Sneakerheads are a committed group. For them, most Saturday mornings are devoted to hopelessly opening Nike’s SNKRS app, frantically searching retailers from Foot Locker to boutiques, and completing CAPTCHAs (where are the traffic lights?!), all in hopes of securing the latest drop. Often, the only things secured are “Ls”, and from that frustrating rite-of-passage sprouts the growing sneaker resale phenomenon. Due to the significant imbalance between supply and demand, secondary market sneaker prices are frequently multiples of a given pair’s retail price. What was theoretically a $160 sneaker at 10:00am, when the possibility of acquiring them still lingered, is a $480 sneaker by 10:05.
While the sneaker market softened in late 2022 (check out our blog post that explains why!), much to sneaker purists’ chagrin, the dynamic described above has attracted fervent profiteering, bolstered by sophisticated bots and carefully cultivated connections, which enable the most successful resellers to acquire hot pairs in heavy volume. The headline-grabbing practice of acquiring for retail and selling immediately at elevated prices on the secondary market is flipping, not altogether the same as embracing sneakers as a collectible asset class.
In flipping, appreciation for what makes a sneaker culturally valuable is not required to provide an edge. In fact, in today’s sneaker market, many would argue hype has rendered that appreciation almost entirely irrelevant. If social media hype surrounds a sneaker, flippers will flip it – not because of anything particularly special about the sneaker itself, but because they know Nike will release a quantity dramatically lower than the demand built by the social media hype cycle. It’s more a matter of access, less a matter of acumen. Such a practice is common in any market where supply is insufficient to meet demand, and the retail price is therefore artificially stifled somewhere below where supply and demand intersect in reality. It’s analogous to the way in which many card flippers aren’t necessarily staking out retailers due to a long-term, bullish thesis on a given underlying card, but instead for the possibility of instant profit on offer.
Bricks are discounted, readily-available sneakers that you can generally find on shelves or on websites with relative ease. The practice of flipping bricks is somewhat of an "asset" play, though it's more akin to arbitrage resulting from market inefficiency. Due to the fragmentation of the sneaker markets, a brick-flipper can spot excess supply at a discount in one channel, unmet demand at a higher price in another channel, and bridge that chasm. It's an interesting strategy, and it can work very well, but it's potentially unsustainable and best executed at high volumes.
Alternatively to flipping and flipping bricks, just as with other collectible assets, it is possible to devise a capital appreciation thesis for a given pair of sneakers based on various criteria. We'll take you through the criteria that make a sneaker valuable below. Such criteria aren’t exclusive to these factors, but they stand out among the most influential. When we talk about "investing" in sneakers, we're generally talking about the effort to achieve capital appreciation beyond just simply buying at retail and immediately selling at prevailing resale prices. A collector or investor would be purchasing sneakers with the expectation that, over a matter of months or years, they can go up in value due to favorable changes in the prevailing supply and demand dynamics. Each of the factors below - and the market's awareness of them - can have an impact on supply and/or demand, which ultimately affects the value of the sneakers, making some pairs winners and others losers. The latter is often more common than the former, so it's critical to research and understand these factors well. Even then, as sneakers are speculative assets, there are no guarantees of appreciation.
Was it the debut of a successful model? A landmark collaboration? The signature sneaker of an athlete worn in a decisive moment?
Without rich associated stories, sneakers very infrequently command high values. It would be a misconception to believe that a sneaker becomes valuable solely on the basis of “looking cool”; that absolutely matters, yes, but it’s not always enough on its own. Before we go any further, let’s debunk the idea that cool-looking sneakers are analogous to valuable sneakers. We see it all the time – two pairs of sneakers appear virtually identical, but due to one small tweak, there’s a $1000+ differential in market value.
Take the Air Jordan 1 “Colette” for example. That's a special pair of Jordans made in limited quantities to commemorate the closing of the French boutique back in 2017. These sold in 2021 for over $23k with Sotheby’s, though prices are closer to the mid-teens today. Meanwhile, the “Storm Blue” Jordan 1, essentially identical to the Colette, but missing the “1992” and “2017” printed on each pair and the “Bonjour” and “Au Revoir” on the outsole, sells for approximately $500-700, depending on size. Minor differences in appearance, huge differences in value owing to story & scarcity.
