The sneaker resell market is changing. Here’s how.
The sneaker resell market has been steadily growing for the last several years. It’s primarily growing for two reason. One reason is that the general popularity of the sneaker culture is penetrating more parts of the country — thanks to the internet and social media. Another reason for the growth of the sneaker resell market is, simply, its profitability. We’re living in a time where the resell premium of moderately anticipated sneakers is exceeding 100%. This, of course, is a result of Nike purposefully skewing the supply/demand of their sneakers in a way that cultivates exclusivity, and thus higher resell values. The emergence of these higher resell values has created a secondary market in which prices are determined by the collective of individuals, rather than the executives at Nike.
Because prices in the secondary market are set by individuals, they are subject to constant change. As people begin to think that a sneaker is “washed up,” their prices will go down. If a shoe that no one has talked about suddenly becomes popular, the price of those shoes will go up. As the psychology of the individuals in the secondary market changes, so will the prices. Thus, a knowledge of how the market behaves overtime with respect to relative price changes can be lucrative. However, most people don’t understand the market down to this detail. But even for the people that do have a good understanding of the mechanics of the secondary market, applying that knowledge to make money is very difficult.
Most of the profit that’s being made on the secondary market is by people who are able to buy sneakers for retail prices and sell them for a premium. These are the people that wait in long lines, enter lotteries, use computer bots, or know someone who’s an insider. But if you’re not one of these people, it’s practically impossible for you to make a significant amount of money in the secondary market. Or is it?
Something interesting is about to happen for the sneaker culture. There will soon be a shift in who makes most of the profit in the secondary market. For a long time, it have been people who are able to get their hands on sneakers at retail price. However, the power will soon shift to those who are knowledgeable about the mechanics of the secondary market — the people who are able to quantitatively and/or qualitatively forecast relative changes in the price of sneakers. But what will enable these subset of people to make money using their expertise? Sneaker trading.
Unlike the retail market, prices in the secondary market are not stable. Sometimes prices will go up and sometimes they’ll go down. If you understand what’s causing these price fluctuations and are able to predict them ahead of time, you can make some serious cash by way of arbitrage.
I’ll give an example to make this clear. Let’s say you have shoes X that someone offers to trade you with shoes Y. Is it profitable to make this trade? Well, you know that currently shoes X and shoes Y cost almost the same price on the secondary market. You also know that the price volatility of shoes Y is higher than shoes X’s — which means that the price of shoes Y is more likely to change than shoes X (your shoes). You’ve also looked at some data that shows that the price of shoes Y has been on a steady incline over the last couple of months. After looking at these facts, even though the current price of shoes X and shoes Y are almost the same, you will go ahead and make the trade because the data indicates that the price of shoes Y will increase. If you’ve made the right prediction, then the profit is yours. Weather your prediction model is quantitative, qualitative, or both, the inefficient relative prices of sneakers are waiting to reward the individuals who will make them more efficient.
There is a huge opportunity for people to make money trading sneakers. But for a long time, this opportunity has been locked up by fear of fraud and inefficient solutions. For the first time ever, Sneaker Connect is unlocking this opportunity. By providing a platform that allows people to trade sneakers safely and reliably, we are opening the door that will shift the dynamics of the secondary sneaker market.
I’ll write more in-depth blog posts about this very exciting subject in the future, so make sure you’re following us. Also, if you haven’t already done so, go to our website and signup to be the first to use our app.