  {"id":11180,"date":"2020-03-21T17:41:26","date_gmt":"2020-03-21T21:41:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/goat-the-greatest-of-all-time-marketplace-for-sneakerheads\/"},"modified":"2020-03-21T17:41:26","modified_gmt":"2020-03-21T21:41:26","slug":"goat-the-greatest-of-all-time-marketplace-for-sneakerheads","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/goat-the-greatest-of-all-time-marketplace-for-sneakerheads\/","title":{"rendered":"GOAT \u2013 The \u201cGreatest of All Time\u201d Marketplace for Sneakerheads"},"content":{"rendered":"<p>GOAT is an online marketplace for sneaker and apparel evangelists (sometimes referred to as <em>sneakerheads<a href=\"#_ftn2\" name=\"_ftnref2\"><strong>[2]<\/strong><\/a><\/em>), where sellers can list their high value, limited edition, or otherwise rare finds to purchase for buyers. GOAT stands for \u201cgreatest of all time\u201d, a term often used in sports for incredible or legendary athletes. GOAT not only acts as a marketplace between buyers and sellers, but also verifies the authenticity of sneakers (to combat the many fake and counterfeits in the sneaker resale market), and offers cleaning and refurbishing services for used sneakers sold on the platform. The sneaker industry has been particularly plagued with fake Yeezys and Jordans, which GOAT has managed to stomp out with their proprietary AI technology. An incredibly innovative company, GOAT has also used technology to allow for sneaker shoppers to virtually try on their shoes using augmented reality using a mobile phone app, so shoppers can see what the latest drop in kicks might actually look like on their feet<a href=\"#_ftn3\" name=\"_ftnref3\">[3]<\/a>.<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/OlMS28yN6zDrvqKNuGitjdrfXoKcBYewRdbF_PKjmUM_nqtmwe.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter  wp-image-11183\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/OlMS28yN6zDrvqKNuGitjdrfXoKcBYewRdbF_PKjmUM_nqtmwe.png\" alt=\"\" width=\"602\" height=\"301\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/OlMS28yN6zDrvqKNuGitjdrfXoKcBYewRdbF_PKjmUM_nqtmwe.png 680w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/OlMS28yN6zDrvqKNuGitjdrfXoKcBYewRdbF_PKjmUM_nqtmwe-300x150.png 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/OlMS28yN6zDrvqKNuGitjdrfXoKcBYewRdbF_PKjmUM_nqtmwe-600x300.png 600w\" sizes=\"auto, (max-width: 602px) 100vw, 602px\" \/><\/a><\/p>\n<p><strong>Creating Value:<\/strong><\/p>\n<ul>\n<li><strong>Authentication of resold sneakers:<\/strong> the way GOAT creates the greatest value is in its authentication process. Sneakers aren\u2019t listed on the app for sale until they have been verified by photographs (and later on, verified again by GOAT employees in distribution centers) to ensure their authenticity. GOAT also protects its buyers by offering full refunds and insuring any purchase over $300<a href=\"#_ftn4\" name=\"_ftnref4\">[4]<\/a>. Trust and protection are valued assets when purchases in the sneaker resale market can go up to $20,000 USD or more.<\/li>\n<li><strong>Access:<\/strong> The ability to have a \u201cone-stop-shop\u201d for buyers and sellers by creating a global network cluster. Sneakers are shipped to distribution centers (multiple in US, and now opening more internationally in Europe and Asia), where these can be deployed and shipped out to customers \u2013 in effect, centralizing its network and creating a global marketplace.<\/li>\n<li><strong>Pricing transparency:<\/strong> sellers can list their sneakers at whatever price they wish, and buyers are able to see all listed sneakers. Buyers are also able to bid on kicks, similar to an eBay model but with more safety and insurance.<\/li>\n<li><strong>Cleaning and refurbishing services:<\/strong> sellers can choose to have their used sneakers cleaned and refurbished by GOAT (for a fee) to help increase their value and make them feel and look like new shoes for the buyer. This is done in their centralized distribution centers.<\/li>\n<li>Large audience of buyers (~7 million), and large inventory from sellers (~400,000 SKUs)<a href=\"#_ftn5\" name=\"_ftnref5\">[5]<\/a>, which leverages <strong>strong cross-side network effects.