My Thanksgiving Break has been terrific, but it also feels great to be back at school and dive into my independent project again while keeping my sneaker business running. October and November have been two of the worst months of Sole Garage, an official name of our brand we came up with a couple weeks ago, due to the crash of the sneaker market and thus the unpredictable fluctuation of sneaker prices. However, we have survived through actively adjusting our business operation. We have also reached to some “veterans” in the sneaker re-sell industry and acquired their advice. Since Thanksgiving week the sneaker market has revived with a consistent increase of the prices of most pairs, and a sense of relieve as well as success has overwhelmed me. In today’s blog post, I will briefly talk about our “adventure” during the last two “dangerous” months, and the progress we have made.
I sensed the crash of the sneaker market two months ago while investigating the price of a specific pair of sneakers on eBay. The final sale price of that pair showed a very irregular pattern, as some pairs were sold at the agreed market value while others were sold at a much lower price. I was vigilant enough to find such a weird phenomenon, and it was consistent with another possible evident – I have the habit of keeping auction-style sneakers in my eBay “watch list” when the winning bid is below the market value, and during October, the number of sneakers in my “watch list” increased dramatically, which demonstrated that many pairs were unable to sell at the previously believed market value; however, we did not respond to such an intuition immediately enough, as we still listed several pairs for sale on eBay. The outcome was terrible, as three pairs of them only sold for a combined $270 while we were expecting a final sale around $400. This time we sensed the “danger” and canceled some planned sales. The decreasing trend of eBay sales of sneakers pictured by Campless continues, as you may be able to see from the graph below.
Luckily, our decision to stop selling turned out to be right. Besides eBay, same patterns occurred in Facebook Groups and Instagram pages as well, as we saw some sellers unable to get their sneakers sold even at prices much lower than the previous market value. Instead of getting our hands immediately at those “steals,” which was something we always did, we lowered our acceptance price (for example, if we were willing to pay $150 for a certain pair before, we are only willing to pay $130 now). However, we did not stop investing completely – we still bought in shoes below our new “acceptance price,” but instead of putting them up on eBay immediately like we formerly did, we chose to keep our inventory until the sneaker market revives. It was a brave move, as none of us knew when the sneaker market would recover. And dead investments can be detrimental to our cash flow if we could not get sales soon. However, I had my own reasonings. For me, the crash of the sneaker market was partly due to the terrible fluctuation of the stock market this summer. Since people were generally losing money during the stock market crisis, sneaker collectors stopped investing in the upcoming months, which led to the ultimate sneaker market crisis. Actually, many industries were hurt by the stock market crash this past summer. For example, according to an article on Wolf Street, stock market crash will “[make the people in Silicon Valleys] suffer from the fall to earth [after being on top for so long.” However, since the stock market has partly recovered in October and November, I envisioned the sneaker business to also revive in the end of November and December, not only because people would be willing to spend again, but also because the holiday season was coming. My speculation was risky, but it turned out to be mostly correct. The sneaker industry has recovered since Thanksgiving week, and now we are able to confidently post auctions on eBay while expecting a better return. Our inventory stagnation was solved, as most of the pairs we invested in are now on different websites, ready to sell.
Meanwhile, we also try to make progress through communicating with several sneaker industry “veterans.” Right now I have talked with the founders of three major sneaker re-sell boutiques, Chilly Kicks, Direct Kicks, and Sole Supremacy. The three businesses use different business models to re-sell sneakers and make profits. Chilly Kicks has a subscription business model. While every customer pays $5 per month for the access to weekly restocks of sneakers, the price on restocks is very attractive, mostly under market value. Such a model has attracted us – instead of making money directly from re-sells, we can attract customers through low prices and make profits through subscriptions. The subscription fee can fill up the gap we create by selling shoes at a cheaper price, and the popularity of our business may increase a lot if we follow such a business model. However, it also requires us to have a relatively large inventory, since we will want to give most subscribed customers a chance to get a pair during restocks. Direct Kicks follows a much more straightforward pattern by re-selling second-handed sneakers directly. However, before selling sneakers, they often carry out a restoration project, which can potentially increase the value of some used sneakers. Sole Supremacy’s business model is more complex while embodying two layers. They have relatively expensive sneakers on their websites for sale while also providing auction-style sneaker sales, with the price always starting at $0.99, on eBay every month. We have already followed their $0.99-start strategy while selling sneakers on eBay, as we believe it can bring more attentions and followers. Right now we are trying to decide if we should follow one, or even more of these three business models. I personally prefer the subscription model used by Chilly Kicks, but in order to actually carry that out, we have to increase our inventory.
And that wraps up this week’s blog post on my own sneaker business. I am very excited while typing this entry because I see how we overcame difficult times and saw the bright future again. Indeed, I made some risky decisions. But I am fortunate enough to see my effort pay off, as we are back on the right track again.
The Christmas Holiday is coming, and I won’t be updating blogs possibly until a couple weeks after Christmas due to preparation for finals and presentations of my project. However, I will be back soon and take on the study of entrepreneurship again as we are heading into more interest topics. I will also update my own sneaker business with all of you here. Don’t miss out! Until next time, peace out.