few stores, raffles to access the purchase and exorbitant resales.
Seattle, Washington State. In a shopping center, about twenty people get into a massive fight that the police, without any other means of deterrence, are forced to dissolve with pepper spray. In Atlanta, Georgia, that same day an angry mob knocked down the door of a Nike store, and similar events took place in Taylor (Michigan), Toledo (Ohio) or Indianapolis (Indiana), according to the BBC. We are in December 2011 and something unleashes multiple riots in the United States. Racism? Police violence? Political issues? No, the launch of the coveted Air Jordan 11 Retro Concord sneakers.
Exclusive sneakers unleash passions around the world, and that burning hobby mixed with large doses of capitalism and a few spoonfuls of marketing results. a recipe of many, many zeros. The main manufacturers of this type of footwear, Nike and Adidas, know this well, who have been promoting events such as those that occurred in the United States in 2011 since the eighties.
Not directly, of course, but based on arousing the fervor of sneaker fans with super exclusive models, designed by renowned artists, and with very short runs, which usually oscillate between forty and seventy thousand pairs for the whole world. And is that when you do something so coveted with so little offer you can not only set the price you want, you also risk unleashing collective madness.
“At first this type of product was sold directly in stores, people queued in the street and were dispatched in order of arrival. Customers came to camp at the door. Then we decided to develop the app and make sales through the raffle system to democratize access to the product, making it easier and more fair ”, they explain from the Spanish store specializing in sneakers Sivasdescalzo.
The raffles, or online raffles, are the system that manufacturers and sports shoe stores devised to avoid incidents at the doors of their establishments. They consist, according to the company, of a sweepstakes on the sellers’ websites or mobile applications or a competition through various systems, like slots, in which the user with the highest score wins. The award? Access to the purchase of the few shoes available among all those interested in acquiring them.
In this way, the entire process is carried out remotely and the only ones who go to the stores are the lucky ones to collect, upon payment, the long-awaited trophy No queues or danger of aggression. They can also choose to have them sent home.
Thus, raffles temper the passion of the fans, although they generate other problems: fraudulent registrations using bots. Because if the business is lucrative for manufacturers and stores, it is equally or more so for resale, and there are those who try to get hold of several pairs of these exclusive products to speculate with them.
“The increase in the resale price is a bit like in the stock market. The shoes usually cost in normal sale between 180 and 300 euros, depending on the model and the collaborating artist. AND in resale they can go up to 3,000 euros, depending on various factors ”, says Javier Lluch, founder of the Backseries sneaker magazine.
And that in new models, because the older ones can reach exorbitant prices in online auctions. For example, the Kobe Air Jordan, launched in 2002 in tribute to Kobe Bryant, currently cost around 15,000 euros. And in May 2020, Bloomberg reported that a pair of the legendary Nike Air Jordan 1S had been sold at Sotheby’s auction house for $ 560,000, the highest figure reached to date for a sports shoe. Although, in this case, it was a pair of sneakers used and signed by Michael Jordan himself.
A business in few hands
The business of selling exclusive sneakers through online raffles is in few hands. Nike and Adidas have their own applications for this and, in addition, they give some models to a few stores so that they also sell them through raffles. In Spain, in addition to the manufacturers, the two main sellers of sneakers are Sivasdescalzo and Foot District. Internationally, they are also sold by Sneakersnstuff, Beastin, Overkill, END or 43Einhalb.
“Brands give these products to stores per imageIf only they sold them, they would lose diffusion and interest. The prices are the same in all the stores ”, Lluch points out.
The number of shoes manufacturers assign to each store It varies depending on the model, the collaborating artist and the amount that the manufacturer wants to put into circulation. “It can be from 20 to 1,000 pairs of sneakers, and there are about 6 or 8 launches a month. Saturday is usually the strong day and then we do some during the week, ”explains Diego Martínez, co-CEO of Foot District.
