The sneaker resell market shows no sign of slowing down: just ask any of the bleary-eyed campers lining up outside your local sneaker boutique early Saturday morning. With the resell market reaching an estimated $1 billion per year, we linked up with Bay Area reseller Sole Supremacy for a discussion on the secondary market for sneakers.
Reselling sneakers is big business these days. With more limited releases than ever, everyone from rappers to high-fashion designers pledging allegiance to athletic footwear, and the internet and social media driving sneaker hype to stratospheric new heights, the demand for limited edition kicks has never been greater. If you need any more proof, just last year the sneaker resell market was valued at a whopping $1 billion.
Derek Lew started reselling sneakers in 2008 as a way to make some quick cash, and has since seen his Bay Area business Sole Supremacy grow into a huge enterprise - shifting over $3 million in used and deadstock sneakers per year. We caught up with Derek to discuss his roots, the state of the sneaker game in 2015 and the impact social media has had on his business, amongst other things.
How did you first get into the reselling game?
I started about seven years ago. I lost my job that I was doing really well in, and to find a new source of income I started selling my personal sneaker collection. I realized I was getting more money than I originally paid for my shoes - so I figured that there was probably a ton of other people out there just like me who needed to sell their shoes for various reasons - to pay their bills, mortgage, car payments or whatever - and I could offer people money to buy their shoes for quick cash and then resell them myself.
So you've grown into a full blown store now, right?
Yeah, we're a full-blown store now. We buy, sell and trade in-store. It's taken a long time to get here - we opened up a physical store after I did two years of trading just online.
And how much of that first few years' business was through eBay?
For the first two years, I wanna say like 80-90% of our sales were through eBay.
And how about now?
Now it's about 50/50 - through the website and eBay.
I think I know the answer to this already...but what are your most popular sneakers?
By far and away it's Jordan - probably 80-90% of our sales is through Jordan.
And the rest of that?
KD, Kobe, Air Force 1s, Nike SBs, rare running shoes - occassionally ASICS, New Balance etc. - but the percentages are so small.
Who are your customers?
Honestly, most of our business is online - so we don't really have face-to-face interaction with a lot of our customers. In-store it ranges - there's kids with their parents buying shoes, there's gentlemen who are 40 or 50 years old, so I mean, it's a wide demographic. I'd say 20-30 is probably the most popular age for our customers, though.
How has the resell game developed over time?
It's growing - Nike, Jordan and everyone else are producing more shoes, but I'd say the profit margins are lowering - it's more of a quantity game now, you've got to sell more shoes for less profit now - because they're just making more and more sneakers these days.
I think there's more people selling them now too - when I last spoke to Josh at Campless he said back in 2008 people would have been making much higher margins than they are now.
Yeah, exactly. Sometimes people now, their first impulse is "I've got a shoe, how much should I sell it for?" instead of "when should I wear this?"
And social media has changed everything, right?
The internet is the driving force of reselling. It connects people together without connecting them personally. Before, people would only buy from people they knew personally or had a good relationship with - with via email, text, etc. - but now people just check out the site that we've never talked to or met. Social media also plays a big role in getting information out to the masses when something is on sale, or an update on what's going on with us.
How do you go about acquiring your stock?
Everything we have is just brought to us through our physical store - people will bring in their shoes - or sometimes entire collections - for quick cash. People will ship us stuff too. It's all directly from our customers.
What's the all-time most expensive sneaker you've sold?
The Nike Air Mag - probably for $7,000 or so. Although we have a pair of UNDFTD Jordan IV's up for sale right now at $20k!
What do you think of the newer Jordan models - the Remastered series, Future, Pinnacle etc.?
I think remastered shoes are a good and bad thing. It's good for the younger generation who never got to own an original or first edition retro. However, for the older generation it's bad because it's something that older collectors kept or bought that became a rarity and is now available to the masses. I personally like limited releases like Pinnacles that are from the original silhouettes - but new models like Futures I can care less for.
What is it about sneakers that makes people so obsessed?
I really can't pinpoint it; I think it's just the culture. People want exclusive stuff, or even just to fit in... Nike and Jordan have done a great marketing job in terms of building supply and demand for their products.
As people make more and more limited edition sneakers, do you think we might reach saturation point? What if people just stop caring about limited releases?
I think there will be a point - not sure when - but we as a shop and culture just have to adapt to it. However, it seems that for every long-time collector that leaves "the game" for different reasons 10 younger people start collecting - so it seems to just keep building and building.
What do you think of the tactics Nike etc. use to keep demand for limited sneakers high? Are they manipulating and controlling the re-sell market, to an extent?
Nike has to do that to keep up the hype. If there was no demand for the shoes than they wouldn't be where they are today. People only want what others don't have - or can't have. Nike is a global corporation that has a firm grasp on the resell market. They control it and could easily make supply for the demand but it wouldn't be good business. Everyone would have what they want and there would be nothing left to chase...
Check out Derek's business over at Sole Supremacy.
For more sneakerhead data stories, check out The Ingenious Methods Nike Uses to Control the Resell Market, as well as our analysis of the many competitions and raffles for the 350 Boost, and our resell report on the Yeezy 750 Boost.