.jpeg)
For another example, look at the Jordan 3 in “Fire Red” and “Varsity Royal” colorways. These are roughly $250 sneakers on the secondary market. Now take their very similar looking counterparts made in collaboration with DJ Khaled in very limited quantities. These are $5,000 sneakers, give or take a grand. Both were released in promotion of one of the artist’s new albums, and whether you’re a fan or not, it’s clear that the combination of his promotional capacity (24mm Instagram followers) and extreme scarcity (more on that next) can make all the difference in market values.
The main takeaway from these examples: aesthetic alone is not enough.
And what about backstory? Consider two Jordan 1 Retro releases from 2016, one in a black and red colorway, the other white and metallic navy blue. Both were colorways dressing the original Jordan 1 way in 1985, but the black and red colorway sells for 3-4x the metallic navy.
Why?
Well, that black and red colorway is better known as the “Banned” colorway, and it epitomizes the mythology of the Jordan 1. Nike expertly marketed the Jordan 1 in that colorway as the sneaker banned by the NBA; Jordan had, in actuality, worn a black and red Nike Air Ship in garnering a reprimand from the league, as black was not a primary uniform color for the Bulls. Still, the marketing worked wonders, and the “Banned” Air Jordan 1 remains among the most sought after today.
Collaborations can also enhance the richness of a sneaker’s storytelling. Whether it’s a brand collaboration with a retailer, an artist, a designer, a celebrity, or another brand, the sneakers are usually developed to fit a certain theme or concept. Speaking of concepts, let’s use the sneaker retailer Concepts as an example. They’re considered a master collaborator, having worked with several brands on countless well-regarded sneakers for over a decade. Concepts, which hails from Boston, is perhaps best known for their Lobster Nike Dunk SBs. The first of those pairs, the Red Lobster, was released in 2008, and was designed to evoke imagery of the New England lobster bake. That first pair has inspired several other “Lobster” colorways, becoming an icon in the process. The Red Lobster frequently sells for over $2,000, while the Yellow Lobster, which debuted a year later in lower quantities, now costs more than many cars. The collaborator, the theme, the sneaker model, and the reputational success that followed all contribute to a rich story here.
Were the sneakers released in limited or large quantities? Are they making their way to feet, thereby reducing the supply of deadstock pairs? Or is there still a huge volume on StockX and GOAT?
All else equal (aesthetic included), scarcity is often the difference between the next four-figure flip on StockX and the bricks sitting in the sale section. This is a familiar factor for connoisseurs of any collectible. People want what not everyone can get. And while it’s just one piece of the puzzle, limited quantity releases can do a strong favor for secondary market prices, so long as the other pieces of the puzzle are sufficient to generate demand well in excess of that reduced supply.
But the scarcity story doesn’t end at release. In the immediate aftermath, it bears watching if a given drop was devoured by resellers without strong underlying collector demand. This means fewer pairs ending up on feet. If that’s the case, the deadstock supply available on the market will remain elevated, and prices will drop to meet that weaker than expected demand. Conversely, satiated end-user demand in the immediate aftermath of release will reduce deadstock supply quickly, potentially yielding larger future price increases.
A recent example would be the Air Max 90 “Infrared” release from late 2020. Despite being a high-volume release with muted flip potential, pairs found their way to StockX and GOAT in droves. As it was not a particularly difficult pair to find, the price fell from the mid-to-high $100s towards $130 a few months after release, a $10 discount to retail. With some of the deadstock supply being thinned out of the market, the sneaker now sells for more than $200. The 2015 release of the same sneaker eventually worked its way in to the $300s before news of this 2020 drop broke (we'll explain this risk shortly).
Does the sneaker resonate past the realm of the sneakerhead niche for myriad reasons?
