default-output-block.skip-main
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Sneaker Resale Heats Up

This week, LVMH Luxury Ventures and Index Ventures bet on sneaker marketplaces Stadium Goods and Goat.
Pile of sneakers | Source: Goat x Flightclub
By
  • Christopher Morency

NEW YORK, United States — Venture capitalists continue to eye the growing streetwear market. After taking stakes in cult labels such as Supreme, A-Cold-Wall and Huf, this week investors targeted sneaker resale marketplaces.

LVMH Luxury Ventures acquired a stake in sneaker and apparel resale marketplace Stadium Goods for an undisclosed sum. "As we continue to scale the business, there are specific areas that require additional capital to nurture this growth. In particular, growing our proprietary tech offering, brick-and-mortar expansion, marketing efforts and staffing," said Jed Stiller, co-founder and managing partner of Stadium Goods, which operates a brick-and-mortar store in New York's Soho as well as its own e-commerce site and has extended its reach through Amazon, Ebay, Zalando and Alibaba. The company projects gross merchandise volume to reach $350 million to $400 million in 2018. LVMH Luxury Ventures did not respond to a request for comment.

Meanwhile, the marketplace app Goat, which acquired specialist sneaker consignment store Flight Club, has attracted a $60 million investment round led by venture capital firm Index Ventures. "The merger brings together a combination of breadth, inventory and consumer experience," explained Danny Rimer, partner at Index ventures, who will join Goat's board of directors.

In recent years, retailers that operate a marketplace model — providing platforms that allow users to display items for other users to purchase without the risk of buying and holding inventory — have attracted increased interest for their advantageous economics.

In the streetwear sector, successful marketplace businesses include Grailed and StockX, a "stock market of things" that specialises in the buying and selling of sneakers and high-end streetwear.

"As fashion and sportswear have collided, these niche marketplaces are now being transformed by young, mobile-centric customers," explained Frederic Court, managing partner at Felix Capital, which largely invests in digital lifestyle businesses and has stakes in Farfetch and Gwyneth Paltrow's Goop, as well as BoF. "This is a strong and global trend and there are opportunities for these companies to continue to grow enormously and challenge established retailers such as Footlocker and others, who are less connected to these young customers."

But marketplace businesses generate less margin per transaction than traditional wholesale businesses, leaving them with less money to spend on customer acquisition, meaning that only those with strong word of mouth as likely to thrive.

The approach also comes with operational challenges. "In the case of premium sneakers, it's essential to guarantee authenticity. There is some friction in the models of Goat, Stadium Goods (or even Farfetch) as the marketplaces end up touching the product to ensure it's authentic. This is reflected in the margin structure as they take higher commission [and] add considerable operational complexity," explained Court. "Still, they will be much more capital efficient than retailers [and] their share of the retail market is only going to grow as they add more choice and convenience to consumers."

Disclosure: LVMH and Felix Capital are part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder's documentation guaranteeing BoF's complete editorial independence.

Related Articles:

© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


Any fashion company that is contemplating going public needs to have not only the product and brand fundamentals right but also a business strategy that can easily be understood by the markets, writes Imran Amed.



view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
Voices 2023 Live
© 2023 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
Voices 2023 Live