Buy Low-Tops, Sell High-Tops: A Sneaker Exchange Is Worth $1 Billion

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 percent profit from over $1 million in sales.

The main website enabling Mr. 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 Mr. 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. On Wednesday, 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 LVMH-backed Stadium Goods for $250 million in December.

The fervor for sneakers has been fueled by “sneakerheads” and others who regard the shoes as investment assets. All told, the market for resale sneakers and streetwear in North America is projected to reach $6 billion by 2025 from $2 billion today, according to Cowen, an investment bank.

“The internet and eBay made reselling into a cottage industry,” said Matt Powell, an analyst at NPD Group. “Platforms like StockX made it into a business.”

For sneaker brands like Nike and Adidas, sites like StockX add a twist to the ecosystem around their most desired shoes, like Jordans and Yeezys. So far, the companies have taken a hands-off stance to the online marketplaces, with Nike’s chief financial officer saying in March that the company was not focused on reselling and had no partnership plans or business strategy for it.

But while the sneaker brands are not capturing any resale revenue, they benefit indirectly because that market generates buzz for them. So they carefully — and secretively — manage the supply of their hottest items, leading to wild spikes in resale prices, said John Kernan, a research analyst at Cowen.

“Keeping Jordans or Yeezys in cool markets, with demand far outstripping supply, is making them more relevant in the mass market,” Mr. Kernan said.

Nike teased the resale market last November when it released a pair of $160 Jordan 1s that bore a message: Their tongues said “WEAR ME,” their toeboxes said “PLEASE CREASE,” and their midsoles said “NOT FOR RESALE.” In a few cases, shop owners required buyers to wear the shoes out of the store, a move that damaged their resale potential since most of the resale sites sell unworn sneakers. But the attention only fueled demand: The Jordan 1s immediately appeared on StockX and have sold for prices as high as $1,000.

Nike declined to comment.

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 naïve to the fact that their distribution channels are evolving,” he said.

StockX grew out of Campless, a website that Josh Luber, a former I.B.M. consultant, built in 2012 to track sneaker resale prices on eBay. After Mr. Luber delivered a popular TED Talk titled “Why sneakers are a great investment,” Dan Gilbert, owner of the Cleveland Cavaliers, and a co-founder, Greg Schwarz, acquired Campless.

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