Detroit-based StockX is among a cohort of startups that have sprung up offering resale services for 'sneakerheads' / StockX
Predicated on the same operating model as the stock market, StockX is pitching itself as a way for some of the biggest brands in sportswear to eschew traditional retail pricing and launch products direct to an engaged audience of streetwear fanatics. Its co-founder Josh Luber explains why.
With the global resale sneaker market set to hit $6bn by 2025, the likes of Adidas and Nike are launching new brands directly on platforms like StockX as they look to reach a burgeoning audience of ‘sneakerheads’.
Set up in 2016 as a ‘Stock Market of Things’, StockX allows people to resell limited-edition, luxury clothing and sneakers. The online marketplace prides itself on “better price transparency,” treating Yeezys and Jordans as if they are tradable commodities.
Drawing inspiration from the way financial stocks are negotiated, sellers list item at their desired ‘ask’ price, then interested parties then submit a ‘highest bid’ based on that valuation and the amount they’re willing to pay. Once a bid and an ask match, the shoes are shipped to StockX’s warehouse, authenticated by a human being and forwarded on to the buyer (all before the platform takes a fee).
“It means people never have to worry if they’re paying a fair price or not and sellers never have to worry about whether they’re getting a fair price,” co-founder and ex-chief exec Josh Luber tells The Drum.
“That's why the stock market is so efficient, there’s that element of transparency so much liquidity because people feel safe, people feel good about what they're buying,” he adds. “That’s what we’re doing for consumer goods.”
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Detroit-based StockX is among a cohort of startups that have sprung up offering such a service. Its rivals include Goat Group, Bump and Stadium Goods which also resell clothing and other goods in a similar way, forgoing static pricing to offer products at their market value. With a unicorn valuation of $1bn and investors like Eminem, Mark Wahlberg and Karlie Kloss, however, StockX is attracting financial backing and piquing the interest of advertisers.
In an environment where an unworn, sneakers from a limited run can be resold at three or four-times the retail price on the very day of their release, brands like Nike are looking to get a slice of the pie for themselves. StockX is accommodating this with “Initial Product Offerings” (IPOs) that let brands launch and sell new products directly into the market via blind auctions at what Luber calls a “true market price”.
“It doesn’t make sense to sell a pair of sneakers at retail price,” he argues, pointing out that the shoes on his feet (a set of Nike Air Jordan 1’s designed by skateboarder Lance Mountain) cost $150 when they were released.
“The were immediately worth and selling on StockX for about $400,” he says. “Is there any logic in that?”.
StockX’s first IPO was with Nike, with the release of Le Bron’s first retro shoe in 2016. In October this year, Adidas launched 333 pairs of its Campus 80s MakerLab via a StockX auction.
It’s largest IPO to date was in January 2019, with 800 pairs of slides from Ben Baller being released exclusively via the marketplace. The sales from the Ben Baller partnership resulted in an average price of $210 a pair for the brand; three-times as much as they would have cost at retail, though still lower than the majority of the bids on the site.
The model also remains true to the site’s original purpose, says Luber, leaving room for those people who win the IPO auctions to resell it make money if “that's what they want to do”.
From a strategy perspective, the move also gives StockX the opportunity to open up bigger revenue opportunities, giving it the chance to take a share of the wider global sneaker market which is set to hit $95bn by 2025.
“What we're trying to do for commerce which is blur that line between primary and secondary markets, and all of a sudden we start playing in a $106bn market, rather than a $6bn one,” Luber explains.
With over 1000 employees in the US and Europe, StockX currently sells across five verticals, including sneakers, streetwear, watches, handbangs and – it’s most recently launched one –collectables.
On where he sees most opportunity for short-term growth, Luber says the collectables market (which means everything from designer toys to baseball cards) is the one to watch.
“From the toy side we’ll end up selling everything from GI Joes to He Man and Star Wars, then on the card side we’ll end up with Pokemon and Magic Garthering. We’ll probably end up in Comic Books too – these are really similar products to what we sell today with a really similar customer base. From there, we’ll see, it’s all about that supply and demand construct and what works best.”
There is, of course, space for brands to get involved too: Topps baseball cards has already run its own IPO on the platform.
As for its own branding, StockX appointed its first-ever chief marketing officer Deena Bahri in September. Having held top marketing roles at Reebok, Birchbox and Helix, she’s charged with leading the firms brand, marketing, content and design teams.
Until now, it’s marketing has been a mix of above and below the line, as well as PR and experiences – including a bricks and mortar store in New York’s Soho.
Luber wants to up the focus on TV, but says digital is proving effective for now as the startup walks the line between performance and brand marketing.
“I would love to do so much TV, we do a little bit – we’ve tested three or four different spots… we were able to test different versions on digital TV before we put it on linear and started running them – usually before live sporting events like NBA and NFL games.
“But it’s just really hard to measure versus Instagram or Google Shopping or anything else. It’s a little tenous at this stage in our growth to say we’re going to spend tens of millions on linear TV. We know how to do digital really well and scale it.”
Luber spoke to The Drum during a panel at Web Summit in Lisbon, you can find all of our coverage from the event here.