The sneaker industry continues to generate a lot of money
Although many may not know it, the sneaker industry is huge and only getting bigger. Familiar names like Nike (NKE) Adidas, (ADDYY) Puma, (PUMSY) etc., have been popular for decades, but they are more successful than you might think.
According to Statista, the sneaker industry was worth $45 billion in 2014 and is now worth $72.2 billion despite supply chain issues and inflation. The sneaker industry is expected to be worth $101 billion by 2026, which would be a huge jump from what it’s worth today.
These brands not only sell sneakers, but they make a lot of money from sportswear. Adidas was famous a few years ago for its iconic three-stripe track pants and Nike is a go-to for sports bras, shorts and everything in between.
Why are sneakers worth so much?
Sneaker culture is, at heart, a collectible hobby. But it’s also a challenge, pushing collectors to get their hands on a pair before it sells out and is listed on resale sites for ten times the retail price.
People spend a lot of their money and time buying sneakers and keeping them in pristine condition. And they are also appreciated by their owners. If you walk into a sneakerhead’s closet, their shoes will not have been worn; they are simply considered a sculpture in a museum.
But what’s even more culturally relevant is the sneaker resale market.
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Resellers have been around for years and make huge money reselling shoes that were part of a limited drop or haven’t been sold in years.
The resale market in the United States is estimated to be around $2 billion, but this figure is expected to increase to $30 billion by 2030. The reason resellers can make so much money is the appreciation of value: sneakers are now seen as an alternative. asset.
Alternative assets are assets that are not typical assets. Typical assets are stocks, bonds, investments, etc. Alternative assets, beyond sneakers, can be real estate, private equity, collectibles, art, and more. From now on, culture has become an alternative asset.
Nike has an app called SNKRS that gives customers the “scoop” on sneaker releases and drops, and offers giveaways where you can win a pair of sneakers. Many people join the giveaways hoping to win the sneakers to resell. Every giveaway you pay to enter, usually $20, then if you don’t win you get your $20 back, but if you win you pay to get the sneakers. The sneakers in these prints are usually limited edition or in high demand.
In 2021, resale market app GOAT raised $195 million in venture funding at a valuation of $3.7 billion. GOAT also achieved $2 billion in sales between mid-2020 and July 2021.
Some resellers buy a few pairs of sought after shoes and wait for them to go up in value only to resell later and make a profit. Others buy sneakers in high volume and resell them. Still others find rare shoes to sell at a high price.
If you are thinking of getting into reselling, now would be a good time.