London-based fashion marketplace Farfetch has announced its acquisition of American premium sneaker and streetwear marketplace, Stadium Goods, for $250 million in a deal that was facilitated by Goldman Sachs.
As a result of the deal, Stadium Goods will become a fully-owned subsidiary of Farfetch that will continue to be led by its co-founders John McPheters and Jed Stiller.
In February, Stadium Goods already sold a stake to LVMH Luxury Ventures for an undisclosed sum, which the company has said to put towards growing its brick-and-mortar presence, grow its proprietary tech offering as well as investing in marketing and staffing. Before that, it received $4.6 million in venture funding from investors including Forerunner Ventures and the Chernin Group.
Founded in 2015, Stadium Goods has grown to become one of the world’s leading men’s streetwear marketplaces that specialises in new and deadstock products.
“From early on it was a great culture and business model fit, as well as a [shared] outlook of where fashion was heading. We spent a long time focussing on these international markets and we saw how strong Farfetch was there. That was all part of making this decision,” Stadium Goods co-founder and co-CEO, John McPheters, tells Highsnobiety.
“Leveraging Farfetch’s tech offering will be very important to our expansion,” he explains, adding that Farfetch’s cross-border logistics, scale and customer base will equally enable Stadium Goods to capitalize on the big international demand for sneakers and streetwear.
Speaking to Highsnobiety, the excitement was echoed by Farfetch founder, CEO and co-chairman José Neves: “For a few years we’ve seen the luxury streetwear category grow on Farfetch with brands like Off-White, A-COLD-WALL* and Heron Preston, as well as with luxury brands like Balenciaga moving into this space and limited edition releases from Nike and Adidas, which have been successful for us. I met John and Jed a year ago and we started looking at the secondary market, an area where we, until now, didn’t have any presence.”
Next to selling product directly on its own brick-and-mortar stores as well as its e-commerce site, Stadium Goods has distribution partnerships with big, external marketplaces, including eBay, Amazon, Alibaba and Zalando. A similar partnership with Farfetch has been in place since April 2018.
“In April we had very limited supply from Stadium Goods and the traction was unbelievable from countries like Russia, China and Japan. Our clients love this product and this is a category we didn’t really have,” Neves continues. “We’re only scratching the surface in the West, [and] then we’re looking at countries like China and Japan where the market is just getting starting.”
For Farfetch, the purchase is incremental in the company’s ambition to gain market share in the premium sportswear market, which was estimated at $70 billion in 2017. Next to an increased supply of in-demand streetwear and sneakers, Farfetch will be able to leverage Stadium Goods’ growing and highly-engaged, global on and offline following. In turn, the streetwear business will make us of Farfetch’s rich technological and logistical expertise as well as its geographical reach.
“[The deal] expands Farfetch beyond a marketplace for retailers to sell designer goods, [as] Stadium Goods is a marketplace for individual resellers,” Matt Powell, senior sports industry advisor at The NPD Group. “By using the Stadium Goods platform, Farfetch can expand into other peer-to-peer categories, [while] Stadium Goods will benefit from having a greater capitalization.”
At large, the deal marks a significant milestone in showing the increasing importance of the secondary market, which for years has been dismissed by luxury and sportswear brands alike, who deemed the aftermarket to be brand diluting.
But the resale market has come long way since its early days of trading rare and limited sneakers and streetwear on auction sites like eBay, and through peer-to-peer transactions via decentralized, local social media groups. A big shift came in the early 2010s when a number of resale players, including Stadium Goods, Grailed, GOAT, StockX and K’LEKT, were founded and formalized the process for a digitally-native audience.
“A huge part of our mission was to clean up what was happening in that secondary market [and] in terms of the population and comfort level, we’ve done a tone to drive that level of trust,” says McPheters.
As consumers, and investors, became more acquainted with secondary market players, business started to grow for the individual companies — i.e. Stadium Goods did $100 million in GMV (gross merchandise volume) last year, while its current revenue per square foot of its retail spaces is over $5000. As a result, brands including Versace and Jordan Brand have become more open to working with resale companies as exclusive distribution partners for new product.
“Consumers want access to certain products and brands, sometimes they’re available on the primary market, sometimes on the secondary market. In my conversations with brands, they increasingly see that the secondary market, which is authenticated, and promotes a sustainable circular market is valuable for [them] and creates more desire,” says Neves. “It’s a win win for both consumer brands and marketplaces.”
Below, check out our video interview with John McPheters inside Stadium Goods, where we spoke to him about the value of hype.
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