Key takeaways:
- StockX achieved a $1 billion-plus valuation and set a standard by providing resale customers with a quality shopping experience that includes access to once-elusive pricing data.
- StockX and its competitors are highly reliant on the current limited-edition drop model that creates scarcity and drives secondary market prices — profits that are not realised by shoe labels.
- The Detroit company plans to expand internationally and into services and products beyond sneakers and streetwear.
StockX, the self-proclaimed “stock market of things”, known for facilitating the sales of sneakers and streetwear, on Wednesday announced that a recent $110 million fundraising round had brought its valuation above $1 billion, making it the newest member of the unicorn club.
As the fashion-tech world’s attention has been focused on companies like The RealReal, which is set to go public this week with a target valuation of $1.5 billion, StockX was quietly building out a business that attracts more than 15 million unique visitors a month. While elevated valuations in the private market are nothing new, both investors and StockX’s customers credit it with revolutionising the sneaker-flipping business.
The Detroit-based company was founded by outgoing chief executive Josh Luber in 2015 as a more developed Ebay. It puts data that was once exclusive to large resellers into the hands of everyday customers, thereby removing the guesswork for pricing products. Much like a day trader might analyse a stock’s price history, buyers and sellers using StockX can assess a shoe or a handbag based on a historical price chart with a suggested expected premium. StockX also authenticates goods and standardises sales for each transaction such that the process is the same no matter who the seller or buyer is. Unlike competitors like Grailed, it only allows the trading of unused wares of sneakers and streetwear (watches and handbags must be in excellent condition), thereby avoiding issues of product quality.
This near-frictionless process is a significant improvement on how coveted sneakers used to be sold — something anyone who has witnessed the madness of SneakerCon can attest to. “The worst part of the resale market is other people,” says Jian DeLeon, editorial director of streetwear bible High Snobiety, adding that other sneaker-selling platforms typically require engaging with a prospective buyer or seller who is eager to haggle or ask for evermore information. “By focusing on the [user experience] first... they’re essentially the Seamless of the resale sneaker market.”
Apparel and footwear resale could be worth $51 billion globally by 2023, according to online resale platform, Thredup — $6 billion of which StockX thinks will be accounted for by sneakers alone.
It’s that upside that attracted Hans Tung, managing partner at GGV Capital, which led StockX’s recent Series C funding. “There are a lot of [peer-to-peer] businesses on the market that have been built over time, [but it is] very difficult to have a uniform experience every time you shop,” Tung, now a StockX board member, tells Vogue Business.
He argues that the company’s future hinges on it providing a uniform experience and trusted authentication of the products it facilitates sales of. “It starts with sneakers, but it doesn’t have to be sneakers forever,” he says. “Whether it’s accessories or apparel or something else, this idea can expand into lifestyle and even services… from a business model standpoint and a product services standpoint, there is infinite potential.”
Indeed, StockX has already set a standard that customers have come to expect elsewhere. “StockX offers... so much good data that even when I’m shopping on other sites, I always consult StockX,” says Rae Witte, a New York-based freelance writer who recently purchased two pairs of Nike Vomero 5s in a slime green colourway on StockX for the price of one pair at retail, savings she attributes to the platform’s robust product data.
StockX avoids many of the woes that plague modern retailers today — a glut of inventory, fruitless yet expensive retail spaces, etc. — but the international expansion it plans will be challenging. Although StockX already has an authentication centre in the UK and is opening one in Amsterdam later this year, it needs to continue convincing customers that its platform properly vets fakes from flooding the market, a problem that may only become more difficult as StockX grows into less familiar markets. (Tung says the company will build a more robust authentication system to tackle the problem of fakes in places like China.)
Since StockX is neither a sneaker retailer nor part of a bigger group, its image as being the destination for the most-hyped products is dependent on whether its limited-edition drops continue. Consider the value of Yeezys circa 2015, when they were released in an ultra-limited quantity versus Yeezys today, which are available to nearly anyone who wants them. The exorbitant prices on some highly coveted sneakers are primarily realised by resellers and not brands, removing at least one incentive for shoe labels to continue with limited drops.
“The fundamental principle of what makes this marketplace work is scarcity,” says Matt Powell, senior analyst specialising in the sneaker market at NPD Group. “If brands decide to ramp up their production of these shoes into more mass quantities, there will be less reason to expect a high multiple, and a lot of these shoes will lose the interest of the consumer.”
Of course, that is why StockX intends to diversify itself away from sneakers. “Their stake is not invested in that 700 per cent ROI like it is for people who are full-time resellers,” says DeLeon. “StockX is basically a platform for small-scale commodities trading without having any skin in the game.”
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