If you need further proof that sneakers have become one of the hottest globally traded assets, on par with commodities like gold and coveted luxury products such as Hermès bags, you just have to look at the incredible growth of online marketplace StockX, which in April 2021 announced a US$3.8 billion (S$5.1 billion) valuation.
Founded in 2016 in Detroit, Michigan, by a trio of sneaker aficionados, StockX is the go-to marketplace for rare sneakers and other collectible items such as toys, gaming consoles, trading cards and streetwear – basically anything that millennials and Gen-Z kids are into these days.
The way StockX operates, however, is different from marketplaces like Amazon and Farfetch.
Its business model is based on the principles of the New York Stock Exchange, where current CEO Scott Cutler used to work before moving to ticket resale company Stubhub, auction site eBay and eventually to StockX in 2019.
StockX lets buyers place “bids” – the maximum amount they’re willing to pay – and sellers place “asks” – the minimum amount at which they’re willing to sell.
Transactions happen if the bid is at least as high as the ask, and StockX takes a commission from each sale.
From hot items like a pair of Dior Jordan 1 sneakers that can sell for up to U$10,000, to more affordable ones in the low hundreds of dollars, StockX has been one of the main drivers of the burgeoning sneaker reselling economy.
In May 2020, auctioneer Sotheby’s sold a signed pair of Air Jordan 1s for US$560,000 and in August 2020, a pair of Nike Air Jordan 1s worn by NBA player Michael Jordan in 1985 sold in a Christie’s online sale for US$615,000.
While those numbers apply to very rare items associated with one of the most legendary NBA players of all time, they reflect the booming global sneaker resale market, which according to Cowen Equity Research is set to reach US$30 billion by 2030.
“A large set of our consumers today are looking at things like sneakers and collectibles as an investment opportunity, as an alternative asset class,” Cutler says in a video interview from Detroit.
“This is driving another growth phase of the business around the world as these consumers drive a brand-new enthusiasm for the category of products that trade on StockX.”
An early investor in the company and adviser to the founders, Cutler joined StockX to help it scale by expanding globally and into categories beyond sneakers.
“What’s really driving our growth has been the growth of what we call ‘the next-generation consumer’ across the world in items that we call ‘current culture’ and it’s now beyond sneakers and covers categories such as apparel, collectibles and electronics,” says Cutler.
“We see a real growth in buyers and consumers across categories and it’s true everywhere around the world.”
StockX only trades brand-new goods and doesn’t buy any inventory, but operates authentication centres where experts make sure that the goods are real before shipping them.
In 2020, the company opened an authentication centre in Hong Kong to cater to the growing number of buyers and sellers in the region.
That same year StockX reported growth in sellers of over 1,000 per cent on a year-on-year basis in Hong Kong, which remains one of the top seller markets, not only for sneakers but also for collectibles such as Kaws figurines and Be@rbrick toys.
“The complexity of this business is something I’ve never experienced at any other platforms, even the larger ones I’ve run before,” says Cutler.
“We have a unique and proprietary complexity to the business that I’m still learning about how to optimise.”
While StockX is mainly associated with sneaker trading, which traditionally has been the realm of male consumers, categories such as handbags have also driven significant growth, especially for cult items such as the Telfar Shopping Bag .
“Thanks to the crossover of sneaker and fashion, apparel and streetwear, we’ve been seeing a real growth in the female demographic, also on the sale side,” says Cutler.
“Hundreds of thousands of first-time sellers on our platform last year were female. The sales growth of the female demographic is very exciting for us.”
It’s not news that the fashion world has embraced sneaker culture and streetwear with open arms, another factor that Cutler says has propelled the rise of StockX.
“You’ve seen the convergence of fashion and streetwear going back for a while with Louis Vuitton and Supreme and then Dior and Nike or The North Face and Gucci,” says Cutler.
“Large luxury brands are going after that next generation of consumers and coming up with really great collaborations […] These brands are using different models to release products like drops based on exclusivity and scarcity to drive awareness for a new generation of shoppers.”
Cutler and his team clearly have their fingers on the pulse when it comes to what young consumers around the world are looking for, but some bemoan the corporatisation of the previously niche world of sneakerheads.
The CEO, however, believes that the convergence of technology, trading and the passionate community of sneaker enthusiasts is the natural development of what he calls the “version 3.0 of sneaker culture”.
“This idea of unlocking a trading opportunity is something that you’ve seen in other markets as well and has now come here for these consumers,” he explains.
Driven and media savvy, Cutler has turned StockX into a well-oiled machine and has grand ambitions for the company.
He has come on board as the experienced CEO tasked with turning a formerly fledgling start-up into a global concern – he won’t comment on rumours of an IPO that have been swirling for a while – but he is a sneaker lover himself and knows that there’s more to a pair of hard-to-get shoes than just their resale value.
“It was always this idea that there was something sought after that was beyond my reach,” says Cutler of his early days as a sneaker fan.
“It’s the importance of sneakers and what they mean culturally. In our company it’s really important how you show up every day and not only how you represent our brand but also how sneakers represent your own personal style.
“For me as a CEO it’s very exciting to represent what sneakers mean to me or apparel means to me and I have the opportunity to run one of the hottest e-commerce consumer companies in the world.”
This article was first published in South China Morning Post.