Adidas ended its seven-year business partnership with Ye, formerly known as Kanye West, earlier this week after the artist made a series of anti-Semitic remarks and wore a ‘white lives matter’ shirt at Paris Fashion Week. Today, the ripple effects of Adidas stopping production of popular footwear and apparel brand Yeezy have rippled outside the company and into a booming, lucrative and more broad: the sneaker resale market.
This slice of the shopping world is where sneakerheads, collectors, and professional dealers buy and sell rare or in-demand shoes through online marketplaces like StockX, GOAT, and eBay. In recent years, it has grown into a $4 billion+ industry in North America alone, with the potential to reach $30 billion worldwide by 2030, according to research firm Cowen. . But the problem for the big resale players in the sector is that the market is only dominated by three brands. And one of them is Yeezy.
Nike, Jordan Brand and Yeezy currently account for more than 90% of resale market sales, according to Cowen. And with Adidas announcing this week that it is dissolving the partnership with Ye and no longer producing or selling Yeezy-branded merchandise, these online businesses that aim to cater to every hypebeast’s desires may suddenly have to look elsewhere to diversify their businesses to to retain customers. come back to buy them frequently. The hype associated with new Yeezy releases isn’t what it used to be, but the lack of future supply will likely still leave a huge void.
“There may be pop in the short term, but I think the Yeezy era may be over,” said Dylan Dittrich, head of research at Altan Insights, which publishes category insights. collection such as sneakers, watches and sports cards.
When Adidas announced on Oct. 25 that it would “stop the adidas Yeezy business with immediate effect,” finally putting the kibosh on a partnership that critics say should have happened much sooner, resale platforms that benefit from the Yeezy sneaker and apparel sales have made a decision. TO DO. But their answer soon became clear. With the exception of a smaller player in the Yeezy resale space, The RealReal, other online marketplaces would continue to let sellers list Yeezy products and buyers buy them. However, none of them wanted to talk about this decision. StockX, GOAT and eBay did not respond to requests for interviews or comment.
The most popular product listings on these sites may explain why. Eight of the top 12 sellers on StockX on Thursday were Yeezys, with the site selling thousands of Yeezy Slide sandals in the past three days alone. Dittrich, Altan Insights’ head of research, said prices for the Yeezy Boost 350 V2, perhaps the most recognizable sneaker model in the Yeezy portfolio, rose 10-30% on StockX after the announcement. from Adidas.
It seemed like fans, collectors, and dealers were making a calculated bet that the lack of future Yeezy supply would increase the value of the artist’s existing shoes, regardless of the controversy. Those prices started falling in the days that followed, but not below where they were before the breakout, Dittrich said.
Kola Tytler, who once helped run Yeezy-centric news site Yeezy Mafia and is the founder of a Milan-based sneaker and streetwear resale store called Dropout, told Recode that store owners from Resales across Europe have been stocking up on popular Yeezy styles this week “as it’s hard to see prices and demand dropping significantly despite the controversy.” Visitors to Dropout’s e-commerce site, dropoutmilano.com, also searched for Yeezys this week at higher rates than in the past.
This all seems like a good thing for shopping sites that cater to sneakerhead demand. Increased interest and higher prices generally lead to a greater reduction in sales for these companies. But what if or when fewer customers want to wear the fashion associated with Ye? Or just when the impact of Adidas not making any new Yeezy products hits and supply is low?
In its severance announcement, Adidas said it was “the sole owner of all design rights to existing products as well as previous and new colorways under the partnership.” Stock analysts said the company plans to produce Yeezy designs under the Adidas brand. It seems unlikely that these products could have resale value and hype to match Yeezy without Ye’s name or involvement being attached to the product.
“I find it hard to see adidas coming close to replicating the success of YEEZY without Kanye,” Tytler wrote to Recode.
Ye said he will sell new sneaker designs but need a new partner, which might be a difficult task. he was escorted out of Skechers headquarters on Wednesday after showing up “uninvited”.
Then again, StockX and GOAT, both founded in 2015, have made efforts to diversify away from sneakers in recent years, even before the Yeezy fiasco. StockX now offers categories for trading cards, collectibles, and accessories, in addition to sneakers, shoes, and apparel. GOAT is earlier in that journey, with its parent company announcing on October 17 that it plans to acquire Grailed, a resale site better known for non-sneaker fashion.
But with both private venture-backed companies eyeing possible IPOs, the race to replace Yeezys could be critical. In the meantime, they’ll take whatever sales and profits that come with the brand they can still get.