American multi-brand footwear retailer Foot Locker has announced a $100 million investment in GOAT Group, one of the most prominent players in the fast-growing $6 billion global sneaker reselling market.
The investment brings GOAT’s total raised investment to $197.6 million since its launch in 2015. The move marks the largest investment to date by a retailer into the secondary sneaker market, as well as Foot Locker’s biggest investment ever. (Foot Locker recently invested a total of $20 million in women's luxury activewear brand Carbon38, children's lifestyle brand Super Heroic and footwear design academy Pensole, all of which are digital-first businesses).
“At Foot Locker we’re constantly looking at new ways to elevate our customer experience and bring sneaker and youth culture to people around the world,” Richard Johnson, Foot Locker, Inc.’s chairman and CEO says in a statement provided to Highsnobiety. “We’re excited to leverage GOAT Group’s technology to further innovate the sneaker buying experience and utilize their best-in-class online marketplace to help meet the ever-growing global demand for the latest product.”
“In 2015, we pioneered the ship-to-verify model with a mission to bring a seamless and safe customer experience to the secondary sneaker market,” adds Eddy Lu, co-founder and CEO of GOAT Group, who says that having Foot Locker’s global reach will enable GOAT’s business to scale its operations both domestically and internationally.
“With over 3,000 retail locations [in 27 countries] Foot Locker will support our primarily digital presence with physical access points worldwide, bringing more value to our community of buyers and sellers,” he says.
"The sneaker resale market has been disruptive to the primary market. Foot Locker is investing in that disruption and believes that the resale market will continue to grow and its wants a piece of that growth," Matt Powell, senior sports industry advisor at The NPD Group tells Highsnobiety.
And it's not the only one. The deal follows a slew of recent investments in the sneaker resale space.
In February 2018, Stadium Goods sold a minority stake to LVMH Luxury Ventures for an undisclosed sum. That same month, GOAT acquired sneaker consignment store Flight Club while also raising a $60 million investment round led by venture capital firm Index Ventures. Then in June, Grailed, the peer-to-peer streetwear marketplace co-founded in 2013 by Jake Metzger, Arun Gupta, and Julian Connor, also closed a $15 million Series A investment round with Index Ventures, Thrive Capital, and Simon Ventures.
Three months later, StockX, the self-proclaimed “stock market of things,” secured $44 million in its second funding round. The company, which has more than 80,000 products listed on its website and in the fourth quarter of 2018 passed a $1 billion GMV run rate — up roughly seven times on 2017 — now boasts a roster of celebrity investors, including Eminem, Mark Wahlberg, Don C, Steve Aoki, Karlie Kloss, and Scooter Braun.
The biggest milestone to date, however, was reached in December 2018 when London-based fashion marketplace Farfetch acquired Stadium Goods for an impressive $250 million, in a deal that will allow the reseller to leverage Farfetch's rich tech expertise, cross-border logistical experience, and giant customer base. Overall, bringing the business to the next level.
For GOAT, the deal makes sense given the company's inventory currently exists out of 25 percent general release sneakers offered at or below retail price. "We do see retail and resell merging,” GOAT's Eddy Lu told Highsnobiety last month. “It’s not just about flipping shoes anymore. People are coming to us now to buy sneakers, period.” As a result it wouldn't be surprising to see Foot Locker and GOAT working more closely together, inventory-wise, going forward.
GOAT currently has more than 11 million users, up from 2.5 million a year ago. GOAT's supply has also grown from 200,000 sneaker listings to 750,000 in the same time frame while its revenue has grown 500 percent as a result. GOAT says that its most lucrative sellers have sold more than $10 million in sneakers each, up from $2 million in 2017.
The numbers are reason enough to justify Foot Locker's investment of this size into GOAT. But there are also other benefits in investing in a fast-growing sneaker reselling platform like GOAT.
With the sneaker resell market as a whole becoming more accepted by consumers and more authoritative in the sneaker space at large, in the past two years, players in the secondary market like GOAT have become direct competition of traditional wholesalers such as Foot Locker. Given the way the market, and consumers, are shopping today, the investment is not just strategic, it's necessary for Foot Locker's relevance among young shoppers and ultimately its long-term survival.
For a full breakdown of what the future of sneaker reselling will look like, click here.