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On the Heels of Streetwear, Sneaker Resale is Going International

From its humble origins as a side-hustle on eBay, sneaker resale is set to take its popularity to the global stage.

Cowen & Company is coming out strong in favor of a worldwide reach for sneaker resale platforms in the coming years, according to its new report titled, “Sneakers as an Alternative Asset Class: Ahead of the Curve.”

The investment bank found in its quest to value the sneaker as an alternative asset that its contacts within the resale industry were “unable to contain their enthusiasm for the potential of sneaker resale and streetwear markets within the international space—particularly in China, with Shanghai becoming ground zero.”

To support their point, analysts from the firm pointed to the popularity of streetwear, which has shown strong growth in China and abroad.

Streetwear and sneakers are strongly linked. StockX and Stadium Goods, for instance, now sell apparel brands like Supreme and Palace alongside their sneaker offering and sneaker resale shops regularly feature rare streetwear apparel. As the streetwear market continues to grow worldwide, Cowen believes the infrastructure and demographics necessary for sneaker resale to thrive will follow suit.

Cowen researchers identified some key metrics to follow that support this hypothesis, beginning with a much larger penetration in the luxury and streetwear markets from mainstream Chinese shoppers. By 2025, the firm expects Chinese participation in the $70 billion streetwear market to rise to 45 percent from 32 percent in 2018. As sneaker resale is a primarily online market, Cowen also believes it will be helped by the rise of online spending in the category—predicting online luxury sales penetration of 25 percent by 2025, up from 10 percent in 2018.

“China has several favorable metrics that can support the growth of sneaker resale and streetwear among its consumer base, making this an attractive market opportunity for resale expansion,” analysts explained. “The market is digitally savvy, places a premium on American brands, and has an interest in sneakers and streetwear among consumers, along with basketball and the NBA, especially among Chinese youth culture. For both Nike and Adidas, we are forecasting Greater China to be a significant contributor to future growth over the next five years.”

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Additionally, Cowen expects a greater penetration of Gen-Z shoppers in the category—up to 55 percent by 2025—an environment that continues to support collaboration and the continued casualization of workplace attire, to become additional drivers for the growth of sneaker resale, internationally.

As Nike products represent somewhere in the ballpark of 90 percent of the resale market, its growth in the market will be vital for sneaker resale as we know it to penetrate into Asia and the surrounding regions. This appears to be going well for the brand, as its latest financial report found that revenue in China was up 19 percent year-over-year.

Not to be outdone, Adidas registered 26 percent revenue growth, year-over-year, in China during its third quarter.

“We estimate Greater China could contribute 38% of revenue dollar growth and 44% of EBIT dollar growth through FY23 for Adidas,” Cowen said. “For Nike we estimate that 38% of its incremental Nike Brand revenue growth of the next five years will be derived from Greater China and 54% of its incremental EBIT dollar growth.”

However, without international support from established resale platforms in the United States, it could take some time for resale to catch on, as Chinese consumers have a hard time trusting local platforms to authenticate products. Established, well-supported platforms like StockX and GOAT will likely have a leg up when it comes to capturing the resale market in China, according to the report. Establishing an international presence will allow those platforms to avoid exorbitant shipping and customs costs that could otherwise prohibit purchases from global shoppers.

Analysts at point to recent developments like StockX’s new London HQ (which the brand said was “laying the foundation” for an Asian expansion) and Foot Locker’s acquisition of GOAT and subsequent expansion into Asia and Europe, as evidence resale platforms have already begun their push to go international.

Already, the same factors that have made sneaker resale platforms noteworthy in the United States have begun to creep into the international market. The South China Post recently reported that Adidas’ popular Yeezy collection, a regular best-seller on sneaker resale platforms, “went viral” and is now selling for 300 percent to 500 percent higher than retail on the black market.