Why are Sneakers so Damn Expensive?
Sneakers are among the hottest commodities among Gen-Zers. In and of itself, the sneaker market has transformed into a culture. One that roots from the rappers and basketball players that they idolize. One that knows no age limits as more and more people are sapped into the addiction. I mean at the end of the day, who doesn’t want to look good?
However, what’s alarming is the prices that these sneakers fetch on the resale market. Despite having an average retail price of $200, these exclusive shoes sell out within mere seconds and are immediately repriced by resellers. Who would have ever thought of spending $300, $1000, or even $10,000 on a pair of sneakers?? Believe it or not, I’m not making up these numbers.
Below are the three main factors that drive a sneaker’s resale price:
Collaborator
The most popular shoes are often collaborations between name-brand sneaker companies and influencers of the younger generation. Not only do these collaborations garner tons of media attention, but they also appeal to a consumer base of die-hard fans. In fact, release dates often coincide with the influencer’s career, which generates even more initial hype and increases the overall demand. An example is the highly anticipated Travis Scott Air Force 1 Sail, which released on August 10, 2018.
Just a week before this sneaker released, Travis dropped his triple-platinum certified album Astroworld, which was nominated for Best Rap Album at the 2019 Grammy Awards. These shoes now sell for over $1000 on the resale market.
Exclusivity
Exclusivity comes in different forms when talking about sneakers. The first is sheer stock numbers. The lower the stock number, the less consumers who are able to acquire the sneaker at a retail price, and ulitimately the higher the resell price. This varies not only across different releases, but also different sizes.
Take a look at the Yeezy 350 V2 Creams for example:
Notice the price disparities across different sizes, especially the spikes among sizes 4–7. This is solely attributed to the production of less Yeezys in smaller sizes.
Exclusivity can also be represented by sellout times on release date. With the immense amount of profitability behind the market, resellers are utilizing any resource they have in order to outcompete other consumers. For instance, many use bots, which are computer programs that automatically add the desired sneaker to cart and check out with the click of a button. With the continuing development of these bots, those who are looking to wear rather than sell the sneaker are not on a leveled playing field and thus resort to purchasing the shoe on a secondary market. This results in an influx of demand that drives resale prices up.
Overall Look
This may seem like an intuitive factor, but the general wearability is also important to consider. More consumers are attracted to sneakers that are versatile across different seasons, compatible with a variety of outfits, and unique from what already exists. Let’s take a look at these Nike Mars Yard Overshoe’s right here:
If anything, these are astronaut boots rather than sneakers. When will anyone ever get the chance to wear these? What outfit would someone even attempt to coordinate with these?
Despite the initial high resale price due to low stock numbers, the market entered a harsh correction to its retail price of $550.
These three factors are important to keep in mind, whether you’re buying, reselling, or investing in shoes. With enough data analytics, it may be even possible to utilize these factors to predict the true market value of any sneaker.
Feel free to reach out to me at maxshiau@gmail.com if you have any questions, or just want to chat about the streetwear market!
