Although many may not be aware of it, the sneaker industry is huge and only getting bigger. Household 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 now worth $72.2 billion despite supply chain issues and inflation. The sneaker industry is expected to be worth a whopping $101 billion by 2026, which would be a massive jump from what it is worth today.
Not only do these brands sell sneakers, they make a lot of money from athletic apparel. Adidas was famous for its signature three-stripe pants track pants a few years ago 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 collecting hobby. But it's also a challenge, driving collectors to get their hands on a pair before they sell out and are listed on resale sites for ten times the retail price.
People dedicate a lot of their money and time to buying sneakers and keeping them in pristine condition. And they are valued by their owners, too. If you go into a sneakerhead's closet, their shoes won't have been worn; they are simply viewed like a sculpture at a museum.
But what's even more culturally relevant is the sneaker resale market.
Resellers have been around for years and make huge money off of reselling shoes that were part of a limited drop, or haven't been sold in years.
The resale market in the U.S. is estimated to be around $2 billion dollars, but that number is expected to increase to $30 billion by 2030. The reason why resellers can make so much money is because of value appreciation: sneakers are now viewed as an alternative asset.
Alternative assets are assets that aren't typical assets. Typical assets are stocks, bonds, investments, etc. Alternative assets, beyond sneakers, can be real estate, private equity, collectors' items, art, etc. Now, culture has become an alternative asset.
Nike has an app called SNKRS which gives customers the "inside scoop" on sneaker releases and drops, and has giveaways where you can win a pair of sneakers. Many people join the giveaways in hopes to win the sneakers to resell them. Each giveaway you pay to enter, usually $20, and then if you don't win you get your $20 back, but if you do win, you pay to get the sneakers. The sneakers in these draws are usually limited-edition or high in demand.
In 2021, GOAT, a resale market app, raised $195 million in venture funding at a $3.7 billion valuation. GOAT also made $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 increase in value to then sell later and make a profit. Others buy sneakers at a high volume and resell them. Still others find rare shoes to sell at a high price.
If you're thinking about starting in the reselling business, now would be a good time.
