How Did Sneaker Reselling Go from weekend pastime to high-profit business?
By day, Tong Shum is a financial analyst for Manulife in Toronto. Standing in the lobby of his Bloor Street office building on an unusually warm September afternoon, the 31-year-old looks every inch the part of the young professional: neat haircut, plaid dress shirt, a gleaming Swiss watch on his wrist.
But it’s the shoes, the old adage goes, that make the man. And Shum’s footwear of choice happens to offer a subtle hint at his other profession.
Written by Yang-Yi Goh
On Shum’s feet is a pair of Nike Air Max 90 Hyperfuse “Independence Day.” To the casual observer, they might appear like any other white runners. But for those in the know, they’re particularly rare sneakers — coveted artifacts — that routinely sell for upwards of $700 on the secondary market.
That market is where Shum earns his real living after hours. Each night, he leaves his desk at work, heads back to his sneaker-filled condo, and logs onto the web — where he’s best known by the moniker Netmagnetism. He’ll spend the next four hours photographing recently acquired goods, uploading them to his online store, managing his social media accounts, and shipping out new orders. All told, Shum moves roughly 80 to 100 pairs of kicks a month. According to him, that’s enough to eclipse his entire corporate salary.
“It’s a lot safer than gambling on the stock market,” Shum says of his side hustle. “I understand the sneaker world and I’m passionate about it, so it never feels like work.”
Shum is just one small player in what has become an extensive and highly profitable industry of sneaker reselling. Globally, the resale market for sneakers is estimated to now be worth over $1 billion (US). That includes individual sellers like Shum, as well as larger businesses like Stay Fresh, a sneaker consignment service that operates both online and out of a storefront in Richmond, British Columbia, and Grailed, an online men’s fashion marketplace with more than 70,000 pairs of second-hand sneakers presently listed for purchase.
“It boils down to simple economics,” Lawrence Schlossman, Grailed’s brand director, says of sneaker reselling’s rise. “The demand for this shit is way greater than the supply.” For the most desirable releases, that demand can drive the price up dozens of times over retail value: pairs of the much-hyped $190 USD Nike x OFF-WHITE Air Jordan 1, for instance, are currently going for $3,000 USD on Grailed.
But determining exactly what a given model is worth often depends on far more than mere buzz. For Shum, it comes down to a mix of studying trend patterns and foreign exchange rates. “When I first started out, the Canadian dollar was high,” Shum recalls. “I was sourcing shoes at a discount in Japan, the US and Taiwan, and flipped them here at a good margin. Then the American dollar went up and ours went down, so I began to focus on sourcing in Canada and selling overseas. My business model shifts with the currency.”
Sneaker collecting is popular for a few reasons.
Sneaker collecting, of course, is not a new phenomenon. Eugene Lau, Stay Fresh’s promotional manager, remembers lusting after Nike Air Maxes as far back as elementary school. “Like all kids, I thought the air bubble would make me jump higher,” he laughs.
But the scene has reached a new level of ubiquity since he first began collecting more seriously well over a decade ago. “Back [in the early 2000s], there weren’t too many sneakers that were considered really desirable,” Lau recalls. “There’d be one or two releases a year, maybe, that people would line up for. These days, we get major sneakers every season on a much more consistent basis — there are 10 or more big releases a year now.”
“At the end of the day,” Shum says, “I don’t know how long sneakers will last. I’m just enjoying the ride.”
The factors contributing to this market growth are many. The most obvious is the Internet. Social media has given young sneaker collectors a new outlet to show off their latest acquisitions and learn about the culture at large. “Some of our youngest customers are our most knowledgeable,” Lau says. “They’re going on Instagram and learning about the culture, and then they come to us and ask for sneakers that were released before they were even born. Showing off these shoes online has become the currency in their social circles.”
Another major reason? Kanye West, whose trendsetting forte has made his Yeezy collection for Adidas the most widely coveted sneakers in the market. “We probably sell one pair of Yeezys for every two pairs of something else,” Lau says, noting that StayFresh ships roughly 30 pairs of sneakers per day. “It’s a trend that’s lasted a lot longer than I would ever have predicted.”
Much like the rapper behind them, Yeezys are the subject of much scrutiny and mixed opinion in the sneaker world. While they have no doubt driven the exponential growth of the sneaker bubble, Shum refuses to sell them, claiming that he doesn’t believe in their staying power and wants to stand out from the crowd. Schlossman, meanwhile, argues that it’s impossible to deny their importance. “Yeezys are a pillar of modern day street culture,” he says. “Yes, there are tons of people who want to wear them. But even the people who don’t — like myself — either still truly understand the relevance and importance they hold, or even if they hate them, they’re still talking about how much they hate them.”
Sneaker experts are split, too, on where the market will go from here. Schlossman believes that things are only going to get “bigger and more hyped” from here on out. “The window of opportunity for a trend to be popping — whatever you want to call it — is just going to increase as more stuff comes into the market,” he says.
Shum isn’t so sure. Despite the massive profits he’s made as Netmagnetism, he has no real urge to quit his day job.
“At the end of the day,” he says, “I don’t know how long sneakers will last. It could end today, tomorrow, no one knows. I’m just enjoying the ride.”