Sneaker culture has always been about buying, selling and trading, taking a shoe you have and getting something of more value for it. This system is what attracted Awais Sughatta and the rest of the workers at Xclusive Cops in New Haven to the sneaker reselling business.
Sughatta, a co-owner of the store, started his sneaker journey with a pair of 2010 Nike Hyperdunks. One of his classmates had a pair, and despite them being beat up, Sughatta begged him to sell them.
“I paid him $10 in quarters for them. Actually $9 in quarters and a $1 bill,” Sughatta said.
Sughatta is hardly alone in the sneaker marketplace. It’s become a profitable business, and the shoes now cost much more than $10.
In 2020, the average resale price for a pair of Nike Air Jordan sneakers was 54% above retail, according to StockX, an online marketplace that serves as a platform for customers to buy and sell sneakers, apparel, trading cards and other products with significant cultural cachet. That means a pair of Jordan 1s that retail for $170 would average $261.80 in the booming private market outside traditional retail and sneaker companies.
A big reason for these elevated prices is the growth of sneaker culture and the market in past two years. Websites such as StockX and GOAT that specialize in sneaker resale have capitalized on price increases driven by seemingly insatiable demand for classic kicks.
StockX and GOAT act as contemporary consignment shops centered around reselling stuff. Both companies have grown in recent years because each provides a service to meet growing demand in sneaker culture.
What is sneaker culture?
Sneaker culture emerged in 1984, when NBA Hall of Famer Michael Jordan attached his name to a Nike line of athletic shoes and apparel. When the NBA banned the black-and-red Jordan line from the league and threatened Jordan with a $5,000 fine for wearing them, demand jumped.
Don C. Sawyer III, vice president for equity, inclusion and leadership development and sociology professor at Quinnipiac University, remembers the impact the ban had on sneaker fans.
“I think about how that controversy sparked this desire for people to have them because they got banned by the NBA, and people made it seem as if they were being banned because they made Michael Jordan perform better than everyone else,” Sawyer said. “It created this following like ‘Yo I gotta get those shoes because it’s gonna make me play like Michael Jordan,’ and so just I remember the explosion of sneaker culture surrounding Jordans.”
Soon, the Jordan brand spread beyond basketball to become part of popular culture. In a classic example of product placement, episodes of the popular sit-com The Fresh Prince of Bel-Air featured star Will Smith wearing new Jordan’s. That sent demand soaring.
Today, this connection of sneakers and celebrities remains true. Brands like Nike, Jordan, Adidas and many more all sponsor athletes and rappers. Not only that, but they also have deals with numerous mainstream companies. Adidas has collaborated with Disney, Lego and others, New Balance with Jolly Ranchers and Nike with numerous fashion brands and boutiques, such as Supreme and even Christian Dior.
Sneaker culture, however, is not unique within communities of interest that collect stuff. A collector sees a pair of shoes and buys it as an investment or simply to display at home. The difference is in the scale of demand.
Sawyer remembers his introduction to sneaker culture growing up in the Bronx, New York, and the need to fit in. One of his friends always had the newest Jordans and Sawyer always wished he could get a pair.
“I used to cut hair and that’s how it made my money and I saved up enough money to get a pair of Jordans that were Jordan 9s and they were the black, grey and red ones,” Sawyer said. “I had enough money, I think at the time they were maybe $149 plus tax, and I was going to try and go get them. I wear 10.5, but the only size that anywhere had was a size nine and I bought the size nine, just so I can fit in, just so I can say I have my first pair of Jordans even though my toes were cramped in that shoe, I had my pair of Jordans.”
Sawyer thus became an original sneakerhead, or someone who collects sneakers and tracks cultural developments within the ecosystem that has developed around collecting the footwear.
Omar Mansour, an employee at Xclusive Cops, had a similar experience with his first pair of sneakers.
“My first pair of Jordans was like ones my friends gave me, they were piston 6s. And they were a size too small,” Mansour said.
For modern day sneakerheads, their introduction to the culture is far different than Michael Jordan and The Fresh Prince of Bel-Air.
The other owner of Xclusive Cops, Almin Sehic, thinks that today’s sneaker culture goes hand in hand with popular culture.
“I would say it’s a lot of trend following,” Sehic said. “Celebrities wear this and people kind of want to wear that shoe or that outfit.”
The introduction of the internet has flipped sneaker culture on its head; what to buy, how to buy it and who is wearing it are at everybody’s fingertips. This has made sneaker reselling not just a hobby, but a legitimate business.
Sneaker reselling
The driving factor for the growth of sneaker culture is the sneaker reselling industry exemplified by online companies such as StockX and GOAT.
Anybody with a pair of shoes can find a potential buyer simply by posting their shoes online. The industry is bustling and estimated to be worth $2 billion in North America in 2021 and the potential to be worth a whopping $30 billion globally by 2023, according to Cowen, a publicly traded financial services company, in a recent report.
