Sneaker Market Turmoil – Where Do You Stand?

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So it has been a WILD 2 weeks to say the least…and I haven’t had time to blog for various reasons and even though most of you are bored out of your minds staying at home, I have been working endlessly and harder than ever because this is probably a once in a lifetime opportunity I get to work from home full time to do sneakers and I want to take advantage of time to clean up some inventory and sell some stuff that I haven’t had time to sell for months. On a more serious note, this virus thing has escalated so fast, it left many businesses struggling for solutions in such a short time period.  I really hate to say it, but I have said it before and I will say it again…this virus will kill more businesses and jobs than people when it’s all over and done with.

As a resellers we are no different.  We are a business too and the change in the economy will more or less affect everyone, so how do we cope under amid changes in the sneaker market.  Well to say the least it depends how you positioned yourself and how you see the current situation.  Same idea as do you see the glass half full or half empty.  Let’s start with one side of the spectrum.  If you are a reseller that have been stretching your capital to the max with super risky inventory, you might find this time period a difficult time to withstand because of course buyer’s buying power will drop amid the crisis as some simply don’t have the cash to buy and some are too scared to spend money. If you need cash flow to live, you might find yourself in a situation selling at a loss to make ends meet.  On the same note, some of you might have noticed some material price drops on some sneakers denominated in USD on StockX.  This isn’t just a function of lower buyer demand, but also a function of the US dollar increasing almost 10%+ in a matter of 1 week against other major trading currencies.  The sneaker resell game is definitely an international game and with other countries buying power dropping from both a currency and demand level, you can expect prices to drop as well.  From a Canadian seller standpoint, it actually helps with the stronger US dollar as certain items i’m actually getting more in CAD equivalent even with a slight price drop in the sneaker in USD.

Of course while some see times like this as a problem…some see opportunities.  As a business if you had built a strong online presence and a solid customer base, you will find times like these even more prosperous.  Even if you lose foot traffic amid store closures, you still have people that are looking to buy shoes everyday.  As a re-seller this actually might be a good time to buy at favourable prices as some look to desperately shed their inventory at a discount.  I’m glad I’m not in a position for that as I have consistently maintained a healthy cash flow, so if I do see good deals on the market I will not hesitate to buy of course given the prices are too good to turn down.  But most importantly in order to do so you have to have good cash management since the beginning.  Cash flow has always been the biggest factor for any successful business and it’s an even bigger factor today in times like these where everyone is looking to hold cash and not sneakers.  If all your cash is tied up in deadweight inventory, you can’t take advantage of price drops without selling your own inventory.

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At the end of the day I do hope this virus can be controlled sooner rather than later.  Everyday this carries on could mean more people going out of business.  It is situations like these that weed out the good and bad businesses over time.  We can’t expect the good times to continue forever.  Sneakers has been on an uptrend for 10 years and just like any market we are bound to have ups and downs.  We have all been talking about a sneaker bubble for some time.  It’s just this time the trigger point wasn’t a straight out lost in demand for sneakers, but simply the mere beginning of a possible global recession.  Sure this might be a small trough in the business cycle, but if you were to learn one thing from this, it should be better risk management and understand business will never be a smooth ride all the way and always plan for the worst.

 

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