How Sneaker Traders Turned Their Side Hustle Into A Billion Dollar Industry
Little Bourke Street in Melbourne, Australia is not one for a traffic jam. A one-way street in the city centre with some high-end stores, bars, restaurants and a scattering of hotels. Truthfully, it’s more familiar with a steady stream of revellers on a night out than any kind of frenzy, but then things changed. Twice in two years it happened; hundreds of people out in search of a pair of Kanye West-designed Adidas Yeezy 750 and 350 Boosts. Starting their descent on local boutique Sneakerboy days in advance – only six and 12 pairs of each, respectively, were available per store – they slept upright in deckchairs and flat-out on the ground, shutting down that quiet street, totally without regulation.
For Louis Tran, co-owner of popular Facebook resale group Underground Society, who’d long been sitting it out for sneaker drops with only a few dozen people, moments like the Yeezy arrival changed everything. “Before then it wasn’t anything difficult. You did it with your friends,” he says. “But the entire street just got shut down randomly, because people were trying to flood the store. Cars couldn’t get through.”
The lucky few who snagged a pair of 350 Boosts paid around $180 for the most sought-after shoe on the planet. The price for missing out? A year later Aria Mokhberi, a high flying reseller, decided to line up for the re-release raffle, camping out at dawn for the chance. “At that time before the restock, [they were] reselling for $1370,” he says. “I was the only one who managed to win the pair from Adidas, and ended up selling them for $605 later in the year. Without that win I probably wouldn’t be doing this right now… but that 5am wakeup was truly awful,” he laughs.
By now, chances are you’ve heard of sneaker reselling. Perhaps news of those $26,000 Back to the Future replica Nikes (limited to 100 pairs) crossed your radar, or the $16,000-25,000 DJ Khaled ‘Grateful’ Jordan 3s? How about the $10,000 Adidas designed by Pharrell Williams. Even more staggeringly, StockX, a marketplace for sneaker and sportswear sellers around the globe, was recently valued at $1 billion.
Long the domain of basketball fanatics and sportswear devotees around the world, a series of high fashion and celebrity collaborations – Travis Scott and Drake with Nike, Kanye West with Adidas – has seen sneaker culture become mainstream, turning a previously underground marketplace into a multi-billion-dollar industry. Found everywhere from grassroots Facebook groups to websites dedicated to luxury goods, resellers – through frenzied in-person releases and online drops – cop some of the most coveted footwear on the planet (currently, that’s Travis Scott’s collab with Nike’s Jordan brand “mainly due to their shape and style ... but there’s also a lot of celebrity influence,” Mokhberi says), auctioning them off to the highest bidder as they please.
So overwhelming is the hype, in fact, that investment bank Cowen Equity Research is valuing the resale market at around $6 billion (up from $1 bil in only a couple of years), fuelled by brands catering to a growing band of eager sneakerheads. And for those who might balk at that much money scraping the asphalt, these boots aren’t just made for walking, either. “We propose the idea that sneakers are now an emerging alternative asset class,” wrote Cowen analysts recently. “One, it earns illiquidity premiums; two, provides diversification – non-correlated with traditional asset classes; and three, earns favourable risk reward characteristics.”
But when Louis Tran and Revan Oluklu started their Facebook group Underground Society, things were different – a pair of Air Jordan were not yet an investment and it was clothes, not footwear, that counted. Frustrated that no marketplace existed in Australia to buy and sell streetwear, they started a Facebook group in 2016, inviting friends and gradually spreading the word, eventually to the tune of more than 100,000 members. “We just wanted an easy way to do it that wasn’t gonna cost $50 to get the shoes shipped from the States,” says Oluklu. “There was a gap in the market.”
Underground Society is typical of the online destinations for sneakerheads to hawk their wares. Free to use, sellers post their goods for either a set price or an auction, arranging pick up or shipping when a sale is made. Regardless of whether you make hundreds or thousands of dollars a month, the dos and don’ts are the same: pick your sizes carefully, do your research (for example, making a spreadsheet of the websites releasing the shoes, and setting up bots that automate the entire buying process), and follow through on deals.
A common sight is a photo of a tell-tale wall of orange Nike shoeboxes, holding dozens of pairs of the same design, selling in one post. There are strict rules that regulate listings. Tags have to be used, for example, and a team of 20 moderators police the page, so far banning tens of thousands of people for everything from rip-off sales or irrelevant comments. “They [the moderators] work for free because of the stature it gives them in the community,” says Oluklu. “We want to keep it as safe as much as possible for everyone so we can reduce the amount of scams that go on.” Community is the operative word here. “This is Facebook and people are using their real names,” says Oluklu. “When you click on StockX, you don’t see the seller’s name, you don’t see who they are, where they live … you just see the shoes, the price, and you choose to buy or not. On Facebook, you’re seeing your name, where they live, you can meet up in person.”
