $3,000 within a few days. 

In fact, financial experts estimate that the North American sneaker resale market will be worth $6 billion by 2025, up from $2 billion today. StockX is worth about $1 billion after recently receiving a $110 million venture capital investment. “The internet and eBay made reselling into a cottage industry,” said analyst Matt Powell. “Platforms like StockX made it into a business.” On StockX users either submit a bid on a pair of sneakers or purchase them for the lowest asking price. Once an offer is accepted, the seller sends the shoes to one of the company’s authentication centers to ensure they are not fakes. If everything checks out, the sneakers are delivered to the buyer with StockX receiving a transaction fee. 

The selling price of that particular pair of sneakers is then factored in to its overall value on the market. StockX keeps detailed sales and pricing histories for each item it lists, allowing it to operate more like a stock market than a traditional auction site. Thanks to this system, StockX earns about $100 million in gross sales per month and employs more than 800 people. The company has even expanded into selling other types of streetwear as well as luxury items. As for the big shoe brands, they have yet to enter this lucrative market but still earn plenty of exposure from platforms like StockX. “Keeping Jordans or Yeezys in cool markets, with demand far outstripping supply, is making them more relevant in the mass market,” said market researcher John Kernan. 

Questions:

  1. How does StockX differ from traditional resale sites like eBay?
  2. How do platforms like StockX help big shoe brands become more relevant to mass market consumers? 

Source: Erin Griffith, “Buy Low-Tops, Sell High-Tops: StockX Sneaker Exchange Is Worth $1 Billion,” The New York Times, June 26, 2019.

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