In this edition of Straat Talk, we explore why sneaker resale value has become intrinsically linked to sneaker buying.
Resale value is the price a sneaker can fetch if it were sold on the secondary market such as reseller platforms like Ebay, StockX, Stadium Goods, Carousell, and the like. Resale is in contrast to retail — the price you pay when you buy the sneakers in stores.
Increasingly, the resale value of a sneaker plays a major role in sneakerheads’ decision-making process of whether or not to buy a pair of shoes. In our recent Straat Talk poll, 48% of respondents said they consider a sneakers’ potential resale value before buying.
In fact, 28% of respondents admit that they have been deterred from buying a pair of sneakers once they saw it had a low resale value.
One word: money. Once sneakerheads started realizing they could make serious money from flipping shoes (cases in point: Robert Newman, Remus Er, Benjamin Kickz), they started becoming pickier about their pick-ups. Aided by tools like StockX, Goat and Farfetch, that provide information like sneaker resale valuation, resale value has easily become the number one deciding factor.
Since resale value has permeated almost every conversation about sneakers, sneakerheads who don’t buy to flip find themselves caught in this echo chamber of talk about resale prices and what’s hype. And we know this first-hand — this talk is hard to ignore.
Because resale value has become one of the top reasons to buy, brands have to preserve this reason to buy. Many believe that brands do this by intentionally keeping supplies low. Though there isn’t any concrete evidence of this at play, it would make total sense: demand and supply, right? The lower the supply, the higher the demand, the more exclusive (hype, valuable, covetable), the higher the resale value, hence the more reasons to buy.
An internal memo leaked in October this year revealed that Nike, for instance, is well aware that leveraging “high heat culture” to drive demand could alienate customers. In a set of leaked presentation slides, SNKRS VP Ron Faris warned that it has become just too challenging or costly for people to buy the sneakers they like.
“We are at risk of losing our most sneaker-obsessed consumer. High heat, hype is killing the culture and consumers are migrating towards New Balance and smaller, independent brands,” he communicated.
But everywhere you look, the sneaker buying ecosystem is primed for reselling.
Apart from the bread and butter reseller platforms like Ebay, we now also have region-specific marketplaces like Novelship or Ox Street. And these players are gaining traction by the day. In November 2019, Novelship secured S$2 million in funding to further expansion plans. Last month, Ox Street, got acquired by Carousell — referred to as the leading classifieds group in the Greater Southeast Asian region in a press release.
Well, while close to half of sneakerheads we polled said they buy sneakers based on resale value, another half say they don’t. So then what drives the other half of them to buy?
“Buying a sneaker shouldn’t be based on its resale value, but on how much you like the shoe,” wrote @cliffydiffy, and many others echoed the same thought.
While that’s a nice sentiment, here’s the bottomline: sneakerheads can choose not to buy sneakers based on its value on the secondary market, but with so much money invested into reselling platforms and so much to be made from reselling — whether to earn a living or to cover the cost of your next pick-up — it’s likely that sneaker resale value will continue to dominate conversations for a while.