Bernard Slamet started selling on Underground after being told about the group by a friend when he was 16 and on the hunt for a fresh pair of kicks. With no prior interest in fashion, his interest was piqued after scrolling through the posts and camping out to try and snag his grail shoe – a pair of Nike x Undefeated Air Max 97s. “After checking out the page and seeing how alive the community was, how the lifestyle brought people together and enabled them to bond over their love for sneakers and clothes, I was hooked,” he says. Now, he’s a casual reseller – no paying people to stand in line, no using bots to ‘game’ online shopping carts, and no taking days off work to camp out. Just moving a couple thousand dollars worth of sneakers per month, joining others of all ages. “It requires a lot of patience and you have to be a person who, at the start at least, does not spend a lot of money on anything other than what you’re selling,” he says. “If you are, then I would say it’s something anyone can do, children literally do this every day.
“I usually obtain a few items and then make a post on Underground, or find a website where something is cheap, but I know would be worth more, and just take payments and buy straight from that website,” he says. “Other people I know would potentially make tens of thousands a month, stay up all night researching drops, learn how to improve their bots by learning computer languages.”
“In the end, the process for selling is the same. They make a post on Underground, consign at a consignment store, sell on a site such as StockX, or they would have contacts that can help them sell in overseas markets to international (buyers) who will pay top dollar.”
To Slamet, the difference between Underground and a ‘corporatised’ marketplace is pretty obvious. “You can see the joy in the messages when someone replies ‘thanks so much, I’ve wanted these for so long’ or ‘thank you, this is going to make my younger brother so happy’,” he says.
“Selling on a site like StockX also means you won’t receive the full amount of your sale, and obviously, us greedy resellers want every cent,” he laughs.
One of those sellers turning over tens of thousands a month is Mokhberi, who nearly tripled his investment on a pair of Yeezys in a matter of months. He favours Underground for that ‘authentic sale’ that comes with being local, also sometimes doing consignment (“my most profitable type of sale,” he says, making potentially $100-300 more per item). “StockX is my least favourable way of selling, due to the time it takes to receive a payout,” he says, not being able to “build your name as a reputable seller and create connections with other people in the community”. “But sometimes [StockX is] the better option,” he says. “The market in the US can be higher than Australia for some items.”
For him, a drop day is “nearly a 24-hour commitment.” In the past, he’s even stayed up for 36 hours straight in pursuit of a pair that promised at least $1000. “Unfortunately, I didn’t cop a pair and that’s just how the game is sometimes,” he says. “There are many ways to go about it to use your time efficiently, but I personally don’t line up in-store. I pay people to line up for me while I stay at home on my computer and try for the online drops. That way, I have a better chance of copping more pairs. Online you have regional drops – that’s what makes it a 24-hour commitment.” As the market has changed, his business has only grown, now counting more than 130 customers. “I plan on continuing to increase that number,” he says. “I’ve built up my name so people in the community don’t hesitate to buy from me, I’ll always try to provide the best and safest service I can. Last year I was doing a couple sales a week, now I’m doing at least 10+.”
In a market where it seems like everyone is giving it a go to make some extra cash, “you need to find ways to stay on top,” he says, using specially coded bots on his computer to beat humans and check out multiple items in a few seconds. “Their consistency varies though, some drops you can get 20+ checkouts, sometimes you get nothing,” he says. “There are a variety of bots available, and each provide the user something different, whether it be the type of websites they can checkout on or how quickly they can checkout.”
Mokhberi’s month-to-month takings pretty much depends on what drops. In March 2019 there were five pairs of Yeezys, and seven in June, leaving April and May quiet – but he averages at about $5000-$7,000 every month. To maintain this level, personal service matters. “I provide a pre-order service, where I take a deposit from customers and cop them their specific size,” he says. “This saves the customer time from searching after a release and usually secures them a pair. But I only do this if I believe I’ll have a high success rate.
“It can be a viable career option if you’re very consistent with your sales and how often you cop. I know people that have turned this into a business, for some it’s worked out and for some it hasn’t. It’s not for everyone and you really do need a passion for it. I personally wouldn’t make it my career, but for me it’s great to do on the side.”
