Wed, 19 Sep 2018 14:50:52 GMT
It’s half-past two on a sunny summer's day at the third edition of Dept’s annual Festival. Queues of highly anticipated enthusiasts have already gathered outside the Circus stage. In ten minutes time, lifelong sneakerhead and StockX CEO, Josh Luber is to begin his enriching talk about his passion and e-commerce. StockX is a revolutionary live marketplace for buying and selling sneakers, streetwear, watches, and handbags. Josh Luber is about to give valuable insights into his venture into the secondary sneaker marketplace. Given Dept’s sizable sneaker culture, this is one of the day’s most in-demand talks.
After entering the crowded Circus tent and making his way on stage, two pairs of the Air Jordan 4 appear on the screen in front of the audience. They are both black, they both have a white accent along the side, and both retail at $190. To the common eye, they are the same. On the secondary market, however, on websites like eBay or StockX, the shoe on the left resells for $230 whereas the one on the right resells for $23,000 according to Josh. "That's the same price as a car, is this crazy?" he exclaims. He quickly follows up by asserting that, “this is merely supply and demand, this is e-commerce 101”. Apparently, Nike made hundreds and thousands of the cheaper shoe on the left side. Whereas the shoe on the right, was a collaboration between Air Jordan and Eminem with only 10 pairs released worldwide. Continuing along the e-commerce 101 class, he explains that demand is exorbitant because its Eminem and that supply is non-existent because there are only 10 pairs. And that, these same basic economic principles of supply and demand have almost no bearing on the rest of our e-commerce existence. Similar to the way that consumers interact with almost any other website to buy anything at any time anywhere. What consumers' experience is something more like supply and deceive. He follows up his lesson by amusing the crowd with various real-life marketing examples of how companies like Amazon try to deceive buyers. "A cat litter box for $27 seems like a reasonable price," he said, down from a list price of $2159 and, "there's only one left for this unbelievable offer!" he shouted out to the crowd's amusement.
Shifting towards eBay, Josh pulls up the search results for a pair of Air Jordan 12 Wings from their week of release. He points out to the audience that there were 1,223 results for this particular shoe and that the top four results were $25,000, $25,000, $18,000 and $15,000. Having analysed eBay data, he was able to reveal that the average selling price for this pair of shoes was, in fact, $932 with a maximum of $1,600. "This is significantly off the $25,000-$2,000 marks. And as a consumer, there is literally no way of knowing this, unless you scroll through all 1,223 results", he says. "How can we offset the 'supply and deceive' manner of marketplace websites given basic economics and the basic supply and demand of the secondary market for sneakers?" Josh asks rhetorically. The answer is, of course, StockX.
The secondary sneaker market has gone from an underground aficionado scene to a global $5 billion dollar industry. Lifelong sneakerhead Josh saw an opportunity and created Campless, the Kelley Blue Book for sneakers, using data to determine the true market price of sneakers. “Campless was essentially a price guide for sneakers, a ‘sneakerhead data’ company which collected, analyzed and published data and derived insight related to collectible sneakers and the industry,” he explains. He continues by describing his overall logic behind creating StockX. “If you know the true value of a pair of sneakers along with understanding asset pricing and portfolio construction, then, perhaps you can operate as a stock market for sneakers. Tracking product and portfolio value over time.” From what started off as a pie in the sky idea, could lead to being the future of e-commerce. Backed by the investor, American businessman, and Cleveland Cavaliers owner Dan Gilbert, they sought out to create a stock market for consumer goods.
StockX is indeed a stock market of things that integrally acts as a marketplace for sneakers, apparel, handbags, and watches. As he rather enthusiastically explains similar to being in a sales pitch; "this is an evolution of eBay. A marketplace which connects buyers and sellers in the exact same way as the world stock market, for the purpose of buying and selling certain products." The website works by a live bid/ask model where buyers place bids and sellers place asks with the market price determined by the lowest ask price. When the bid and ask meet, the transaction happens automatically. By utilising data, StockX is about everyone's understanding of what these interchangeable commodities are worth. Josh then proceeds to explain that, to create a marketplace for consumer goods, you need three tenants: authenticity, anonymity, and, transparency. StockX physically authenticates every single product that it sells on its website across four operation centers around the world: Detroit, Arizona, New York, and London. "Authenticity is the core of enabling the larger marketplace," Josh says. By sitting in the middle, StockX also guarantees anonymity. The company makes sure that both the seller and buyer are genuine. "There is a tremendous amount of value that comes from that anonymity. And the most important thing is, it creates transparency", he exclaims. He continues by explaining that there are only three buttons per product page, buy, sell and view all sales, it is the same process as when buying or selling particular stocks. Data is collected to provide the customer with sufficient information to make an informed decision about what a commodity is worth.
Keeping to his eBay and Amazon examples, Josh mentions that anything that sits between those two companies, selling products with a finite supply, people will ask themselves what the demand and price is. As he continues, he explains that the reason why StockX is involved in the market for sneakers, apparel, handbags, and watches is that the related brands all leverage scarcity to be able to sell their products. Nike, Jordan, Rolex, Supreme and Louis Vuitton all drive prestige and hype to market and sell their products. "They all inherently understand the idea of having a product with greater demand than supply," he says. Josh's speaking time is up, so he quickly ends by stating that StockX is a fix for a broken system. A company which gathers data to allow consumers to make the most informed purchasing decisions. StockX is a revolutionary live marketplace and the future of e-commerce.
Gus Eadie is Marketing Assistant, at Deptview more - Trends and InsightDept, Wed, 19 Sep 2018 14:50:52 GMT