StockX: An online “stock market of things” — A Startup Research Report by Jibran Ali

Overview

• Founded: March 2015
• Founders: Dan Gilbert, Joshua Luber
• Active Team Members: ~450 (Crunchbase, LinkedIn, Pitchbook)
• Specialties: E-Commerce, Marketplace, Sales
• Industry: Fashion, Resale, Software

Investments

• Seed: November 1st, 2016. No further details were released.

• Series A: Feb 15, 2017. $6 Million from Scooter Braun, SV Angel, Eminem and Paul Rosenberg, Mark Wahlberg, Detroit Venture Partners, Courtside Ventures.

• Series B: Sep 13, 2018. $44 Million from Steve Aoki, Shana Fisher, Marc Benioff, Karlie Kloss, Jonathon Triest, GV (formerly Google Ventures), Don Crawley, Detroit Venture Partners, Courtside Ventures, Battery Ventures.

Abstract

StockX is an online “stock market of things.” They are a platform for the resale of many exclusive and limited items, especially sneakers. The company promotes the sneaker market and earns revenues by taking commissions on each item sold through the application. StockX boasts an authentication process in order to guarantee the validity of the sneakers bought through their services.

Team

Dan Gilbert (Co-founder)

Education

• Undergraduate: Michigan State University (1979–1983)
• JD: Wayne State University (1985–1987)

Pertinent Prior Experience

• Founder and Chairman at Quicken Loans Inc.

• Founder and Chairman at Rock Ventures LLC

• Founder and Principal at Detroit Venture Partners (a VC firm investing in early-stage technology startups)

Personal Details

• Avid basketball fan, major shareholder of the Cleveland Cavaliers

• Has been referenced by a plethora of business magazines such as Forbes, Fortune, etc.

• Considered a revered business tycoon in the world today

• Saw an opportunity in the growing sneaker and “streetwear” market, which led him to found and invest heavily in StockX

• Has partner status in various sports-related companies such as Flash Seats (an electronic ticketing company), and Xenith (helmet maker)

• Has a great passion for the city of Detroit. Invested $5.6 billion in properties and employed 17,000 natives by moving his major companies to the city’s downtown financial district. Virtually saved the city’s economy (Business Insider)

Josh Luber (Co-founder, CEO)

Education

• BBA, Marketing and Finance: Emory University (1995–1999)
• JD, MBA: Emory University (2003–2006)

Pertinent Prior Experience

• Co-founder/CEO at Tech Experts, LLC (a computer consulting company for homes and small businesses)

• Co-founder/CEO at Servinity (employee management application for restaurants)

• Senior Managing Consultant at IBM Global Business Services

• Founder at Campless (Later StockX) (a “Sneakerhead data” company: collects, analyzes, publishes data and derived insight related to collectible sneakers and the industry)

Personal Details

• Extremely passionate about sneakers and streetwear, as evident through his various social media accounts

• Met Co-founder Gilbert when pitching Campless to Detroit Venture Partners. Gilbert saw an opportunity and entered as a partner; further, he offered the idea of selling sneakers through the platform and not just analyzing them

• Shares a similar passion for the city of Detroit, MI

• Has given a Ted Talk on the sneaker resale industry and why it’s an important market to consider

• Has a lot of sneaker acumen, serves as the primary marketing and creative mind behind StockX

Market

As per Forbes, the global sneaker market is expected to reach $95.14 billion by 2025. The market for shoes is growing rapidly, as currently the fashion trend is very popular. The figure from Statista plots revenue from sneakers only against years. As evident in the figure, over the last few years, sneaker sales have increased steadily and are projected to continue to do so. StockX’s goal isn’t to join the sneaker market with their own products, but to facilitate the market, and capitalize on the high prices of rare and exclusive sneakers.

Seeing that the sneaker market itself is prospering, StockX should have no problems continuing to grow and earn substantial revenues. As for the resale market, where the startup specializes, they face uncertainty and

unpredictability. As per StayHipp, a global fashion blog, the sneaker resale market is worth $1 billion. Shoe brands release rare and limited sneakers for a rather low retail price; then, resellers immediately buy these sneakers in bulk and resell them through a medium such as StockX for a very large profit. The demand and exclusiveness of the sneakers drive up the price. The only catch with this market is that if retailers start releasing exclusive shoes in greater quantities, as done recently with Adidas’ Yeezy 350 Boost, then prices will fall drastically, affecting companies like StockX. However, the likelihood of this happening with many sneakers is low because of brands wanting to maintain exclusivity and brand value.

