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Behind The Overheated Sneakers, Will The Business Of "Crazy Thunder" Be "Thunderstorm"?

2019/8/9 14:55:00 0

SneakersFried Shoes

Behind the overheated sneaker culture is a collusion between brands and consumers.

According to yesterday's news of fashion business, the new regulations on online trading of App, the biggest selling platform for shoes, and the platform of fashion lifestyle in China, protect the rights and interests of buyers and sellers by restraining the cost of sellers' default and raising the amount of buyers' compensation.

Poison APP also issued the "shoes not to stir" proposal earlier, put forward that shoes are used to wear, not for frying, "respect the trend culture of shoes, grasp the benign operation direction, responsibility guide positive consumption concept."

The culture of sneakers has been popular for some time. Although the sneaker culture can be traced back to the last century of NBA basketball, it has not been until the past five years, thanks to consumers' inclination to comfort, the global penetration of basketball and hip-hop culture, and the mainstream of fashion fashion, that the culture of sneakers has officially shifted from specialization to life, from small circles to the masses, and in a fashionable way is called "going out".

Especially since the beginning of this year, "fried shoes" have been warming up all over the country. Many people feel that the wind is not right.

According to statistics, in May this year, the market prices of the most popular shoes on APP were all above 100%, and the number of individual sneakers increased by 430%.

All kinds of media are beginning to turn their attention to a group of young people called "shoes dogs" or sneakerhead. These people include not only ordinary consumers who buy and collect limited edition sports shoes, but also a large number of shoe vendors who are already not satisfied with buying, but are starting to participate in reselling shoes business.

In fact, the resale of sports shoes has become a serious business, and even "financial" has become a tool for investment and financial management. According to Cowen&Co, a consultancy, by 2025, sports shoes resale is expected to become a global business of $6 billion.

The Statista data show that the income of the footwear industry in 2019 will be estimated at $9 billion 520 million, and the market will continue to expand at a 10.3% annual compound annual growth rate in the next 5 years, and this figure will continue to grow.

The latest APP initiative has also made it the first platform for a clear attitude towards fried shoes, which has been affirmed by the official media such as the people's daily. Prior to that, both domestic and foreign shoe resale platforms were tacitly convinced about fried shoes, which in fact supported the total volume of merchandise sold by the major shoe sales platforms, and promoted the rapid growth of many domestic and overseas sports shoe resale platforms.

Toxic APP is hatched by the largest sports community in China, and is now a unicorn with a valuation of $1 billion. Tiger rushed to the community online shopping guide in 2014. In 2015, the poison APP was officially launched on the basis of information exchange and identification of shoes, and then increased the diversion function to Taobao store.

In August 2017, poison APP on-line shoes trading function. In 2018, poison APP got tens of millions of dollars of financing from Gao Rong capital, Sequoia Capital China and pearly capital, and independently operated by tiger tiger. After that, the A round financing from DST was completed in April this year.

In addition to poison APP, the second major domestic shoe resale platform nice is also booming. Its predecessor is the picture social platform. After that, it transformed into a trend of information and resale the community. In June this year, it completed tens of millions of dollars in D financing.

In the interview, niceCEO said in the interview that the focus of nice services is to purchase professional users of sports shoes for collection or investment purposes, rather than "small white users who only want to buy sneakers".

In addition, YOHO YOHO's BUY platform, the two level trading platform of UFO's flying saucers, has been launched by the trend industry group, and many of the resale platforms such as bullfight, get and so on have made the market more crowded.

The purchasing power of China's young consumers has also made the global shoe sale platform impossible. In June this year, StockX, the US sports shoes trading platform, announced that it had received $110 million from institutional investors such as DSTGlobal, GeneralAtlantic and GGVCapital. It will use new funds to expand international markets such as China and Japan, and add new toys and other trading categories.

At the end of July, the resale platform GOAT (GreatestOfAllTime), which was invested by FootLocker, a sports shoe retailer, formally entered the Chinese market. It held the first conference in Shanghai Xingye Tai Gu Hui, and launched the WeChat GOAT online store. GOAT emphasized that with its technology and identification technology, the platform has created a business model of "identification to delivery" for shoes, and all shoes sold on its platform must be certified by genuine products.

The sale platform of sneakers is the same as many luxury secondhand resale platforms, and the business mode is mainly C2B2C. After the order is formed, the seller will send the goods to the platform for identification, and then the buyer will deliver the goods to the buyer. Platform revenue comes from collecting a certain percentage of service fees to sellers and charging appraisal fees to buyers.

