The Secondary Market: How Resales are Dominating the Sneaker Industry

With the rise in popularity of sneaker culture, demand for hype sneakers has increased, creating an opportunity for success in the secondary market. Primary sale applications are demanding, reward digital bots and offer limited supply, leading companies such as StockX, GOAT and Stadium Goods to profit off sneaker resales. As owning an exclusive pair of sneakers becomes more important in the collectables world, here is how and why the secondary market has recently taken off.

Collectables have become an increasingly important topic in the art world. Noting this emerging sector within art markets, Sotheby’s and Christie’s have launched Collectables departments.

In 2021, Sotheby’s set multiple records for sneaker sales. In one sale, the auction house sold the most expensive sneaker ever - Kanye West’s Grammy-Worn Nike Air Yeezys - for $1.8 million. Additionally, they sold Michael Jordan’s 1985 Game-Worn Nikes for $1.47 million [1].

Clearly, the sneaker market is hot. More specifically, this is particularly true of the sneaker resale market. Piper Sandler estimates that the secondary sneaker market was worth $10 billion in 2020 [2]. Cowen reports also projected the resale market could reach $30 billion by 2030 [3].

Kanye West’s Grammy-Worn Nike Air Yeezys. Image. Courtesy Sotheby’s.

Michael Jordan’s 1985 Game-Worn Nikes. Image. Courtesy Sotheby’s.

Aside from institutional approval, digital innovation has led to rapid scale. The primary market began its digital shift in 2015, with Nike and Adidas launching their limited sneaker drop applications, SNKRS and CONFIRMED, respectively. Both applications release new, limited-edition sneaker designs and colourways for 10 minutes on a specific date and time. Anyone can access these drops, though one must first download the applications to their mobile device and then create an account to become an application member. Application members must submit a raffle entry to be considered for purchasing the sneakers. Once submitted, applicants wait impatiently to see if their entry has been chosen.

Alongside this, SNKRS and CONFIRMED award preferential entry drawing for members who interact with the application more frequently, meaning a member is more likely to win a raffle if they spend hours scrolling through application content. Given the limited quantity and preferential entry, the average application member is often met with the disappointing “Didn’t Get ‘Em” message from SNKRS.

J23. 2017. Didn’t Get ‘Em. Mobile Phone Screenshot. Courtesy J23.

Additionally, the hype around launches and minimal supply means digital bots often cause drops to sell out quickly. These bots are digital programs designed to buy sneakers at the moment of release, leaving few opportunities for genuine human buyers. As a result, these bot-bought sneakers are often resold at a higher price on the secondary market. Consequently, the frustrating “Didn’t Get ‘Em” message is now a popular meme among sneakerheads. Immediate sellout and high demand allow the primary market to increase its average selling price, which in turn increases the average selling price of a resold item on the secondary market.

The combination of digital bots, limited quantity and the preferential application system forces sneakerheads to look to the secondary market for a shot at purchasing the hottest new drop. The cyclical effect has led to a lucrative, high-margin resale business.

Before 2015, these resales were isolated to eBay. This was not an ideal platform for the secondary sneaker market due to the unknown credibility of sellers and lack of authentication practices. However, the absence of a sneaker-focused (resale) community created an exciting business opportunity for secondary sneaker companies. With this gap in the market, companies focused on hypewear, and sneakers, like StockX (2015), Flight Club (2012), Stadium Goods (2015) and GOAT (2015), entered the scene.

The results have been staggering; since 2015, the combined primary and secondary sneaker market has grown from $35 billion to $86 billion [4]. Meaning resales alone now account for 12% of the entire sneaker market. 

Growth within the resale market is due to multiple factors. First, the supply of sneakers is steady compared to the elite, and limited primary market drops. Additionally, platforms often offer rewards to increase customer loyalty. Thus the results for these resale companies have been fruitful, as average order values remain relatively high. For example, GOAT resells sneakers for $300 on average, Flight Club for $400 and StockX for $240 [5]. This can be compared to the average cost of a Nike sneaker from their primary eCommerce site of $111 [6]. 

A recent Nike SNKRS drop shows the success of the secondary market. The Concepts x Nike SB Dunk Low Orange Lobster was released on December 22, 2022, for $120 per pair. Less than one month later, the same sneakers sold for over $400 on Laced, StockX and GOAT. Like a piece of art, sneaker resale prices depend on their current demand and historical importance.

The SB Dunk Lows are an incredibly significant sneaker model for Nike. They were first sold in 2002 as skateboard sneakers and are now sought after as one of the most desirable Nike’s due to their rarity, street credibility and comfort. Nike utilises strategic partnerships to increase the desirability of owning a pair of SB Dunk Lows. They have partnered with skateboarders to design colourways, collaborated with influential hype brands like Supreme, and co-created with musical pioneers like the Grateful Dead. 

Concepts x Nike SB Dunk Low Orange Lobster. Image. Courtesy Hypebeast.

In February 2005, Nike hit the jackpot and changed sneaker culture forever by collaborating with Jeff Ng of the brand Staple to create a sneaker representing New York City. The STAPLE x Nike Dunk Pro Low SB "NYC Pigeon" release was so successful that it is hailed as the creation of the sneakerhead phenomenon. Only 150 pairs were made and sold in editions of 30 across five stores in New York City. In one Lower East Side store, Reed Space, the sneakers were also branded with numbers, increasing the exclusivity of owning a pair. In addition, the release is credited for birthing the phenomenon of camping outside for limited sneaker drops, which is now commonplace. Thus, exclusive sneakers were codified into the “cool” streetwear cannon forever.

The influence of the resale market on a pair of STAPLE x Nike Dunk Pro Low SB "NYC Pigeon" can still be seen today. They were initially sold in 2005 for $130 per pair and now sell on StockX for upwards of $38,000 per pair [7]. The opportunity for success in the secondary market is clear. Primary sale applications have left room for resale platforms such as StockX, GOAT and Stadium Goods to profit. As owning the newest pair of sneakers continues to define cultural cache, the secondary market will continue to rise in importance and dominate the sneaker industry.

The STAPLE x Nike Dunk Pro Low SB "NYC Pigeon". Image. Courtesy Sotheby’s.

Bibliography: 

[1] “Sneakers, Sports Memorabilia & Modern Collectibles.” Sotheby’s. Accessed January 9, 2023.

[2] “Taking Stock With Teens.” Piper Sandler. 2020.

[3] Kernan, John et al.  “Sneakers as an Alternative Asset Class, Part II.” Cowan. July 20, 2020.

[4] McLoughlin, Danny. “Sneaker Industry Statistics.” RunRepeat. October 21, 2021.

[5] McLoughlin, Danny. “Sneaker Resale Industry Stats and Facts.” RunRepeat. October 21, 2021.

[6] “The Average Price of Nike Shoes.” RunRepeat. November 7, 2021.

[7] “Nike SB Dunk Low Staple NYC Pigeon.” StockX. Accessed January 9, 2023.

Megan Brown

Art Market Co-Editor, MADE IN BED