Jordan sneakers aren’t popular solely because Michael Jordan was really good at basketball or because they’re cool-looking. They’re popular because he was really good at basketball, he’s a global icon that transcended sports, he made Nike into a global phenomenon wearing their shoes, the sneakers are a bedrock piece of street fashion, and their must-have, sometimes unattainable nature fueled further must-have, unattainableness. Those are merely a few reasons, but a run-on sentence can’t run on forever.
Before Kanye West went fully off the rails, the Yeezy Prototype became the most expensive sneaker ever sold at $1.8 million. Again, speaking about the status before the meltdown, it was a sneaker that sat uniquely and historically at the intersection of music, culture, fashion, business, and sport, both because of Kanye himself when at his best and because of everything that followed for Yeezy sneakers with Nike and Adidas.
-L.jpeg)
Or consider the Dior Jordans that released in 2020. Sure, sneakerheads alone would have made this release a smash-hit, but it was the notable intersection of sneaker and streetwear culture with high-fashion, two worlds growing ever closer in recent years, that attracted interest beyond sneaker-centric blogs and IG pages.
Is Nike going to re-release this sneaker frequently, or is it permanently one for the archives? Will are-release tank value due to the new supply, or draw attention to the OG?
Considerations here can be a bit tricky, particularly in an era when “retros”, re-releases of old models, comprise such a large portion of key drops. So, collectors are left to ask, as they purchase an “OG” release of a model, whether future retros will be a detriment to their asset’s value, or conversely, if those future retros serve to amplify the importance of the OG. The latter is best evidenced by the massive values of good-condition, 1985 Air Jordan 1s. Those originals command tens of thousands of dollars even though the Jordan 1 is one of the most longstanding, consistently released sneakers on the market. In this case, the OG’s value is boosted by the reverence for its standing as a foundational piece of sneaker culture, in addition to the rarity of examples in good condition given the passage of time.
On the flip side, a Jordan 11, which is among the very most beloved Jordan models, in its OG form from the 1995 release doesn’t fetch much more than double what a retro released in 2019 or 2020 commands on the secondary market.
Renowned collaborations aren’t immune to re-releases either. The original Animal Pack Air Max 1 release from Atmos and Nike in 2006 garnered prices over $2,000 on a fairly consistent basis….until 2018, when the sneaker was retroed (retro’d?). While sales of the original are infrequent fifteen years on, they’re certainly no longer consistently in excess of $2,000. Meanwhile, the 2018 release goes for $300-500. Not to pick on Atmos, but the 2007 release of the Atmos Elephant Air Max 1 effectively halved in value from $1,500 when the sneaker re-released in 2017. That’s not to say that the OG maintained in good condition can’t one day sell for multiples of the more common re-release, but that’s not a certainty today.
Certain sneakers have become part of borderline folklore, and therefore its hard to see how a re-release would be anything but detrimental. For example, Nike Yeezy releases have attained a premium of sorts due to the low likelihood of Kanye ever coming back into the fold with the Swoosh. The Staple Pigeon Dunk is one of the most memorable sneaker releases of all time, due to the ensuing riots and the portrayal of said riots on the cover of the New York Post (talk about a rich story). While variations and approximations have released, the luster of that historic sneaker moment would be tainted by another release. And so, the sneaker is worth close to $50k.
While not an unmitigated death-knell to sneaker values, the likelihood, implication, and timeline of a potential re-release must be considered in relation to the intended holding period.
Are trends, whether fashion, cultural, or otherwise, going to drive new demand to previously disregarded models?
The case study here is a simple one. If you believed that Nike Dunk SBs were going to come back into vogue before 2020, or better yet 2019, you stood to make a lot of money. As part of a years long strategy to make the Dunk highly coveted, Nike brought the frenzy to a crescendo in 2020, delivering millions of Ls on the SNKRS app to a mainstream public suddenly rabid for the sneaker. Whether it was the Ben & Jerry’s Chunky Dunky, the Grateful Dead pairs, or Travis Scotts among many others, nary a week went by in the sneaker world without a Dunk dropping to great acclaim.
