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Forget art, wine, bitcoin or NFTs: investing in sneakers could be the next big thing. So big that there are sneakerhead conventions, tip sheets, sneakers selling for thousands at Sotheby’s, even a company that does nothing but authenticate sneakers to make sure eBay listings don’t are not counterfeits. Aimee Ng, 17, visits the market for Newsroom
The 22-year-old we speak with lives in Hamilton and runs the @puresteal.nz Instagram page. He has about 1000 followers who come to his page to buy sneakers.
No old sneakers. Special sneakers that the young man buys, new or second-hand, then resells with a profit.
Since launching his business during lockdown last year, he has made between $3,000 and $4,000 in profit from his investment in sneakers.
The Hamilton man is what is known as a sneakerhead – someone who collects and trades sneakers as a hobby or as a business. He is the shoe version of an art collector or a wine investor.
There are thousands of people like him around the world, and with high inflation and unstable stock markets pushing investors into niche markets, some in the investing community predict more people will enter the sneaker market. .
There are crazy stories. Nikes that might have originally cost a few hundred dollars sold at auction in Hong Kong in late April for up to $10,000.
A pair of Dior x Air Jordan 1 High sneakers launched in 2020 and selling that year for US$2,200 could now fetch between US$9,000 and US$24,000.
At the truly jaw-dropping end of the scale, an auction in February this year of 200 pairs of special-edition Louis Vuitton and Nike Air Force 1 sneakers created by the late American designer Virgil Abloh fetched an average of $150,000. each during an online sale at Sotheby’s. , a total of $38.5 million.
The most sought-after pair sold for over $540,000.
The Waikato man – and most Kiwi sneaker investors – are not in that league. Still, sneaker enthusiasts and sneaker stockists here can enter sweepstakes at retailers like Culture Kings to get their hands on, say, a newly released pair of Air Jordan 1s. Then resell them, hopefully at a profit.
They can also shop on specialized platforms like eBay or StockX, both of which provide authentication and sneaker verification to weed out counterfeits. In fact, StockX, a real-time online market (much like a stock exchange), was created in 2015-2016 primarily to allow people to trade sneakers.
And of course, sneaker entrepreneurs can do it the old-fashioned way and line up around the block outside a store in the early hours of the morning when something special comes out.
The 22-year-old says he buys his sneakers locally and online from Australia, sometimes from private groups. And he does his homework.
“It’s a matter of trial and error, but it’s important to do research. Personally, I started learning from YouTube, online articles, and friends who are part of the sneaker community.
To sell the sneakers, sellers like John tend to use social media platforms like Instagram and Facebook groups; some also use StockX to sell – the market takes a commission.
Over the last eight months John says he has sold over 100 pairs of shoes and although he is overall in the black he has also suffered losses and has taken it as a learning experience.
“It was mainly because the shoes were aimed at the wrong audience.”
The history of sneakerhead investing
Sneakerhead culture began in the United States in the 1980s, alongside the rise in popularity of basketball (especially Michael Jordan) and the growing influence of hip hop. The trend has benefited from the more recent “hype culture”, where excitement is built around a product’s limited release and consumers are desperate to own the rarest items, including shoes.
In early 2021, research firm Piper Sandler estimated the global sneaker reseller market to be worth $10 billion, up from $6 million in 2019.
A year earlier, Cowen Equity Research categorized sneakers as an “emerging alternative asset class” and predicted the resale sneaker market could reach $30 billion by 2030.
But make no mistake, the potential risks are high.
US-based alternative investment firm Alts.com runs a newsletter called Sneakers Insider where, according to the company, they “use Moneyball tactics to uncover sneaker arbitrage opportunities on the fractional platforms.” Whatever that means.
The December 2021 edition described sneakers as “probably the most choppy asset class in split markets” compared to a year ago, adding that the market had “been all over the place” in 2021.” he tough year, things seemed to be picking up…until the fall, when they immediately fell back to their early Q1 lows.
The volatility didn’t put people off. Many teenagers (and 20s, like John) run their own sneaker stocking businesses, according to a boston magazine article from May last year titled “Meet Boston’s New Teenage Sneaker Moguls”.
The magazine interviewed 17-year-old retailer Damian Mathews (aka Newton Kicks) who said that in a good month he was able to make a profit of $10,000-12,000 from his sneaker business .
Not only had he bought himself a car, he told the magazine, but the experience had been an education in starting and running a business.
Back in New Zealand, financial coach Shula Newland cautiously encourages anyone who considers sneakers an investment.
“Because sneakers are tangible, their second-hand value will generally increase with inflation as well as underlying supply and demand prices,” she told Newsroom.
While most clients she spoke to viewed collectible investments such as sneakers as a hobby, “it’s a potential form of investment,” she says.
“It’s just important to do your research and see how it aligns with your own financial goals.”