Sandy Li and Justin Truong are two people who have made the leap into a career of reselling. Truong became a fan as a university student with the first wave of Yeezys in 2015, while Li – who camped out for a pair of those Yeezys, catching micro sleep in the rain to get them – was more into wearing her sneakers than selling them. But together, they quickly realised the potential of the market.
“I’d buy from people who camp out and who’d mark it up a bit,” says Truong. “I’d then mark it up again and sell it … it was good pocket money, to start.” However, Truong and Li soon found there were too many obstacles to buying. “Namely a shortage in supply, counterfeits flooding the market and no monitored platform that authenticated sneakers,” says Li. “I remember seeing someone walking around with a shoe that never arrived in Australia. It was always a guessing game on how they got the sneakers – whether they had a contact from another country, a counterfeit or they were paid a hefty premium to get them.”
“If you’re spending this much on sneakers, you want the assurance,” agrees Truong. “For the average consumer who wants access to Yeezys – or any exclusive sneakers – it’s hard.”
Spurred into action, just two years later, Truong and Li started Pushas as a trial. The online consignment store offers an authentication guarantee and streamlines the selling process. It works like this: sellers send their sneakers to Pushas, a team of dedicated authenticators ensuring they’re legitimate – a process that’s “both an art and a science” according to Truong, requiring an intricate knowledge of stitching, shade, and even smell – before listing, and packaging once sold. “One of our sellers even flew to the US to authenticate a sneaker before Pushas existed,” Li laughs. “There are more counterfeits now than ever, and they’re becoming more sophisticated” she says. “What we do standardises the buyer experience,” says Truong. “They’re from Pushas, (they’re) not worn, (you) get sneaker spray if you need it... everything’s in order. All they [the seller] has to do is send the sneakers to the store, and sell them, not worry about the 1000 other things they have to worry about as a small business owner,” he says.
Since launching in May 2017, Pushas is now home to around 1000 regular sellers, from those shifting one or two pairs a month (‘casuals’, who pay 16.5 percent plus $5 of their sale), to turning profits in the thousands (‘powers’, who pay 15.5 percent plus $5). It’s a format that has seen Pushas enjoy double digit growth every year since it began. “It’s become this thing now that’s really taken a life of its own,” Truong says. And as the company scales up, Li and Truong continue to invest in technology – an analytics suite breaking down how much they’re spending, profit, and how fast their sneakers are selling – that will optimise the experience for their sellers. “By doing that, we’re really going to be competitive worldwide,” he says. “Our mission has always been to empower sellers, so they’re able to make a living out of this.”
With the market seeing such growth in a short amount of time, changes are guaranteed. For Alan Boothe, a Pushas seller who got into reselling by accompanying a friend to a drop after a graveyard shift at work, once copping $10,000 profit in 15 minutes – a selling frenzy that occurred between home and the bar – profit margins are decreasing due to larger quantities.
“Nowadays it is more quantity rather than quality,” he says. “With that being said, it’s still entirely possible to clear anywhere from $60,000-80,000 within a financial year.” To Mokhberi, however, the market is oversaturated. “A couple years ago – when the market wasn’t as populated, Yeezy’s were selling for $1.5-2.5k a pair,” he says. “Compare that to prices now, you’d have to cop 10 pairs to make the same profit you got from one in 2016.”
But while the market is certainly in flux, there are some that think reselling has lost touch with its soul a little. It’s the argument levelled at anything once it enjoys mainstream success, of course – ‘this isn’t as good as it was in the old days.’
“It’s very rare to find someone who still has a passion for sneakers,” explains Tran, co-founder of Underground Society. “I mean, people still like what comes out, but it’s not really with the same nostalgia as before. It’s very transactional these days.
“People still like them, but I think they might like the shoes or the clothing for different reasons. Status maybe ... it’s kind of less about why the brand made the shoe to begin with.” Underground co-founder, Revan Oluklu, agrees. “Most people selling, even if it’s their full-time thing, are interested in the product, but it’s not quite the same as above. That small group of people who really know the granular details of each brand, and the pedigree of the sneakers doesn’t really exist anymore.”
For Truong, the market shows no sign of slowing down – in fact, having seen no pushback from big brands or retailers, it will only grow. “The marketing budgets of Nike and Adidas are so immense now that we can’t really get away from them,” he says. “And I think the culture is just so mainstream that it would take a huge shift to change this. But despite the loss of credibility that global success naturally brings, he disagrees that this movement isn’t still about the people. “There is still a love that exists,” he says. “We’re at a point where the money is good so it does draw new people, but for those who stay in the game long enough, it’s really about a passion for the footwear and everything about them.
“Believe me, if you don’t love sneakers, you won’t last long doing this.”