How disruptive can a Nike resale platform be? – Vidak For Congress

Last month we learned Nike accuses StockX of knowingly selling fake Jordans. Earlier this year, the now-amended lawsuit began, with Nike suing the market for their release of an NFT line of Nike shoes, alleging that the “stock market of things” is using the company’s trademark without permission or approval.

As the lawsuit progresses, conspiracy theorists of the sneaker world are embroiled in a far-fetched line of reasoning as to why the sneaker brand eventually sued the resale market. One is that Nike is quietly laying the groundwork for its own in-house aftermarket platform.

While I don’t know if any of these hypotheses qualify as the “real” reason for the lawsuit, the concept of a Nike-owned resale marketplace specifically for Nike products is extremely intriguing. Not only is it highly beneficial to the brand and consumers, it also has the potential to significantly disrupt the sneaker aftermarket.

Sneaker brands can exist without the resale markets – and have been for over 50 years. However, it’s safe to say that the explosion of the sneaker business over the past six to seven years would have been much less robust without Flight Club, Stadium Goods, GOAT and StockX. Still, these marketplaces cannot exist without the sneaker brands, and sneaker brands are still in a position to easily influence their business in two ways: flood the market with products, then reduce demand for shoes, or set up their own secondary marketplace.

Nike has nearly all the parts needed to launch its own secondary marketplace that could deliver major benefits to both the brand itself and consumers, from warehouses to the team that would build that technology.

In May 2019, Nike called itself a technology company with the development of Nike Fit, a scanning solution to find the best shoe size for Nike app users. The product was developed by Intervex, a Tel Aviv-based startup. Nike bought the company and expanded their digital talent, providing them with a highly specialized workforce to add a marketplace to its range of digital products, from workout apps to SNKRS and the Nike app.

A Nike-owned resale marketplace can be an extension of the Nike app as a place to buy and sell used or dead stock, resold Nike sneakers and apparel. Functionally, it would be more like GOAT or eBay than Stadium Goods or StockX, which only allow unworn sneakers.

How this can benefit Nike

Establishing this secondary market benefits the brand itself in several ways, the largest of which is in the data. “They already know to a degree, but they would get more data on what actually makes a hype sneaker,” Gerald Flores, the former editor-in-chief of Sole Collector and senior creative strategist at Bleacher Report, told me. “It’s what makes the sneaker valuable, what drives resale. Is it purely numbers and are there only 75 pairs or is it because it was done by this particular designer or this athlete or because it is on this silhouette?”

Since the majority of product profits are made on first sales, this data can help them better understand how much to produce or re-release and refine hyped products for optimal first sales, as well as call back on products that just sit there.

For example, if we look back at the early Yeezy releases, the Kanye West-Adidas collaboration sold out quickly, sometimes selling for over $1,000 in the resale market. In 2017, West and Adidas decided to release larger runs of the shoes, allowing more people to buy them at retail and reducing resale demand. While new releases sometimes still sell out, the trade-in value is significantly lower and hovers just above retail.

By owning Nike the marketplace, they would have hard data to do this across multiple silhouettes and gain a foothold in the resale market without completely killing the demand for their sneakers by saturating the market.

Because Nike has a reputation for telling superior stories in the sneaker space, this could easily be turned into sustainability branding opportunities, wrapping Nike Refurbished and Nike Grind in a space that’s more hyped and almost devoid of mission. Plus, places could afford to tie historical Nike stories to viral moments that fuel hype and resale that the resale platforms don’t.

They are completely missing out on a multi-billion dollar industry that may not be sustainable without them.

While StockX told Vidak For Congress in their EC-1 (Vidak For Congress+ subscription required) it’s not often a real-life event or pop culture moment moves the needle in the market, there have been a few times when Nike products in particular have seen a huge increase in traffic. saws and trades on the platform. The broadcast of the Michael Jordan documentary “The Last Dance”Meena Harris’ husband who wore Dior Jordan 1s to Joe Biden’s presidential inauguration and the untimely and unexpected death of Kobe Bryant all caused significant volatility in the market.

Jordan sales were up 40% and StockX saw increases in every OG Jordan after the document was released. The Dior Jordans saw a 200% increase in bids on the platform, and Kobe Bryant sneakers that went on the resale market for about $750 were listed for $12,000.