Sneakers resale platform with identification services instead of the early gray area of the micro business and Taobao store. The identification of APP is mainly from the private sector. It is mostly the opinion leaders who have accumulated word of mouth for many years.

GOAT hired a team of special appraisers and used AI to identify and manually identify two checkpoints. However, due to lack of professional qualification assessment, consumers still have doubts about the reliability of products and whether the platform is general inspection or sampling inspection.

But in any case, a market has been built up and snowball.

The premise of this business is the supply of goods. The acquisition of genuine products can only be achieved through official channels, which are then sold in the market to earn the difference, which is mainly dependent on luck and probability. In order to make the shoes Fair, the sports brand has set up online auction, offline multi round drawing and other complicated forms in the official sales channels, and restricted one pair of ID cards to buy a pair of shoes.

Both Nike and Adidas have launched mobile terminal applications for the purchase of limited edition sports shoes. Take Nike as an example, in 2015, Nike launched SNKRSapp, which will take the initiative to push the news of limited edition shoes sale to users, and remind users to open app rush on time.

That is to say, Nike has two electricity suppliers app, one is Nike's ordinary shopping app, and the other one is app for robbing shoes.

According to the fashion business express data, SNKRS's income doubled and its monthly activity doubled. Now it is nearly 20% of the total sales of Nike figures. It is expected that this year's sales will reach 750 million US dollars.

However, although the sports brand has launched a seemingly fair shoe rule and tool, ordinary consumers need to pay high time and opportunity cost. The possibility of buying a pair of hot sneakers at the original price is very small. Many shoe vendors hire older people to queue up.

What is more noteworthy is that today's sports shoe Rush has become a specialized operation. With the strong background of the "banker" into this business, they use more sophisticated technology plug-in, shoe grabbing robot and computer skills to complete the rush to buy goods.

Today's sports shoe Rush has become a professional operation, which has become an opportunity for the third party platform.

For example, in the early days, a veteran player discovered the loopholes in the adidas official website. He could skip a series of preorder actions such as selecting products and adding shopping cart, and enter the payment interface directly through the input web site, thereby improving the efficiency of panic buying.

Besides, shoe vendors monitor the change of brand page inventory in real time through computer plug-ins, and seize the opportunity of surprise sale. Recently, there has also been a APP community targeting veteran players and shoe vendors. For example, a APP called "staring at the tide" has helped pay members to monitor the replenishment trend of major websites and brand websites in real time, and provide calendar and reminder services for sneakers.

The supply of goods provides the foundation for this business, and the second step is the real capital game.

In view of the above advantages, there are 28 serious phenomena in today's sports shoe resale platform, that is, a few professional sellers have mastered most of the supply. In the first half of this year, 88% of ordinary buyers of toxic APP bought 1 to 2 pairs of sneakers, and 12% of professional buyers bought over 3 pairs.

In the first half of this year, there was a buyer who bought 5703 pairs of sneakers on poison App in half a year. The first ten users of trading volume produced 23635 transactions in a short period of six months, totaling about 34 million yuan.

This batch of shoe dealers who master the "pricing power" will become the makers. They can increase the premium of the supply and demand by maintaining the supply of the "Gold code", which is the highest demand code, and pulling the price.

Of course, this is also a risk factor, just like the stock market. Shoe vendors judge the price trend of shoes by limiting factors such as limited money and star street shooting. Because of the wrong prediction, some shoe devaluation happens.

But price volatility is the key opportunity for makers to make profits. The rapper TravisScott and Nike jointly issued a low price barb shoes with a price less than 2000 yuan, which experienced dramatic price fluctuations.

Because the sales volume of sports shoes is not small, the probability of winning the lottery is not low. On the day of sale, the price of the shoe sold on the platform dropped from 9000 yuan to 4800 yuan. Later, because of the news that the shoes will not be replenishment, the price rebounded again, now has been around 6000 yuan.

In this process, due to the margin and the default payment mechanism of the platform, due to the different prediction of the price trend of the buyers and sellers, the liquidated damages resulting from the cancellation of the order also become the source of income for some sellers.

The shoe vendor summed up the methodology in a self-contained article that WeChat's public heard. That is, the real way to make money in the shoe business is to leverage the capital to pry the market and make profits from price fluctuations. Like stocks, considering all factors, buying, holding and selling is a long term stable way of making profits.

AirJordan and Yeezy new and old two generation sneakers almost propped up half of the market.

Looking back at the evolution of the shoe business, it is easy to see that the Yeezy brand launched by rappers KanyeWest and adidas has become the subversive of the rules of the game. If Nike and Jordan's AirJordan represent the professional era of sneakers, Yeezy will open the era of popularization of sports shoes.