Competition

Goat is another popular sneaker resale facilitator that was founded in June 2015. They cleared their corporate round of funding in June 2015 and are StockX’s biggest rivals. Their total funding exceeds $197 million and is synonymous with the sneaker market. They have 7 million users worldwide, and with their recent acquisition of the iconic sneaker store Flight Club, they now have a retail presence as well. GOAT focuses solely on sneakers, whereas StockX does offer platforms for the resales of watches and streetwear.

eBay is an E-commerce firm based in San Jose, CA. It was founded in 1995 and became one of the first success stories of the mid-90s dot com bubble. Prior to StockX and GOAT, eBay was the prime marketplace for sneaker resale. Although not as pertinent anymore, eBay was at one time the leading company in this field. However, issues with the authenticity of sneakers being sold on eBay led to the rise of GOAT and StockX as the latter two companies prioritize their authentication processes. eBay had no such mechanism of doing so, because of which its sales have steadily declined over the last few years.

Product

StockX offers a smartphone app as well as a website as a platform for sneaker resale. They claim they are the first and only “stock market of things” as they combine data analytics and pricing expertise to offer insights on future prices of items. Furthermore, they actually allow the purchasing of these items as well. From a technological perspective, the user interface is designed well and is very easy to use.

The application has 4 main features; market, browse, search, and account, as shown above. The market feature gives users a good idea of current prices are for popular sneakers, and what sneakers are doing well in terms of sales. Furthermore, the market area gives metrics such as the amount of a certain sneaker sold on the application. The browse feature is more shopping oriented and less informative. Here, users can scroll through and browse sneakers that they may find interesting. After finding one that catches their eye, they can either pin it to keep tabs on its market value, purchase immediately, or make a bid for the sneaker. The search feature is for users that have a particular sneaker in mind that they’d like to view. The account feature gives a full transaction history, sneakers bought and sold, personal sneaker portfolio, and more for each individual user. The website has almost the same features; however, it’s more in-depth.

StockX’s focus, however, is the importance of facilitating the market for selling authentic goods only. Going back to the main problem of counterfeit sneakers and fraudulent items being sold, companies like StockX and GOAT strive to sell only genuine goods.

Metrics

• Estimated Annual Revenue: $14.2 Million

• ~450 Employees

• $44 Million from Series B funding round

Final Thoughts

StockX, along with GOAT, has definitely changed the sneaker resale market. The unfaltering demand for sneakers proves that the market for such companies exists, and is growing. Like this report stated earlier, Forbes expects the sneaker market to be worth $95.14 billion by 2025. To put things into perspective, the market is currently at roughly $38 billion. Thus, the market is expected to more than double in just 6 years.

With that in mind, it’s easy to assume that StockX is not going to go out of business, or suffer financially anytime soon. However, as discussed earlier, companies like StockX rely heavily on the resale market especially. Should companies like Nike and Adidas increase retail quantities of their exclusive goods, companies like StockX would suffer as consumers would much rather pay the substantially lower retail price. Going back to the example of the Adidas Yeezy 350 Boost:

Adidas recently released a large quantity of Yeezy 350 Creams, which meant consumers could now buy the good at its standard retail price of $220. This caused a frenzy among resellers of this sneaker as no one was buying it for $350+ (typical resale price) anymore, and prices of the sneaker fell dramatically in the resale market as well. Hypothetically, if this scenario took place with most other shoes, then companies like StockX could be in trouble as no one would have the need to use them anymore.

As for the application and website, StockX’s are very well made and have easy to use and responsive UI’s. StockX’s in-depth analysis and stock market-like analysis of sneaker pricings gives the consumer a lot of information and motivates them to make purchases. Furthermore, the portfolio feature helps customers keep track of their purchases, preferred brands, and prices of the sneaker currently should they want to resale. Lastly, StockX has an edge over its main competitor GOAT by providing lower prices (in general) on goods than GOAT does. As for moving forward, StockX should consider moving into the retail field, the only aspect GOAT still has an advantage in. GOAT’s acquisition of Flight Club gives them a greater brand value and presence especially among celebrities, etc. StockX should consider venturing into this field in order to broaden their market and spur growth.

Originally published March 2019.

Disclaimer: All information in this report has been aggregated through numerous, public news reports/articles or StockX’s website itself. Any misrepresentation of the company is purely accidental. BV is more than willing to correct any mistakes.