THE PRE-INTERNET SNEAKER GAME: The Black Market — UnderWorld of the Sneaker Hustle Pt1.
“EVERYBODY Knows there is a BLACK MARKET out THERE”
When speaking on the BLACK MARKET in the SNEAKER GAME I am not referring to a color way, or a consumer segment. Not even a shopping outlet focused on food within a culture. The BLACK MARKET for the SNEAKER GAME is a dynamic underground network focused on the unauthorized distribution of sneakers at retail. The BLACK MARKET SNEAKER network is complex and takes many shapes and forms. With this entry I will focus on breaking down this network, how it developed and how it works.
I remember walking down Fulton Street in downtown Brooklyn, New York with Jerry Alloco, my Nike LE footwear partner. During our stroll I became alarmed at the amount of Nike Footwear products including LE that was displayed in unauthorized accounts. From Mom and Pops general stores to the Avenue Jeweler, everyone had what we were calling LIMITED EDITION. I turned, looked at Jerry and said, ”We have a problem.” To which he replied, “Welcome to the SNEAKER BLACK MARKET”.
When brands have goods in high demand with controlled distribution, the development of a BLACK MARKET is a natural occurrence and sort of a measuring stick that your brand has arrived. We would later develop strategies and monitor sell-thru with retailers to gain a bit more control.
The original BLACK MARKET started within various industries as a way to circumvent government control, similar to a liquor prohibition and drug game. It was a way of enabling the free market to work, thus enabling people to hustle. The sneaker industry is not monitored by the government, but by the brands. Unlike some of the aforementioned early BLACK MARKET industries in which the consumer is also committing a crime in the transaction; in the sneaker world this is not the case, so all of the risk is a one-sided affair. But when viewing the addiction of today’s sneaker consumer, in many ways it is like a drug with the addiction being sneakers. This game is in epidemic proportions with over consumption, theft, mass lines to get the goods, and a lack of prioritizing real life needs especially in urban environments. Sneakers are a currency on many levels, but to be blunt, Sneakers are very similar to a DRUG aka “THE BLUE MAGIC”
The underworld of the BLACK MARKET SNEAKER GAME is driven by supply + demand + opportunity within an untraditional retail platform. The segments within the Sneaker BLACK MARKET includes: TRANSSHIPPING, CLOSEOUTS AND COUNTERFEITS.
All major brands attempt to manage where product is sold today, but in the early to mid 80s before computers, forecasting, futures systems, and retail segmentation in the industry, the environment was a bit like the WILD WILD WEST. Early on the sneaker business was an emerging industry until 1984 when Michael Jeffrey Jordan was drafted in the NBA as a third pick by the Chicago Bulls. An under-developed industry, when MJ came along so did the modern day signature sneaker business model, which today is a standard. With this new standard also came a demand never before seen at retailers with brands not being prepared to take on this business evolution.
Defined within the industry as the wholesaling of authentic products by authorized retailers to unauthorized retailers and wholesale brokers, TRANSSHIPPING is the original practice of the SNEAKER BLACK MARKET. When products are in high demand and retailers have access to booking orders beyond the demand in their store, they can make quick dollars at reduced margins by selling to the retailers who do not have an official brand account. Plus the retailer is awarded discounts on their official orders for meeting the target bookings set by the brand; making the benefits two-fold. Additionally, TRANSSHIPPING is classified as the selling and/or exchanging of products between authorized retailers without consent from the brand. This practice was a strategy used by retailers who could not move a particular style in their market while the receiving retailer in another market is experiencing success with the designated product, a sort of inventory management strategy when the actual brand would not allow returns. The retail business is a true hustle and you have to have game to survive, much like a drug dealer does in the streets.
In researching the moves within the BLACK MARKET, major key players during this early era explained to me that often times brands themselves played an interesting role in the development of the TRANSSHIPPING distribution model. In its infancy the sneaker industry had no real formula on how to build and manage day-to-day business and sales were managed by outside agencies. During this era, when brands did not meet a bookings goal they would ask the sales agency to go back into their accounts and sell more goods so they could hit their numbers. The retailers were in a way forced to take the additional pairs, even knowing they did not have enough demand in their stores to sell the inventory — this game was the birth of TRANSSHIPPING. The sales reps knew retailers would need to hustle off this product by all means necessary. With their compensation being commissioned-based they welcomed their super-sized checks, and in some ways “hit the number” was much like winning the lottery. It has been rumored reps during this era were so busy and swimming in income, they would have multiple months of un-cashed commission checks in their desk in excess of $20,000 to $30,000 each. Upon me entering the industry in 1994, it was a new day with sales agencies being brought in house and reps now being paid on a salary structure — but I knew a few reps who made such a fortune already that they owned their own planes and had several vacation homes. This truly was the golden era for sneaker sales reps and sheds light on one of the hidden components of how the BLACK MARKET materialized.
Trading out and/or selling styles with authorized retailers and small unauthorized accounts was the initial avenue in the world of TRANSSHIPPERS. Like all businesses it evolved, particularly with the explosion of the West Coast SWAP MEETS; which quickly became the top customer of TRANSSHIPPED goods in the Sneaker World.