<\/strong><\/li>\n<li><strong>Mobile app<\/strong> for easy shopping and selling, as well as <strong>augmented reality features<\/strong> to virtually try on pairs of sneakers for sale.<\/li>\n<li><strong>Retail locations<\/strong> in NYC and LA with the acquisition of Flight Club (an iconic sneaker store).<\/li>\n<li><strong>Reduces friction in marketplace <\/strong>between buyer and seller.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-try-on.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter  wp-image-11182\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-try-on.jpg\" alt=\"\" width=\"543\" height=\"310\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-try-on.jpg 720w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-try-on-300x171.jpg 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-try-on-600x343.jpg 600w\" sizes=\"auto, (max-width: 543px) 100vw, 543px\" \/><\/a><\/p>\n<p><strong>Capturing Value:<\/strong><\/p>\n<ul>\n<li>GOAT takes a <strong>commission of 9.5%<\/strong> on each sale, meaningfully lower than their competitors at eBay (13%).<\/li>\n<li>They also <strong>charge fees for refurbishing<\/strong> and cleaning used shoes.<\/li>\n<li><strong>Consumer and Seller Data:<\/strong> To authenticate shoes, GOAT asks its sellers to take photos of shoes from certain angles, which have allowed them to build AI technology in helping to determine fakes\/legit sneakers. This gives them an advantage in the form of a large database, formed through seller photos as well as data from buyer preferences on the app (users can add items to wish lists among other features).<strong>\u00a0<\/strong><\/li>\n<\/ul>\n<p><strong>Scalability:<\/strong><\/p>\n<p>GOAT has recently vastly scaled their operations \u2013 from mainly US centric \u2013 to distribution centers in Europe and Asia. While their marketplace is global, rather than local markets (which adds to their defensibility), they rely on having distribution centers in central locations to minimize shipping costs from sellers and to buyers. The lynchpin to their continued scaling is two-fold: the strategic location of new distribution centers, and the continued addition of sellers (more inventory) and buyers. The platform benefits from strong cross-side network effects, which only further helps them to scale.<\/p>\n<p><strong>Sustainability:<\/strong><\/p>\n<ul>\n<li>To date, GOAT has been <strong>wildly successful in discouraging disintermediation<\/strong>. Its value proposition of authenticating and offering insurance to buyers and sellers is hard to take off the platform.<\/li>\n<li><strong>Multi-homing<\/strong> in the case of the sneaker resale market is present, but less persistent than in other industries. Even though there is relatively low switching cost or effort for sellers to list shoes on other platforms (eBay, Craigslist, Facebook Marketplace), GOAT has become users \u201cgo-to\u201d due to the trust and peace of mind built into the platform (its main value proposition), that transactions will migrate there anyways.<\/li>\n<li><strong>Competition:<\/strong> the market is somewhat consolidated between local clustered players such as Craiglist, Kijiji, and Facebook Marketplace, as well as the more direct global network competitors of eBay, StockX, and Stadium Goods. GOAT occupies a white space in between all of these players, giving it a solid strategy and leg up on differentiation.<\/li>\n<li><strong>Critical Mass:<\/strong> The amount of users, inventory, and repeat sellers GOAT has amassed helps to give it a \u2018moat\u2019 in defense against competition and new players.<\/li>\n<li><strong>Story-telling and brand building<\/strong>: GOAT has moved into community and brand building around their platform. They build buzz and word-of-mouth organic marketing through events such as the after party it hosted during the NBA All-Star Weekend in Los Angeles.<a href=\"#_ftn6\" name=\"_ftnref6\">[6]<\/a> They have also recently launched a bi-annual, 150 page lifestyle magazine for a brand dubbed \u2018Greatest\u2019, showcasing people in a number of industries (not just athletes!) who are doing amazing things and defining their own success.