Two weeks ago, the online resale site StockX was valued at $3.8bn. The business has taken the world by storm, changing the landscape of streetwear and fundamentally reimagining how people browse, buy and sell collectable items. But unlike most multi-billion-dollar companies in the consumer sector, StockX remains a relatively unknown entity.
Founded in 2015, StockX has capitalised on the 30-year-old sneaker resale market, providing a best-in-class online platform where users can buy and sell limited edition items. While the marketplace was set up with sneakers in mind, it has since expanded to apparel, handbags, watches and electronics, with backing from the likes of General Atlantic, Battery Ventures and DST Global.
It works like this: brands such as Nike ‘drop’ limited-edition products through their own direct-to-consumer channels, which are snapped up by sneaker fans, often with the sole intention of reselling them. Individuals then list the products on StockX, and pay a 3% fee when items are resold.
But so far, so familiar… StockX’s real distinctiveness lies in its authentication promise and its pricing model. Together, these features have allowed the business to easily outstrip other players in the market. StockX overtook eBay in sneaker sales in 2017 and is valued at nearly double its most direct competitor, GOAT. Notably, the business has seen great success in Asia, where other international brands have struggled to gain traction.
The business takes full responsibility for ensuring items sold through its platform are authentic; all products are sent to a StockX-run authentication warehouse before being delivered to the buyer. With verification warehouses around the world, StockX gives buyers the peace of mind not found with other resale sites like eBay.
Perhaps most interesting is StockX’s pricing structure, which is modelled heavily on the stock market. Dubbed ‘the stock market of things’, the company allows sellers to set asking prices and buyers to place bids to indicate how much they are willing to spend. As a result, product prices are determined by supply and demand.
This link to the stock market is central to StockX: the company gives each of its products ‘tickers’ (a pair of Jordan 1 Retro High OG Hyper Royals becomes JB-JO1RHHRHL) and has even introduced ‘brand IPOs’, where brands ‘float’ on StockX and begin selling directly to customers via the platform. Every senior team member has a background in finance and the company’s CEO, Scott Cutler, was EVP at NYSE Euronext. Somehow, taking the underground world of streetwear and combining it with the hyper-regulated and established world of trading has paid off.
“Somehow, taking the underground world of streetwear and combining it with the hyper-regulated and established world of trading has paid off.”
But what can we learn from StockX?
The resale firm is rewriting the rules for how consumers access the most coveted products. StockX’s ultimate goal is for brands to sell directly onto the platform, bypassing retail and branded ecommerce all together. We are certainly not there yet (in 2019, Nike said that it had no business strategy around resale), but deals such as Foot Locker’s $100m investment in GOAT might pave the way for more partnerships between brands, retailers and resale platforms.
For brands, sites like StockX are a force to be reckoned with, and labels are reworking their long-term strategies to take into account the impact of the resale market. We spoke with a senior executive at a sneaker brand, who explained this further:
“Over the last twenty years, many luxury, fashion and sports brands have been shifting more towards a DTC business model to connect directly with their customers to tell their own authentic brand story. Resellers are not part of this strategy – and if anything, brands have wanted to stop resellers from reaching their product. But as time’s gone on, and consumers have gained more options to control their own shopping journey, many brands have pivoted to leverage a platform like StockX to reach Gen Z and new customers, by moving towards limited and exclusive products while revamping their own sites.”
StockX is also fundamentally changing the face of the collectables arena. Historically, identifying and buying the most coveted products took hard work – only the most committed sneakerheads were prepared to put in the hours trawling through eBay and place bets on potentially fraudulent products. StockX has dismantled this system, and build a user-friendly platform that can be used by anyone, anywhere. It will be interesting to see how far StockX goes with this democratisation. The business faces a catch-22: success means more customers, but becoming ‘mass’ risks losing its crucial cult appeal. Either way, gone are the days of underground culture – StockX is outrunning its competitors by doubling down on extreme commodification.
Looking ahead, we will be watching StockX with interest to see how it evolves and the impact it continues to have on the market. If you’ve got a view on what’s next for the collectables and resale space, then please get in touch – we’d love to hear from you.
Elizabeth.Shelley@thembsgroup.co.uk | Daria.Koren@thembsgroup.co.uk | @TheMBSGroup