Shoes and Snake Oil: An Analysis of the "Hype" Driven Sneaker Resale Market

Abstract

In recent years, a secondary footwear market has been forged with an enthusiasm rivaling that of a Black Friday sale at Best Buy. A community of collectors and enthusiasts has rapidly expanded ushered by an influx of speculators who seek the sizeable profits sneakers have come to provide. Across the internet various exchanges have emerged, facilitating the culture the current sneaker resale market has come to see. This culture characterized by hype driven consumers willing to pay undue prices for the most exclusive and highly praised sneakers, and resellers who treat sneakers like pseudo-stock shares, investing in dozens upon dozens of pairs in anticipation of financial gain rather than personal. Consequently, the market is at an imbalanced with the scale tipping in favor of resellers whose exploitation and snake oil have allowed for their market dominance. Hence comes the overarching objective this paper: forming a resale pricing model based on true value rather than the current, unjust framework. By analyzing the resale market through the lenses of the consumer, the reseller, and market comparables, conclusions will be drawn for both the consumer and the reseller, shedding light on the rationale of each of these sneaker resale proponents. Additionally, stock market theories will be utilized to accomplish the overall goal of this paper. In particular, IPO valuation models will serve as a guide to the sneaker price prediction model that will be devised. Using the aforementioned “guide” and data analysis of market leaders in that of both Nike and Adidas brands, the effects that various factors such as sneaker model, size, and color have on resale pricing will be explored. Thus the resale valuation model will be formed, successfully reducing the average resale price. Yet, along with establishing internal conclusions, this paper will also explore the existing limitations present and the resulting possibilities for future contributions to resale market analysis.