The Unpredictable in “Predictable”

netmagnetism predicting the unpredictable

I’ve said this once and I’ll say this again… Sneaker market is changing faster than ever before.  It’s changing so fast and constantly that new trends and prices are swinging in shorter and shorter time spans.  Unlike the old days, holding certain sneakers was guaranteed a return over time.  Most coveted sneakers followed a very steady path of time value.  Nowadays trends and hype drive the demand for sneakers and consumer wants are becoming harder and harder to predict.  Is this a good thing for the market and what can re-sellers do to stay in business and not lose money?

In the past, it wasn’t that easy for re-sellers to lose money because if you paid too much for a sneaker, you can just hold for a few months and the shoe usually will naturally go up in value and you’ll at the very least get most of your money back.  Today, re-sellers can lose some serious money with one wrong move or decision.  Let’s take the simple backdoor dilemma as an example.  Rewind 2 months ago and let’s say the off white dunks are dropping this week.  Backdoors are calling potential buyers for the shoes and trying to strike the highest price possible.  Let me explain this…being a backdoor buyer is NOT easy either…not only you have to pay premium for the sneakers at large quantities, but you are also fighting with potential competition for the business.  So if you want the shoes, you gotta pay high or at the very least offer something the competition doesn’t such as cash up front or some other deals that helps the backdoor.  If you don’t have a back door and you’re buying in the first month…you also have the same problem of possibly paying TOO MUCH from customers because nowadays everyone is bench marking “StockX payout”.

off white dunk green

Here’s the problem…this model works well if the price of the highly coveted keeps going up.  We rarely see scenarios where it goes the opposite direction. As an example, let’s take a look at the price movement of the off white dunks (pine green size 9 in this case)…it had an amazing first month where prices seems to be going up and up and suddenly prices tapered and came back down after touching the $1000 mark briefly just for a few days.  Of course part of the re seller’s job is to speculate on the price expectation of the sneaker and whether or not they should quick flip for a small profit now OR should they hold out for the longer term for a bigger margin.  If you have large overhead, sometimes you can’t afford to just make $30 a shoe…you need to make atleast a good $100 or 20% margin at the very least to pay the overhead.  On the same token, sometimes you can’t afford to hold too long or hold everything because you need cash flow from sales to stay alive.  I would say re-selling today is by far the hardest time ever in the last 5 years because of all the changes happening in the market.  For those that can’t adapt to these changes quick or resilient enough could see you out of business in less than a year.  I mean 1 year ago holding off white’s was almost a sure thing…look at the volt and black AF1s…those went off the charts good.  Buying those were one of the best decisions/flips in 2019 for me personally.  However, the off white dunks might be a tougher and longer hold unfortunately….don’t get me wrong, i’m still extremely bullish on them and in my opinion they are a good buy at prices right now, but as for the time frame it might be a slightly longer hold than expected and as a business you may need to weigh the longer wait time vs. cash flow needed for the daily operations of your business.  This is also why I never bought any pine greens during the 1st month and I only bought the Michigan’s and the Red pairs because I felt they were under priced compared to the pine’s.  Thank god I didn’t give in just because everyone wanted the Pine’s at the time because of the “price”.  I personally am a mid to long term flip, hence I try to get the best prices and guess what people will want NOT today…but in a few months time.

off white dunk green 2

So what now?  We all thought Off white dunks was an easy one…but as it turns out, it’s actually a much difficult play than originally thought.  Prices end up being super volatile and now who knows how long it will take to get back to $1000 territory.  The good thing is that there are plenty of releases every month and you just have to learn and use your experience as intuition for the next buyout.  You won’t win every single time, but like I always say…if you make the right call 70% of the time, you will succeed in the resell game.  In my opinion the best way to play in the current resell market today is to stay with low cost items preferably below $500 and stick with low margin and high volume.   Yes, it is more work, but you always have to remember that you have to factor in risk into your business.  Of course selling and having $1,000+ sneakers are sexy, but at the end of the day remember clout doesn’t grow your bank account…concrete solid steady business does!

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