What’s important for this discussion, though, is that the rising tide of the Dunk frenzy also lifted the boats of Dunks released in years past. The Newcastle Brown Ale Dunk, released in 2008 for $90 and a $300 sneaker as recently as 2018, tripled to over $900. The Heineken Dunk, released for $65 in 2003, traded for around $900 in 2018. In 2021? It was a $4,000 sneaker. The Purple Lobster Dunk SB by Concepts is an even more recent example. Released in late 2018 for $130, the Purple Lobsters spent the first half of 2019 below $400, breaching $600 by the end of that year. Today, sales are often above $1,500. If you managed to get this pair at retail (it wasn’t the hardest drop of all time), kept them on ice, and sold today, you would have achieved a return of over 1000% in under three years. Even if you missed at retail and felt the Dunk wave building at the end of 2019, you’d still be looking at 2.5x.
The 2020 Dunk wave is an extreme example, but still, the sneaker market abounds with tales of well-theorized bets on future demand growth for certain pairs.
This is a tricky one that also underscores a significant risk in sneaker investment. As a sneaker approaches the later stages of its lifecycle, there are pushes and pulls on value. On the one hand, the longer its been since a sneaker released, the fewer deadstock pairs will exist as more and more pairs find their way to feet over the years. This could have a favorable effect on values as supply dwindles. However, on the flip side, demand could also dwindle as the sneaker drifts further from the mind of consumers and younger generations demonstrate little interest.
Furthermore, and perhaps more importantly, many sneakers begin to decay or deteriorate in condition after a certain number of years have passed. Of course, once that happens, the value is detrimentally impacted considerably. Some sneakers can cruise past a decade or even close to two decades with no issue, but others might fare worse, particularly if stored poorly. This presents great risk. Those looking to move sneakers on at a profit should take care to act at the appropriate moment in the lifecycle, when there is still demand from buyers eager to put the sneaker on foot, and when there's little danger that the sneaker will effectively disintegrate on foot. That's a delicate balancing act, and it's a relatively unique one for the asset class.
It's also worth noting that if sneakers are carefully preserved and appear pristine and intact, some collectors will have little issue purchasing them, as their intent is not to wear them but instead to display them. However, that typically only applies to very high-end, very collectible, very significant sneakers.
The sneaker market has grown so significantly in part because it's so much easier than it used to be to buy and sell sneakers. Thanks to the rise of resale marketplaces like StockX and GOAT, the experience of buying a sneaker on secondary markets is effectively the same as buying one at retail. Selling them on those platforms is similarly straightforward, though costly for low-volume sellers (typically a 10% fee, in addition to payment processing at 3% and shipping). eBay, the forerunner in online sneaker commerce, has recently dedicated greater resources and attention to its platform, and it remains a popular arena even if not the leader it was once perceived to be. Any of those marketplaces are generally beginner-friendly, reliable places to start, and each offers some level of authentication for those purchasing sneakers.
Consignment services like Stadium Goods and Flight Club (owned by GOAT) can also be leveraged by sellers looking for higher-touch service, and they boast strong and rare inventory for buyers as well.
At the ultra high-end, premier auction houses like Sotheby's, Christie's, and Heritage Auctions have begun to offer rare sneakers both at auction and in buy-it-now formats. This has the potential to introduce sneakers to new, affluent audiences, and it positions the sneakers included in sales as premier offerings. Of course, one can expect that listing with these houses may not be the most cost efficient way to sell, given the marketing and fees associated. A buyer may pay $5,000 for a pair, but at least $1,000 of that (25%) is likely going to the auction house in buyer's premium.
If live negotiation is your thing, many cities around the country host large sneaker events and conventions at which collectors come together to buy and sell sneakers. This can often be a convenient way to transact, removing middlemen, shipping, and other processes from the equation, but it can also be both time-consuming and frustrating should the haggling prove difficult.
Enjoyed this article? Don’t forget to subscribe to our newsletter to receive more like it in your inbox weekly!
Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.
All information provided by Altan Insights is impersonal and not tailored to the needs of any person, entity or group of persons. Past performance of an index or asset is not an indication or guarantee of future results.
