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How Sneaker Resale is Fueling the Battle Between Nike and Adidas

The secondary market, an arena driven by exclusivity and the “cool factor,” can be a reliable bellwether for the popularity and relevance of a brand—and it’s fueling the unending battle between Nike and Adidas.

When it comes to sneaker resale, it seems Nike has the decided edge.

Cowen & Company’s recent report, “Sneakers as an Alternative Asset Class: Ahead of the Curve,” found that Nike maintains more than 90 percent of the market share in sneaker resale.

However, looking at the best-selling styles and silhouettes in sneaker resale, it’s clear Adidas has a considerable influence on the market, too. Its Yeezy line regularly tops lists of best-selling sneakers at resale, despite the brand increasing production and gearing its focus toward a mass audience.

According to Cowen, brands that can boast a resale market following often see ancillary benefits.

“The network effects of each marketplace are significant with data, and more users/communities participating in the market creating more trading, more hype/storytelling around product launches and enabling brands to create customized, limited-edition product at premium prices and high sell-throughs,” Cowen analysts explained. “This ultimately can feed back into primary market sell through. Our work around volume and price premiums suggests Nike and Jordan Brand continue to dominate the market with scarce, limited-edition product (Jordan, Air Max) but Yeezy is a lever Adidas is flexing with recent sell-throughs of the Yeezy V2 350 Clay generating some of the fastest the industry has ever seen.”

The success of Yeezy puts Adidas into the resale conversation despite the market largely being dominated by Nike, a great example of the disparate methods each brand is using to drive both the primary and secondary market.

On StockX’s marketplace, Cowen found that Nike led in total sales over a 72-hour period. However, among the top 10 styles sold in that time frame, 60 percent were Adidas brand shoes. Additionally, Nike shoes tend to sell closer to retail (and sometimes below), while Adidas’ Yeezy’s can often sell for two to three times their initial asking price.

Researchers also found that the lowest average asking price for five of the Yeezy’s on StockX’s best-seller list, was $318 compared to $175 for Nike’s sneakers. Adidas’ ability to maintain interest with limited drops and speed initiatives are among the many reasons Cowen expects more than 14 euros ($15.80) in EPS potential through 2023.

However, the firm still reserves its strongest praise for Nike.

“Nike’s financials solidify the company as one of the greatest investments and businesses in consumer and retail history in our view,” Cowen analysts noted. “The brand’s influence on modern sport is also nearly transcendent and increasing rapidly, with nearly omnipresent sponsorship in global football, American football, NBA, MLB, PGA, NCAA and Olympic athletes among others.”

The firm pointed to Nike’s ability to weather poor markets and its reliability in earnings as a couple of the many reasons why it remains one of the best bets in apparel—and by extension, the resale market.

Nike’s method of creating a “pull market,” a purposefully low level of inventory that drives real and perceived exclusivity of product, has fit in perfectly with sneaker resale. Cowen said the company’s commitment to “speed, full-price selling and earnings growth” has allowed it to build an industry-leading gross margin, with Adidas not far behind.

Above all, though, Nike’s ability to generate excitement in and around “micro-communities” is what Cowen analysts believe separates it from other brands. The report pointed to a speech Nike’s VP of digital products, Michael Martin, gave at Shoptalk 2019. In it, Martin said the brand created a style, the “De Lo Rio,” specifically with information gathered by its SNKRS app. Through micro-targeted ads and word of mouth, the shoe sold out quickly. Then, in a few weeks, paparazzi spotted Nike-brand athlete, Lebron James, wearing the De Lo Rio.

Today, a used pair can sell for $235 at resale on GOAT’s marketplace.

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