How Young Entrepreneurs Are Finding Their Footing in the Sneaker Market
On the morning when a highly anticipated sneaker is going to drop, Zachary Buchalter is ready. He’ll have as many as four computers primed to try to secure a coveted lottery number in an online “lobby,” forgoing the bots that many sneaker buyers use. If he’s lucky enough to score a pair, he’ll put them away for a while, waiting for the prime opportunity to resell them at a profit. “I’m always looking for a business opportunity,” says the Baltimore native. “The more money you can make, the more options you have.”
Buchalter speaks of following the market and its fluctuations, keeping track of his inventory, and the intricacy of pricing. He learned the ins and outs of reselling with YouTube videos, and because he purchases only through retail, he’s confident in the quality of what he’s buying and selling. He’s not new to selling, having already tried his hand at fidget-spinners and key chains when they were hot. “Sneakers are not going to be my life,” he says. “They’re good for now but I would like to expand my interests.”
He sounds like any budding entrepreneur – until he mentions that he has to commandeer the computers of his mother, father, and his brother to camp out in online lobbies and that he has to coordinate his buying and selling around his schedule as a high-school sophomore. For example, he notes that Supreme drops a new pair every Thursday at 11 am, which fortunately coincides with a free period. “I’m on my phone every Thursday at 11,” says the 16-year old.
He views the sneakers as a commodity, pointing out that he doesn’t get overly attached to any one pair – with one exception. “The Yeezys were a pretty hard release to get,” he remembers. “I really like them, so I don’t plan on selling them.” He loves what he does, sees entrepreneurship in his future, and that his once-baffled parents are proud of his success.
For Collin Porcaro, a young professional, the buying and selling of popular sneakers has more to do with his love for the product itself. “I sell one pair so I can buy my next pair,” he says. Though Porcaro, at 22, has a few years on Buchalter, he also got the bug early – as a high school freshman. An avid skateboarder, he was friendly with some older skateboarders, one of whom had a pair of shoes that didn’t fit. He offered them to Porcaro for $20 – and all the wooden hangers he could rustle up from his mother’s closet. “He needed the hangers for some other merchandise he was selling,” shrugs Porcaro. It was a valuable, early lesson in supply and demand. “He needed hangers more than he wanted those shoes.”
Even though the shoes were a little big for Porcaro, he wore them to school. “If you had these shoes, it was a big deal,” he remembers. A friend noticed them, and bought them from him for $50. Porcaro turned that profit into a new pair – and then bought others that were too big for him that he could resell. Porcaro’s approach to buying is motivated more by what he likes – not what he thinks the market will like. “I don’t do much buying specifically to sell,” he says. “I buy what I like and if I want something new I’ll sell what I like the least and what is most liquid.”
Porcaro falls somewhere between the dispassionate buyer and seller, who views the sneakers like any other commodity, and the true collector, who buys them just for the pleasure of owning them. “Real collectors never take them out of the box,” he says. “I wear them all.” It’s a testament to the power of branding and marketing by the shoe companies and the celebrities they collaborate with that used merchandise has such a strong secondary market. “Even if you wear a pair, you can still get double the retail price,” notes Porcaro. “But anything that I know will have value moving forward I will try not to beat up.”
And while Buchalter pays retail, Porcaro generally pays a higher price unless he gets lucky with a lottery. To him, paying a premium for what he really wants is worth it. “Everything is driven by demand,” he says. And sometimes by lack of demand. “I thought there would be a lot of interest in one of the Kanye shoes, because the first two models were selling for 5 to 10 times their retail price.” He gave a friend who used a bot to get him a pair of $220 sneakers an extra $50. “It turns out the public wasn’t that excited about the look of this particular shoe,” he remembers. “I’d be lucky to get what I paid.”
He’s philosophical about the occasional miss, grateful for what he’s learned along the way. “It’s made me more comfortable with the idea of investing,” he says of his adventures in the sneaker market. He has started collecting watches, and has dabbled in crypto-currency. “I’m now more comfortable with having my cash in something other than my bank account.”
For Buchalter, Porcaro, and numerous other sneaker aficionados, the active reselling market has proven to be a powerful way to learn the dynamics of market forces. The U.S athletic footwear market was estimated at $17.5 billion in 2016, according to the NDP Group – with the resale market valued at about $1 billion, according to Business Insider. The value is even greater, though, when one considers that young entrepreneurs are getting early exposure to basic tenets of capitalism.
In fact, for many young people, it might be their only exposure. Buchalter notes that his school doesn’t have a curriculum in economics or personal finance, so he’s grateful for the lessons he’s learned – and eager to put them to use. His school is looking to start an in-school coffee shop. “I think we could make money,” he says, already thinking about his next entrepreneurial adventure.