The Over-saturation Effect

offwhite resell

As you noticed I haven’t been blogging for a while mainly due to the holidays where I took some time off to rest, but more importantly I was focussing on growing the other aspects of the business that lacked attention previously.  Over 2018 I noticed a big problem in the sneaker resell market and that is the over saturation of re-sellers ALL going for the same shoes.  Coupled with the strong emergence of StockX making big strides in 2018 to become “the resell market”, this translated into a fairly challenging year for many resellers, big and small.  As a business if you may, is all about adapting and evolving to changing market conditions and I’m not going to lie…we had our ups and downs as well, but today’s topic I wanted to point out is the over saturation issue.

Here’s the root problem…it seems like every kid nowadays wants to be start a sneaker re-sell business.  I don’t blame them because it is fairly easy to get into, but I wouldn’t say it’s the most profitable.  Everyone that’s in re-sell wants to pop open a brick and motar consignment shop, but guess what?  Margins in consignment are razor thin and ultra competitive and hence why I avoided consignment entirely since the beginning.  Very naturally, everyone starting off is gravitated to the “hype” sneakers and there is every reason for it.  Re-selling hype sneakers is easy…everyone wants them, demand is through the roof and having them sells itself without much advertisement.  HOWEVER, here’s the big problem.  The supply is stupid limited and there could only be so many pairs that could go around and what’s left is everyone fighting for the same small pool of shoes.  A successful business in my opinion isn’t about making a killing off one deal, but rather making a decent spread on one deal and being able to multiply that 100 deals.  The simple economics doesn’t support the “hype” market anymore because there’s simply too many people after them.   For the most of us, winning a raffle on release date is not guaranteed every time and more than often you can’t get more than one pair…hence you can’t scale.

offwhite resell 2

So what’s next?  In case you haven’t noticed…the sneaker market isn’t defined by just “hyped” sneakers.  The market actually is fairly BIG and if I was to make a very educated guess, the total money flow of “hype” sneakers in the market probably only represents 5%-10%.  The rest is defined by every day sneakers being bought by people that buy normal non-hyped sneakers to wear.  The supply is enormous and the competition isn’t as crazy.  Well at the very least…you never have to line up or enter a raffle to buy shoes.  I won’t hand feed you on how to make money in this bigger less competitive market, but there is money to be made.  The vast amount of supply available means you can scale and earn money from volume.  If you say…well it’ll be much more work per shoe compared to selling just 1 pair of hyped shoe….I must counter and say…when do you NOT have to work hard and earn money?  Everything requires work!

[VERDICT] The changing sneaker landscape has created and eliminated a lot of opportunities.  I can’t say for certain where the market will head in the next few years, but I always believe whenever there is change…there are always opportunities.  If you are on the edge of figuring out what to do with your re-sell business…it may be a good change to evaluate the market and research what’s underpriced and where to take advantage of price anomalies because re-selling is all about buying low and selling high.

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