I’m sure there are no consumers crying about Nike missing out on these organic sales gains or storytelling opportunities that StockX is reaping the benefits; however, smart and successful companies only allow others to benefit for so long with little benefit to themselves.

Just like Instagram is trying to turn into a shopping app or Twitter is looking for ways to make more money than ads, Nike may be sideways capitalizing on the hype built around their products on these resale platforms, but they’re completely running a multi-billion dollar industry. miss it may not last without them.

Using the data, they were able to get more revenue on the first release and less demand for the shoes on resale. Nike also doesn’t have to take advantage of resale transaction costs as much as the actual resale marketplaces themselves. Nike could potentially have lower transaction costs than all other marketplaces.

What this means for consumers?

Flores may see a potential first backlash from the sneaker community if Nike announce their own resale marketplace: They might wonder if Nike will just mark hype items as sold out and put them on a resale platform themselves, he says. Or it could deter consumers that the brand would continue to make profits throughout the shoe’s lifecycle.

“I think they’ll get mad for a while and then they’ll get over it, and they’ll still be trying to get something on SNKRS the following weekend,” he says. Despite the totally unsavory experience of getting high temperature products through Nike’s SNKRS app, users keep coming back time and time again, release after release.

Without Nike having to approach this marketplace primarily for financial gain, but also to gain more control and understanding of their place in the marketplace, consumers will also benefit. Total resale prices could fall in a brand-owned marketplace for shoppers due to lower reseller costs.

With Nike’s existing warehouse network, shipping costs can also be reduced from other resale platforms. Even resellers can earn more from each trade made on a Nike marketplace if the brand chooses a smaller percentage than StockX, Stadium Goods or GOAT or opts for a flat fee for each trade, regardless of resale value.

Which one would you trust more to sell your authentic sneakers for resale – a platform that has to figure it out or the brand that released the shoe?

But the biggest benefit to both buyers and resellers in a Nike-owned marketplace would be authentication. “You’d know it’s 100% authentic and you’re not going to get a counterfeit pair of shoes,” Flores said.

While StockX told Vidak For Congress they have a 99.5% success rate for their authentication, that 0.5% still raises questions or mistrust from the community. They had to develop a 100+ point checklist for their authenticators that is constantly evolving for each brand and silhouette, and other resale platforms must meet this challenge without the help or partnership of the brands.

StockX’s CEO Scott Cutler Went To Squawk Box CNBC earlier this month to downplay Nike’s manufacturing and bolster its team’s authentication practices. “Last year alone we had 41,000 items that were rejected that were Nike products with a manufacturing defect,” he said. “So we’re not just looking for counterfeit products, but also products that meet our higher authentication standards.”

Which one would you trust more to sell your authentic sneakers for resale? A platform to figure it out or the brand that released the shoe? The lawsuit being finalized adds even more legitimacy to buyers and sellers’ fears that the platform is selling counterfeits.

What it’s like to disrupt space

“I think it’s going to be a big blow to the other resale markets out there,” Flores said. “Firstly, they remove the broker in the middle and the authentication makes them more reliable than buying every day from a StockX or other marketplace.”

In addition to the trust of existing Nike shoppers, it can also bring Nike consumers unfamiliar with the resale world in it because of its reach through other digital Nike spaces.

“Nine times out of 10 I buy directly from the Nike app. I use the Nike running app, I obviously use SNKRS and I use the Nike Training app,” said Flores. “I think the benefit is for the consumer that it all falls within the same ecosystem.”

Whether or not Nike would establish itself as the only place to resell Nike gear, there’s no denying that platforms like GOAT, StockX, and eBay would lose a lot of sales.

Every year StockX publishes a snapshot of the previous year through the numbers. In 2021, four of the top five sneaker silhouettes sold on the platform were Nike and Jordan Brand. Both brands also held the top two slots for the most popular sneaker brands on the platform in 2021 and 2020.

While retailers like Foot Locker and FarFetch buying into the space through GOAT and Stadium Goods respectively may seem like a smart move, as retailers (and especially sneaker stores) get their foot in the door of the resale market, nothing has changed from the experience of the consumer. A brand-owned secondary marketplace specifically owned by Nike has been the biggest disruptor since the commercialization of sneaker reselling pushed the sneaker industry into a $79 billion industry.

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