The new generation of consumers need not be a sports enthusiast, but are curious about their sports style. They also wear sneakers in other life scenes besides sports, so that they can enrich the content of sports shoes culture which used to be told by athletes only.

At the same time, the hunger marketing of Yeezy and adidas has greatly broadened the imagination of the price of shoes. When the Yeezy was launched, the price of $350 was much higher than that of traditional sneakers, and the resale of the two tier market increased the price.

Earlier, KanyeWest said in an interview show that Yeezy should be "Hermes" in the sports brand. Last year, Adidas decided to mass production of Yeezy, on the one hand, let KanyeWest achieve "everyone wearing Yeezy" ambitions.

On the other hand, began to collect the net and enter the stage of scale income. Last week, Yeezy also held an unprecedented replenishment, but it still did not affect the Yeezy price of the two tier market, behind which is the market's confidence in Yeezy.

Of course, to a greater extent, the financing of sneaker culture is planned by the platform for the sale of sports shoes. StockX has been branded on the stock trading gene since its birth. Its idea is to allow users to trade shoes like fried stocks, and no longer just limited to sports shoes, but "Stockforeverything" - all kinds of trends, and become a platform for securitisation of various commodities.

Taking a look at the domestic and international shoe resale platform, the poison APP has a strong foundation in the domestic market, but the nice aiming at professional investment and rapid growth can not be underestimated. GOAT, who recently entered China, specializes in the identification technology of more professional shoes, aiming to become an authority in the field. At the same time, the background of its internationalization brings more abundant supply.

However, the development of these resale platforms ultimately depends on how strong the two tier market is. When the market is circulating, "old people speculate in stocks, middle aged people stir up money, and young people fry shoes", this business is hard not to cause "Thunderstorm" concerns.

The paradox of "fried shoes" is that sports brand and two level market of shoes need enough topic heat to keep the products at a premium. Sports brands such as Nike and Adidas do not benefit from the two tier market, but they do benefit from other aspects such as brand value.

But if it is over capitalized to become a game for a few people and most people feel tired, then the business is facing a crisis of collapse. After all, the size of the market is supported by most of the ordinary sports shoe enthusiasts. Up to 88% of the APP users are ordinary users.

In the short term, because the market does have a rigid demand for sneakers, and the trend of sneaker culture in the global market, the market will remain strong. According to Euromonitor data, China has 0.4 pairs of sports shoes per person, 4.3 pairs per capita in the United States, 3.7 pairs in Europe and 4.4 pairs in Japan.

The surge in footwear and footwear has consolidated the price range of the product, which keeps the price of the shoes relatively stable. At the same time, these large scale production of sports shoes will also face the real demand for resale of idle second-hand shoes, although many consumers are still afraid of the used sneakers, but the perfect shoe cleaning industry will weaken this problem.

But in the long run, the frequency of sports brand launching new products is higher and higher, and the supply is also sufficient. Sports brands are now offering "limited" sports shoes with high frequency, and the scarcity of sneakers will be diluted. If we rely solely on the concept of artificial speculation, the two tier market will be more and more bubbles, and the development of platform for sale of sports shoes will also become a bottleneck.

The growth of black box analysis suggests that China's resale platform should not be confused by short-term interests and vanity indicators such as total commodity transactions, and seriously open up new trading modes and emerging markets and continue to make valuable growth.

From this level, StockX's thinking on the future is more clear and has certain industry reference. StockX CEO ScottCutler told BusinessInsider, "StockX doesn't see itself as a resale market. The size and opportunity of the market we pursue are just as big as the market itself.

StockX will not position itself as a platform for the sale of shoes, but a platform for securitisation of various commodities.

The core of the company's business model is to overturn the traditional fixed price mechanism of shoes, and use the new technology platform to carry out the new price revolution. The company takes data as an advantage over other resale websites, which can display price fluctuations and trading history of different sizes or colors of sneakers. With the expansion of the platform in the global market, this change will be global, which is the fundamental reason for such platforms to stimulate investors.

For real hot commodities, prices are no longer defined by brands, but by consumers. Susquehanna analyst SamPoser said that the two level market is reasonably creating heat. It provides the brand with a measure of demand and helps the brand understand the market demand. NickDePaula, creative director of NiceKicks, a sports shoe collection shop, also believes that the price of shoes is no longer related to supply, but is driven by demand.