Raised in Southern California I can speak directly into this. The SWAP MEETS in my youth were held at drive-in movie theaters during the weekend, typically in lower economic areas. Looking for additional avenues to create revenue streams during the day, someone came up with the savvy idea to host individual vendors selling mostly used items in a drive-in setting with vendors lined up in parking slots, very similar in fashion to the cars that would later that evening post up to check out the latest flick. SWAP MEETS soon evolved to being the source of new goods targeting younger consumers, including the basic West Coast staples — the white PRO CLUB t-shirt, customized hats and shirts embellished with nicknames or the commemoration of a local fallen “Hood Hero”. The SWAP MEET also became a major source of music including the drop of the latest mixed-tape and the launching pad for new artists trying to get their music in the streets. It was at the Roadium SWAP MEET, an abandoned drive-in theater in Gardena, California, where Eazy-E marked the birthplace of the notorious rap group, N.W.A. After listening to a 12″ he copped by Dr. Dre’s former 1980s rap outfit World Class Wreckin’ Cru, Eazy, who was impressed by the album, reportedly reached out to the store’s proprietor and brokered a call with Dre, which soon lead to the formation of Ruthless Records and N.W.A. Then as they say, “The rest is History!”
Eventually as the goods improved and the crowds grew, the weekend-only hours along with set-up and tear down time constraints, outside SWAP MEETS needed more protective environments to preserve the merchandise sold. This growth brought on the transition from an outdoors weekend-only event, to a more structured in-door environment now open 7-days a week.
SWAP MEETS quickly became a viable retail outlet especially in urban communities. After the 1965 Watts Riots, Jewish merchants who owned most of the retail in predominately black neighborhoods cashed in insurance policies and never returned to do business. There was limited economic growth post the riots, so urban LA families were forced to travel outside of their neighborhoods to shop for the family. Gradually Korean businessmen recognized a market opportunity and took over the vacated retail landscape and introduced the indoor SWAP MEET as a solution to the void. LA’s retail is dominated by malls especially in the 80’s, however, there were no malls in the urban communities so the SWAP MEETS became the new urban mall serving the needs of an isolated consumer.
As the consumers demands grew for Sneakers, the development of the new SWAP MEET landscape was evolving; creating another outlet for authorized sneakers retailers to seize as it relates to TRANSSHIPPING, aka “selling through the backdoor.”
The two most renowned SWAP MEETS are the now defunct COMPTON SWAP MEET aka COMPTON FASHION CENTER — which was held in a converted Sears department store serving the East side of LA; and the most famous of all, is the SLAUSON SWAP MEET aka SLAUSON SUPER MALL on the West side. I found it hilarious during my tenure at NIKE that one of the key figures at NIKE who rose to become VP of SALES and is credited with being a major player in the building of the SWAP MEET business on the WEST COAST, had the nerve in his VP role to be a stickler for the practices of retailers including the world of TRANSSHIPPING. A landscape he thrived on as one of the early sales reps while cashing brink level commission checks.
The word on the streets is even your large mall accounts play in the TRANSSHIPPING system. Leveraging their ability to get the largest orders of product based on their large number of doors much like a patient who gets a prescription for drugs beyond their needs with the intent to sell the excess to an eager buyer. Even the “Big Boys” got in on the BLACK MARKET game and in some ways based on their product accessibility were the DONS of the SNEAKER Underworld.
The underdeveloped international sneaker retail landscape also became a major recipient of TRANSSHIPPED Sneakers. Most countries abroad had under-penetrated sneaker retail. In fact, during the 1992 Olympics held in Barcelona, Spain, the USA Basketball DREAM TEAM featuring Michael Jordan made such an epic impact on the world, that coupled with the explosion of Hip-Hop, there was major global demand for elements of US urban culture including sneakers and music. With this demand came a new avenue for TRANSSHIPPED SNEAKERS; and as a supplier you must find a way to serve buying customers even if it means taking risk. In the Sneaker Game the risk is being stripped of your authorization to sell the brands product with official consent. And to think many of the brands were originally built on the backs of retailers and their TRANSSHIPPING hustle.
The sneaker and drug game are very similar in characteristics + characters — there is a strong relationship between supply & demand, one must always distribute great product and employ major connects “dealers,” there is feeding the addiction of fiending customers, and knowing how to navigate an underworld. It all starts with the consumer and their overwhelming addiction to the Cotton + Rubber aka Sneakers. This current day addiction has created an $80 Billion White Market empire. The consumer can’t say no, and the suppliers and connects keep feeding the consumers relentless appetite by all means necessary.
The Sneaker x Black Market Pt2. will focus on CloseOuts and Counterfeit segments of the business leading to today’s Grey Market.
“Happiness is a Drug and I want to be Your Dealer”
To read my other articles in this series, please click the below links:
THE PRE-INTERNET SNEAKER GAME: Market Travel x Consumer Voyage Pt2.
THE PRE-INTERNET SNEAKER GAME: Market Travel x Consumer Voyage Pt1.
THE PRE-INTERNET SNEAKER GAME: Sneakers Expire in 30 Days
THE PRE-INTERNET SNEAKER GAME: Sneaker-Lution — I Miss Ole Retail
THE PRE-INTERNET SNEAKER GAME: Music Artist x Signature Sneakers