{"id":9562,"date":"2019-10-16T18:30:58","date_gmt":"2019-10-16T22:30:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/stockx-trading-exchange-for-sneakers\/"},"modified":"2019-10-16T18:30:58","modified_gmt":"2019-10-16T22:30:58","slug":"stockx-trading-exchange-for-sneakers","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/stockx-trading-exchange-for-sneakers\/","title":{"rendered":"StockX \u2013 Trading Exchange for Sneakers"},"content":{"rendered":"

What is StockX?<\/strong><\/h3>\n

Founded in 2015, StockX is a marketplace platform for buying and selling hard-to-find consumer products, most often limited-edition sneakers. The platform is popular among sneakerheads, a community of people who collect sneakers as a hobby. Despite playing in a niche market, StockX has gained an astounding amount of traction. With an estimated 14.4 million monthly unique visitors [1], StockX serves as the community’s center of gravity for buying\/selling high-priced sneakers and streetwear.<\/p>\n

\"\"<\/a>\"\"<\/a><\/p>\n

How does StockX work?<\/strong><\/h3>\n

StockX\u2019s website and mobile app facilitate trades in a manner that is very much similar to that of a stock exchange.<\/p>\n

    \n
  1. Sellers list goods such as sneakers, watches and handbags on the exchange at a desired ask price. The physical condition of the goods must fulfill the specified product guidelines.<\/li>\n
  2. Buyers submit bids on listings, specifying an expiry date, akin to a limit buy order on a stock exchange.<\/li>\n
  3. Bid\/Asks are published in real time. When there is match, which is to say, there is a buyer\/seller pair that has the same willingness to buy\/sell at a given price, a trade is automatically made. Both parties also have the option to buy\/sell immediately at the lowest ask\/highest bid respectively.<\/li>\n
  4. Buyers pay StockX, who holds the funds in escrow<\/li>\n
  5. Sellers have 2 business days to ship the goods to a StockX authentication center. 15% delay penalties apply otherwise.<\/li>\n
  6. StockX verifies the accuracy, authenticity and condition of the goods, swaps out the shipping label and re-ships the parcel to the buyer.<\/li>\n
  7. StockX releases payment to the seller, taking a commission of 8% to 17.5% on the invoiced amount [2], depending the seller\u2019s ranking and the product category.<\/li>\n<\/ol>\n
    \"\"<\/a>
    Most expensive sneaker\/streetwear sales for\u00a0 Feb 2017 to Feb 2018 (Credit: StockX)<\/figcaption><\/figure>\n
    <\/div>\n

    How does StockX create value and for whom?<\/strong><\/h3>\n

    Centralized marketplace<\/strong><\/p>\n

    StockX\u2019s basic value proposition is to act a centralized marketplace, thereby allowing buyers and sellers to meet and exchange goods for money. Sellers, who spend time and effort to obtain limited edition goods from official stores are rewarded for their dedication to the hobby, especially with most sneakers selling 10 \u2013 50% above retail prices. \u00a0On the other hand, buyers from all over the world gain access to their cult favorites, at a price they are willing to pay.<\/p>\n

    Publishing transaction data<\/strong><\/p>\n

    By publishing historical and current bid\/ask price as well as trade volumes (even for different shoe sizes), StockX demystifies supply and demand for buyers and sellers. Price transparency levels the playing field for novice sneakerheads to transact fairly with veterans. No longer does price information asymmetry allow veterans with expert knowledge take advantage of novices \u2013 buyers and sellers may simply look at the price of a pair of sneakers to assess its scarcity.<\/p>\n

    Curating selection of goods available<\/strong><\/p>\n

    Not every sneaker brand\/model can be listed on StockX. The company carefully curates the scope of items that can be listed on the platform, thereby facilitating product discovery for buyers. While some buyers may visit StockX with a particular item in mind, others visit to browse the selection and get inspiration for their next purchase. Similarweb.com estimates that the average StockX visitor spends about 4.12 minutes per visit [1].<\/p>\n

    Authentication of goods \/ Facilitating payment and escrow<\/strong><\/p>\n

    By acting as a physical clearing house that ensures that buyers\/sellers fulfill their respective obligations, StockX, it significantly reduces the counterparty risk in a market where fake goods are common. Sellers can rest assured that they will be paid promptly while buyers can purchase with confidence that they will get authentic goods of good quality and shipped on time to boot.<\/p>\n

    Logistics and customer service<\/strong><\/p>\n

    StockX provides logistics and customer service infrastructure for its users, creating value through economies of scale. Sellers use shipping labels prepared by StockX to send in their wares to an authentication center. Buyers can contact StockX customer service to follow up on orders.<\/p>\n

     <\/p>\n

    How is StockX different from most platforms?<\/strong><\/h3>\n

    Disintermediation<\/strong><\/p>\n

    As StockX controls a significant portion of the value chain, buyers and sellers are anonymous to one another, which prevents disintermediation. In addition, given the broad and irregular demand of any given pair of sneakers, the risk of disintermediation is low even if buyers and sellers were to be in direct contact with one another.<\/p>\n

    Scarcity signaling<\/strong><\/p>\n

    Manufacturers such as Adidas intentionally limit production runs to create hype about their sneaker design. By bringing price transparency to the market, StockX has become the industry benchmark to quantify this artificial scarcity, thereby cementing its position as the arbiter of cool in a market where cool is currency. Ironically, as these sneakers are aspirational goods, it is often the price that signals scarcity instead of vice versa. Some sneakerheads would pay $500 for a pair of shoes because of its price, not in spite of it.<\/p>\n

    \"\"<\/a>
    Chairman of the Federal Sneaker Reserve, DJ Khaled (Credit: Thayer Allyson Gowdy)<\/figcaption><\/figure>\n

     <\/p>\n

    [1] “Stockx.Com Traffic Statistics”. Similarweb<\/i>. https:\/\/www.similarweb.com\/website\/stockx.com#overview.<\/p>\n

    [2] “Stockx Help”. 2019.\u00a0Stockx<\/i>. https:\/\/help.stockx.com\/s\/article\/What-are-StockX-selling-fees?language=en_US.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    Buy high, sell higher. Sneakers are too big to fail! – Overheard in a Nike elevator, probably.<\/p>\n","protected":false},"author":11638,"featured_media":9569,"comment_status":"open","ping_status":"closed","template":"","categories":[814,2469,2471],"class_list":["post-9562","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-ecommerce","category-sneakers","category-stockx","hck-taxonomy-organization-stockx","hck-taxonomy-industry-apparel-and-accessories","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/driving-platform-innovation\/","yoast_head":"\nStockX \u2013 Trading Exchange for Sneakers - 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\/stockx-trading-exchange-for-sneakers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"StockX \u2013 Trading Exchange for Sneakers - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"Buy high, sell higher. 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