<a href=\"#_ftn7\" name=\"_ftnref7\">[7]<\/a><\/li>\n<li><strong>Marketing &amp; Strategic Partnerships and Ambassadors<\/strong>: GOAT has moved into collaborating with brands through strategic partnerships, such as Versace, to create and launch limited edition shoes.<a href=\"#_ftn8\" name=\"_ftnref8\">[8]<\/a> Notably, they also are now working with Kyle Kuzma of the Los Angeles Lakers as an ambassador to the brand.<a href=\"#_ftn9\" name=\"_ftnref9\">[9]<\/a><\/li>\n<\/ul>\n<p>GOAT, with its cult-like following, has certainly caught a culture wave \u2013 and they are riding it well. But can they continue?<\/p>\n<p><strong> <a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-nyc-theme-4.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter  wp-image-11181\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-nyc-theme-4.jpg\" alt=\"\" width=\"509\" height=\"330\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-nyc-theme-4.jpg 640w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-nyc-theme-4-300x195.jpg 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2020\/03\/goat-nyc-theme-4-600x389.jpg 600w\" sizes=\"auto, (max-width: 509px) 100vw, 509px\" \/><\/a><\/strong><\/p>\n<p><strong>Sources<\/strong><\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> <a href=\"https:\/\/finance.yahoo.com\/news\/the-mostwanted-sneakers-of-the-decade-goat-171236815.html\">https:\/\/finance.yahoo.com\/news\/the-mostwanted-sneakers-of-the-decade-goat-171236815.html<\/a><\/p>\n<p><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> <a href=\"https:\/\/www.ideamotive.co\/blog\/most-interesting-marketplace-platforms\">https:\/\/www.ideamotive.co\/blog\/most-interesting-marketplace-platforms<\/a><\/p>\n<p><a href=\"#_ftnref3\" name=\"_ftn3\">[3]<\/a> <a href=\"https:\/\/www.mobilemarketer.com\/news\/goat-showcases-worlds-rarest-sneakers-with-ar-try-ons\/564346\/\">https:\/\/www.mobilemarketer.com\/news\/goat-showcases-worlds-rarest-sneakers-with-ar-try-ons\/564346\/<\/a><\/p>\n<p><a href=\"#_ftnref4\" name=\"_ftn4\">[4]<\/a> <a href=\"https:\/\/techcrunch.com\/2015\/08\/28\/goat-lets-you-cop-kicks-without-getting-jacked\/\">https:\/\/techcrunch.com\/2015\/08\/28\/goat-lets-you-cop-kicks-without-getting-jacked\/<\/a><\/p>\n<p><a href=\"#_ftnref5\" name=\"_ftn5\">[5]<\/a> <a href=\"https:\/\/www.businessinsider.com\/sneaker-app-goat-founders-have-come-long-way-2018-3\">https:\/\/www.businessinsider.com\/sneaker-app-goat-founders-have-come-long-way-2018-3<\/a><\/p>\n<p><a href=\"#_ftnref6\" name=\"_ftn6\">[6]<\/a> <a href=\"https:\/\/www.businessinsider.com\/sneaker-app-goat-founders-have-come-long-way-2018-3\">https:\/\/www.businessinsider.com\/sneaker-app-goat-founders-have-come-long-way-2018-3<\/a><\/p>\n<p><a href=\"#_ftnref7\" name=\"_ftn7\">[7]<\/a> Ibid.<\/p>\n<p><a href=\"#_ftnref8\" name=\"_ftn8\">[8]<\/a> Ibid.<\/p>\n<p><a href=\"#_ftnref9\" name=\"_ftn9\">[9]<\/a> Ibid.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cThis decade brought new meaning to both the sneaker industry and the secondary market. Ten years ago, sneakers were seen as a subculture, a small group of enthusiasts and collectors, but has since become a global phenomenon,\u201d\u00a0said Eddy Lu, CEO and co-founder of GOAT<\/p>\n","protected":false},"author":11146,"featured_media":11185,"comment_status":"open","ping_status":"closed","template":"","categories":[663,2476,2672,2671,2589,2469],"class_list":["post-11180","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-e-commerce","category-resale","category-secondary-market","category-sneaker","category-sneaker-culture","category-sneakers","hck-taxonomy-organization-goat","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/platform-business-challenges\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GOAT \u2013 The \u201cGreatest of All Time\u201d Marketplace for Sneakerheads - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/goat-the-greatest-of-all-time-marketplace-for-sneakerheads\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"GOAT \u2013 The \u201cGreatest of All Time\u201d Marketplace for Sneakerheads - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"\u201cThis decade brought new meaning to both the sneaker industry and the secondary market. 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