Summary of Research | stopbotsandresellers

Nike's Start & Influence:

Reselling products of all functions, prices, and demands has always been a staple in American history. America was partially founded off trade, and selling items or services for a profit. This strategy has been engraved into the American dream and will never go away. In the past decade, it could be argued that in the lucrative sneaker and clothing industry, reselling has influenced the market (and more specifically the average consumer’s wallet) more than in any other industry in America. People or companies who purchase sneakers and garments at retail price with no intention to actually use the product, but instead intend to sell the product for a profit are known as “resellers”. (Fernandez 2015.) As a consumer with a large interest in products from this industry, I have experienced first hand how it feels to have a product taken from beneath me because of a reseller. I also watched that same item sell for around five times its original retail price that very same week. After researching the sneaker and clothing industry much further, I have gained information on Nike and the strangle hold it has over the sneaker industry, owning about 50% of the world’s market shares since the 90’s (Vanderbilt 1998), the underground reselling game of sneakers and some of the rarest sneakers to be found in any collection, and the reselling of other highly demanded brands, like Supreme and Adidas. In my research I also learned a lot about strategies resellers use and how they are able to charge so much for recently released collections, and why they continue to get away with it. Lastly I have looked into why people argue towards keeping resellers around and letting the underground reselling market stay alive, allowing crazy resale prices, hundreds of dollars above retail. Some corporations are working to fight resellers, but nothing has been effective so far. As the most resold shoe brand of all time, Nike hasn’t done much in the fight against reselling, but with a revenue of $30 billion in 2015 (Woolf 2015), the sneaker giant has proved that it still dominates the industry, even with recent hype surrounding the Adidas x Yeezy collaboration (Leach 201 5).

Nike's Dominance in Reselling:

Many people believe that Nike is in constant competition with many other shoes companies such as Adidas, New Balance, Under Armour, Sketchers, Etc. In reality, Nike has dominated the sneaker industry for quite sometime. Owning a 62% share of the entire market in North America (Woolf 2015), Nike releases new and retro shoes every weekend, which sneaker-heads and consumers everywhere go crazy over. Each release typically costs anywhere from $100-$200, but with some selling out in stores and online in the matter of hours, these limited releases can resell on secondary markets like eBay, for hundreds of dollars above that retail price. After researching the underground sneaker reselling market, staggering numbers were to be found. Such as the reselling market is now worth over $1 billion as of late 2015 (Luber 2015), or that Nike dominates that underground market with 94% of all shoes selling were originally sold by the Swoosh. A large part of the Nike shoes resold every year come from a brand of their own, Jordan Brand. Jordan Brand has been a staple in shoe wear ever since the Jordan 3 was released in 1987 (Spence 2015). Jordan has been the driving force behind the demand for all Nike sneakers, with a limited release almost every Saturday of a retro Jordan. Jordan has stayed relatively quiet for most of his career, but with the cultural icon he has become Jordan is like a god to many basketball and sneaker fans, leaving them always wanting more. Fans want these shoes so bad that in some instances, like the release of the Air Jordan 11 Concord in 2011, has left some kids dead in the street (O’Connor 2015). The hype around the Concord release was so high that multiple consumers were found shot and killed over a pair. People will stop at nothing to get a pair of Michael’s shoes. After winning six NBA Championships and seven regular season MVP awards (Lazenby 2014), there is no denying that Michael was one of the greatest to ever play, but this did not solidify his brand. Nike has strategically kept Jordan brand shoes releases limited so that the market doesn’t get flooded and the demand for the shoes stay very high (Luber 2015). The high demand for the shoes allows resellers to buy the shoes when they release at retail price and then immediately sell them for a profit. Nike isn’t the only brand resellers have been able to capitalize off of.

Supreme's Following:

In a documentary recently filmed by Complex News and executive produced by Marc Fernandez, they go in depth in a four-part series uncovering what is the reselling market of the New York based skate-style clothing brand Supreme. Supreme New York was established in 1994 and is one of the most sought after street wear brands on the planet. The film series takes a look at how Supreme successfully promoted their brand through celebrity cosigns and limited releases of their apparel. This is a strategy that has been around for decades. Dating back to a specific advertisement between Run D.M.C. and Adidas. The popular hip-hop group made a song titled “My Adidas” and it was a single placed on their second album Raising Hell. This song put Adidas shoes Superstar and Stan Smith models on the map, increasing demand for the shoes and creating an iconic look. To this day Supreme still only releases clothing online and in their only flagship store located in the city of New York, which makes their garments extremely hard to find at retail price. This strategy drives the demand for their clothing and products through the roof. Enter resellers. We are now seeing $49 dollar graphic tees reselling for around $600 (Fernandez 2015). This has become the standard for all Supreme products being resold because of the insanely high demand. Anything with a Supreme logo is most likely going to be sold for ridiculous amounts of money above retail, at times the upcharge can reach about five to six times more than its original price. Resellers will sell anything they can get their hands on as long as it was produced by the street wear giant, it will sell, and they will make multiples of the original dollar figure they spent.

Reselling & Bots:

This brings me to the research I did on reselling and how exactly it hurts the consumer and even the largest corporations being resold. It’s pretty simple, resellers use advantages like location (closer to flagship stores, can camp outside while everyone else does so online), using other people to buy more of the product in case of item caps, and the largest advantage, “bots” (Babcock 2015). These strategies allow them to buy up as much of the already extremely limited market as possible and keep the retail prices for themselves, and instead save the jacked-up prices for the average consumer. The underground reselling industry of sneakers and clothing has taken off in the 20th century because of the availability of products the internet has given us, but with the internet comes “bots”. A bot is a software available for download on any computer and most mobile devices (Sneaker Freaker). A bot greatly increases a consumer or resellers ability or purchase limited edition products because it does all the work for the buyer, including placing orders, entering personal information, and completing purchases for them. This has become a large problem in the industry because the average consumer is struggling more than ever to purchase highly demanded products at an affordable price, instead resellers are purchasing most of the products available. Now you should be able to see what this does to the average consumer, it is possible to beat bots and resellers, but it is very difficult. There aren’t many plans in place to fight bots and resellers, although Nike and Supreme are two street wear giants that have something in the works. Supreme has warned online shoppers that they will be banning IP addresses that frequently visit their online store with suspicious or “bot-like” tendencies (Espinoza 2015). Also Nike has reportedly trying to fix the bot problem from occurring during their recent online releases dating back to early 2015, even cancelling certain releases online due to the problem. As far as anything more, not many other companies have spoken out about the problem, and a real, effective solution to the problem has yet to surface.

Conclusion of Research:

After researching the ins and out of the sneaker and street wear industries and all of the reselling capital that comes along with it, I have found that reselling in general is not necessarily the worst part, but the prices being paid for these limited garments are just too high for an average consumer to compete with. No matter what, a reseller is going to maximize their profit by finding what someone is willing to pay, and right now the willingness to pay in the underground reselling market is often hundreds of dollars above the initial retail price. Reselling is being fueled by online shopping and bots, and as the world gets more technologically savvy, more products will go straight to resellers instead of the average consumer if nothing is done.