Regarding the volume of business of raffles, it is difficult to unravel concrete figures, since the profits they generate for manufacturers are lost in the ocean of their global balance sheets. What there is data on is the money that moves the footwear sector as a whole, and they are conclusive: around 74,000 million euros per year worldwide according to various sources, and about 1,560 million euros in Spain in 2019 according to data from the consulting firm NDP.
Likewise, the business figures of the two main stores specializing in exclusive shoe raffles in Spain are also eloquent. Sivasdescalzo reached a sales volume in 2018 of 20 million euros, 70% more than in the previous year, while Foot District closed 2019 with a turnover of 10.5 million euros, almost double than in 2018 (5.3 million euros). However, it must be borne in mind that raffles are not the only business of these companies, although they are a very important part of their activity.
Beyond the ‘raffles’
The exclusive shoe business seems, by all accounts, round. Products that have their assured sale before they were put on the market, with high prices, for which people were literally sticking and now she is anxious in front of her device to enter the raffles as soon as they open. According to the information provided by Sivasdescalzo, through its app they have reached up to 100,000 registrations for a single model of sneakers.
But there is more. The mandatory registration for these raffles, with email, verified phone number and device associated with the account, provides a very valuable database to brands and stores, as it is an audience with which the probability of conversion to sale of any commercial email is very high.
On the other hand, brands tend to release models similar to the exclusive ones, but without the participation of a famous designer or artist, a few days after the launch of the original sneakers, and in greater numbers than these. A) Yes, those who have not been able to get the first shoes in the raffles can console themselves with similar shoes the one they wanted, even if it is not so exclusive. These last products also tend to run out, according to the sources consulted by SamaGame, and leave huge profits in the coffers of Nike, Adidas and fashion stores.
“That disappointment that they generate in the customer for not having the product is a marketing strategy of the manufacturers. By having little offer, the product is more exclusive, because many people are going to be without it, and that makes it more desirable. It’s the charm that these shoes have, ”explains Martínez.
But where the most profit is obtained per pair of shoes is in resale. The volume of sales after the raffles is so high that there are even portals specialized in this type of transaction, which have mechanisms to ensure the authenticity of the footwear. Because, of course, there are also those who try to sell counterfeits at authentic prices.
“The resale channels are varied. You can find them in Wallapop, Vinted and other second-hand platforms, but there you risk being sold a fake. The best thing is to go to specialized pages such as StockX or Laced, where they carry out so-called legit checks to authenticate them ”, explains the founder of Backseries.
StockX’s is a striking case. In addition to facilitating the sale of exclusive shoes and guaranteeing their authenticity, works as a kind of stock market for this shoe, as we already explained in Engadget. This platform has a database of about 5,000 sneaker models with price charts ranging from their release to the market to the present, detailed information with minimums and maximums in recent months and the value of the different sizes.
The dark side of reselling is that of fraud and mafias. The newspaper El País pointed out in 2018 that on the day of the launch of the latest Adidas Yeezy model, several men with Asian features stood outside the physical stores of Sivasdescalzo and Foot District to offer the winners in the raffle amounts of between 300 and 600 euros in cash for a pair of shoes whose price in store was 200 euros. According to the aforementioned information, the destination of these shoes was resale for an even greater amount to wealthy people in China.
On the other hand, with the implementation of the raffles model both manufacturers and stores began to experience thousands of fraudulent registrations using bots, with which individuals or organizations tried to get hold of several pairs of sneakers to speculate with them.
“At the beginning of launching the app, we had thousands of fraudulent registrations, and we spent a lot of time and effort debugging them to ensure that the product was raffled only among those who met the rules on equal terms. At the beginning of August of this year we made a major update to minimize the incidence of these attacks, and now users have to enter and authorize a payment method in the registration process, making it more difficult for bots”, They point out from Sivasdescalzo.
Similar online anti-fraud methods are used by other stores and manufacturers. Thus, Nike, for example, asks users interested in raffles to verify your account with a phone number, which is associated with the registration email. With this email and telephone, you only allow one registration per product, and if there is a duplicate participation, it is automatically discarded.