One of the hardest things to do as a re-seller since the emergence of StockX is the valuation of preowned sneakers. Couple years ago I operated 80% in the preowned market because margins were much better and fast forward to today, that percentage has flipped 180 where now I deal mainly with DS pairs only. Why so? The switch actually makes sense because not only dealing with DS allows me to scale the business with more volume because I can cross list on different platforms with ease, but it also gives me less work on the selling front in terms of photography and inventory tracking.
Over the past year or two I’ve noticed a trend that has become very alarming that it can’t go unnoticed. The price gap between a preowned and brand new DS has been widening – meaning the valuation of a preowned sneaker is taking a much steeper discount relative to the same pair in DS brand new condition. To put things in perspective…A brand new Air Jordan 1 Chicago 2015 retro can be sold on StockX for $1,300, but a preowned no flaw (9/10 condition) would have so much difficulty selling at even $900. How I personally would value a preowned sneaker is…if it’s 9/10 condition it should be worth approx 90% of the DS price, right? Well the fact is you probably need to take atleast a 30% discount and sometimes more to even get anyone remotely interested in purchasing the shoe today vs yesteryear.
Aside from seeing this trend, I am started to ponder why this trend persists today. The only reason I can think of is people are actually buying sneakers to invest and not to wear. There will always be a percentage of people that only buy DS because they can’t psychology stand wearing a pair of shoes worn by someone other than themselves, but this percentage is relatively small compared to those (like myself) that rather buy preowned pair at a discount because it makes more sense financially.
The point i’m trying to make today is 2 fold. The market indeed is changing in which I believe there are more “investors” out there buying to solely for it’s price appreciation than actual sneakerheads that are buying to wear. The 2nd point is if you are a reseller, you may need to change the way you value second hand sneakers because IF you are benchmarking a brand new DS price on StockX to derive the value of a preowned sneaker, the discount factor probably has to be steeper than what it used to be if you want to be able to make a spread. In other words, DS brand new prices now have a much higher premium than it did in the past because you now have to factor in the liquidity of the item, in which a preowned item doesn’t have.