David Foster is one such sneakerhead who turned his passion for collecting into a lucrative side hustle on social media.
“I would buy people’s collections in my size and if there’s four shoes, there was like one that I wanted to keep and then I was just kind of forced to sell the other ones,” Foster said.
Foster, 26, began selling while he was attending Merrimack College in 2014, but when he moved back to his home in Milford, Connecticut after school, he started ramping up his business using Facebook groups.
“You go on there, and you start to know what the numbers are, and you’re like, ‘Yeah, this type of shoe in this type of condition typically sells for this number,’” Foster said. “So when I started seeing things where I’m like, ‘Oh, I think I can make a spread on that.’ I started buying them.”
Foster’s lingo of a “spread” refers to making a good profit on a pair of shoes and in 2020 his “spread” was the highest he has earned totaling around $10,000.
Xclusive Cops also started with an online page, but it has since blossomed into a sneaker store that pulls inventory from various resellers.
“We collaborate with different resellers that buy shoes from retail themselves, or the shoe can be sold three times to another person till we get it, or I have some people that specifically bought sneakers that sell straight to us,” Sehic said.
StockX has set the value for most shoes. Xclusive Cops usually pays the StockX asking price for incoming shoes, and sells them to customers for the “ask” price plus shipping and authentication fees.
The scope of Sehic’s sneaker connections has allowed him to gain inventory from every major shoe drop.
“I got a text this morning (about) those new red foam runners, ‘I got 100 pairs for you, tell me what sizes you want. I want StockX ask for them,’” Sehic said.
Most shoe companies like Nike and Adidas have also exploited sales online and through phone apps, creating events known as “sneaker drops” to amplify the drama of new releases and boost sales. In the past, sneakerheads would wait in line at stores for releases. Now, these shoe lotteries occur on the SNKRS’ and Adidas’ apps, turning sneaker purchases into a high-stakes raffle.
These raffles, however, have become flooded with bots, allowing one person to take advantage of the system. David Cadden, an emeritus professor of business at Quinnipiac, said bots are the only way to make a career out of sneaker reselling.
“Some people have done well, there has been an investment and the development of bots in order to secure new issues of shoes,” Cadden said. “So, if you’re going in that department, obviously, it’s lucrative enough to watch the software development.”
Bots are software that resellers purchase on their laptops enabling them to finesse wins in raffles.
Nike has attempted to crack down on botters but has yet to be successful.
“They also tried to make it so that you’ll have to submit what your foot sizes so that you can’t be trying to acquire shoes in a whole bunch of different sizes for reselling,” Cadden said.
A major reason for the proliferation of bots is the profit that can be made, especially with limited releases.
“Nike deliberately keeps the supply of some of the premier shoes down. So, if you are able to get those, they become popular, and you might be able to get as much as 100% margin on them,” Cadden said. “But that assumes that you’re able to be one of those people that can get the shoes in the first place, like IPOs on Wall Street, it tends to require that you already have a connection so that you’re first on the list in order to purchase these shoes.”
In certain scenarios, Nike releases shoes that actually fetch a price below retail on StockX. These “unwanted” shoes may not be sought after in the moment, but down the line usually turn a hefty profit as well.
“I started noticing people holding onto shoes for a year or two that were essentially worth nothing and then in a year or two the demand is still there but there’s way less of a supply. They went up,” Foster said.
Foster used a hypothetical about the Flint Jordan 7s to explain this cycle.
Imagine Nike released one million Flint 7s, and 700,000 of them get sold, leaving 300,000 unsold pairs of the shoe. That means resellers who bought the 700,000 pairs, realize the shoe lacks value and want to sell it in any way possible. Now, three years down the line, 500,000 of those pairs have been worn, but people still want deadstock pairs. The result: a skyrocket in price and major profit for sellers who stashed away those very shoes three years ago.
Sawyer sees the skyrocket in prices when he looks at GOAT and StockX to purchase shoes, and while he does not pay those prices himself, he does not see the market slowing down.
“If they’re buying them for like $170 and then selling them for $400 to $500 depending on the shoe and the size, I think there’s going to be a marketplace because everybody wants to be fresh, right? It doesn’t matter,” Sawyer said.
2 replies on “Reselling revitalizes sneaker industry”
It’s ridiculous what’s going on. These people buy the shoe at retail price then they go to these sites and sell $190 pair of Jordans for $300-$500!! That is outrageous!! There should be some law against that!! These sites should do something about this. Because people like me who really love to wear Jordans can’t anymore because the price are so high. I know what your going to say it’s a big business now, everybody is paying the higher prices now. They may be so but it doesn’t mean it’s right!! I blame Nike to if they would just make enough shoes these super high prices wouldn’t be happening!!
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