Sneakers: The Billion Dollar Market

By Jonathan Lee In 1984, 22-year-old Michael Jordan signed a deal that would revolutionize sneakers forever. The NBA star chose a lesser contract with Nike over Adidas for half the money. One year later, the Air Jordan 1 was released and made $130 million in revenue. Today, these Air Jordan’s, along with other high demand sneakers such as Yeezy’s, are part of a resale market worth over $1 billion per year according to StockX. Resellers put these sneakers up for sale on platforms such as eBay, Facebook, or Craigslist, for 30%-1000% markup, potentially resulting in significant profit for the seller. Large scale resellers such as Sole Supremacy and 16-year-old Benjamin Kapelushnik make millions through the resale market. This markup may seem ridiculous but for people like Miguel, a high school junior, they are more than just shoes. “Being able to wear what MJ wore back in the day helps us connect with the athlete on a new level,” he says. However, reselling can be a high-risk practice. Like any investment, people take the risk of not making as much as they hoped or even losing money. Successful resellers must do lots of research and stay up to date on trends and the mind of the consumer. So how does one get these high demand sneakers? The first method is through online retailers such as Nike, Adidas, Footlocker, and Eastbay. Although buying a pair online seems convenient, in reality, the process is highly competitive because of programs called bots, which are designed to bypass online release procedures. By the time a person clicks “add to cart,” the majority of the inventory is already out of stock. A better method is filling out a raffle ticket at a particular retail store. If a person’s ticket is drawn, he or she is then eligible to buy the pair at retail price. The last method is camping. Buyers wait outside of stores that sell their releases on a first come first serve basis. Many will camp for hours, days, or even weeks prior to the release. Sneakers are no longer just footwear. If you do your research, there are profits to be made in the resale market of sneakers. So whether you want to be like Mike, or show off to your friends, take a second look at the sneaker market. It could fund your next vacation.

©2020 by On the Money Magazine Online

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