In this regard, StockX has made a new attempt, which is directly publishing products with the brand, which is known as StockX IPO (InitialProductOffering) "first public release". In January this year, the company co operated with jewellery brand Ben "Baller" Yang and footwear brand Straye to offer limited sandals.

The sale is in the form of a Holland auction. Each buyer makes an offer, and the buyer can buy the product at the lowest price. The average buyer spends 210 dollars on the pair of sandals.

In this way, StockX realizes the price of consumers, and the price of 210 dollars is higher than the market price of a pair of sandals about 70 dollars, that is, the premium that consumers give to the product.

Cowen&Co analyst JohnKernan believes that as the resale market reaches the scale of billions of dollars, brands such as Nike and Adidas will not sit idly by. They are likely to reach a partnership with the resale platform for shoes, and will be directly listed on the third party platform.

In fact, the rising price of the shoe market is more and more similar to that of the luxury goods market. If we refer to luxury electric business Farfatch, it is also through the establishment of direct cooperation with luxury brands, exclusive new product sales and other acts to enhance its industry status, breaking the ceiling of the electricity supplier.

You know, Farfetch, which uses a buyer's shop cooperation system, also doesn't keep its stock, and directly cooperate with the brand so that it can be resale from a buyer's shop and develop into a luxury brand approved distribution channel, or even an online scenario of touch consumers.

In addition, with the development of second hand luxury platform such as TheRealReal, the second hand luxury trade and traditional retail are no longer a parallel market that does not interfere with each other. The former has deeply influenced the latter, which is also reflected in the sports shoes market.

Similarly, the next step for StockX is to blur the boundaries between the first and the two tier markets and become a substitute for the traditional shoe retailers. JoshLuber, co-founder and former chief executive, said StockX will not aim at a few professional players in the future, as well as ordinary consumers who only want to buy a pair of sports shoes. At present, sports shoes with a price of less than 100 dollars have become one of the fastest growing StockX products.

There are only a few hundred pairs of sneakers on the wall of the traditional shoe collection shop. The products are not fully displayed and the products are seasonal. But StockX has a complete product catalog. Consumers can query and purchase any sports shoes with color matching and size in StockX.

In fact, the prices they find on StockX are likely to be lower than those of physical retailers. The brand says that about 25% of StockX's sneakers are sold at below the selling price. It can be seen that the selling platform for sneakers also foresees that speculation is not a permanent solution.

In the thirty years of agitation, Wu Xiaobo, a writer, described the trend of speculation in China in the last century. "The five needles of the Clivia in the northeast and the Jiangsu and Zhejiang provinces in 1980s were not inferior. These phenomena are similar to the tulip events in Holland in seventeenth Century. They can be seen as a demonized release of public desire for wealth.

Nowadays, the trend of "fried shoes" does not seem to be very different from the above events. They all take advantage of the vanity mentality of people who are quick to get rich. Facts have proved that although the brand, platform and consumers collude to establish the price system of sneakers, but the products that lack their scarcity may be swept away for a while, and the bubbles will eventually dissipate.

When we extend the timeline, the market will eventually return to reason, and consumers must return to the recognition of the product itself. The long-term value of sneakers is composed of the product's own performance and cultural value, and the two need long-term construction.

Although the initial explosion of Yeezy is related to the enviable image of KanyeWest, it is also inseparable from the excellent Boost technology and PrimeKnit weaving. It is hard to support the long-term development of brands only by matching colors and concepts.

At the end of last month, a pair of Nike sports shoes, known as "moon shoes" in 1972, were photographed at Sotheby's for $437 thousand and 500 (about 3 million 10 thousand yuan), breaking the world record for the auction of sports shoes.

This pair of shoes was designed by Nike co-founder and track coach BillBowerman for runners during the 1972 Olympic Games. There are 12 pairs in the world. This also proves that the sneakers with long-term investment value are truly sports shoes with cultural value.

If there is a healthy business model to support and make the shoe market a more dynamic and orderly market, then the development prospect of this business can not be underestimated. Moreover, considering the issue of sustainable development, there will be more room for future pricing of sports shoes, because sports brands will take into account the ecological cost and recyclable materials, which is also good for the two tier market.

At present, Nike has achieved 73% of shoe and clothing recycling materials, and Adidas also promotes the use of sustainable materials.

Concept21, founder of Nike's early staff and footwear consultancy, told BusinessInsider that the industry still underestimated the price of sneakers. In the future, both branding and two tier markets will weigh the ecological cost of shoes and non biodegradable materials. So people will eventually go back to looking at sneakers as a long-term investment rather than a fleeting trend. Author: Drizzie


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