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Hey 👋🏼

Growing up, sneakers were just something I wore to school or playing some kind of sport. 

But somewhere along the way, they became something much bigger - a cultural statement, a collector's item, and, believe it or not, an investment!

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Whether you're someone who’s already keeping your kicks pristine in the box or just curious about this booming market, I want to dive into why sneakers are in the spotlight as a serious money-making opportunity.

In today’s guide, I’ll cover:

• Why even think about investing in sneakers?
• What do the numbers say? 
• Most profitable sneaker brands for resale
• What do the returns look like?
• What makes a sneaker valuable?
• Risk of investing in sneakers
• How to invest

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Why even think about investing in sneakers?

Sneakers aren’t just about style anymore - they’ve become a booming investment opportunity. While the overall shoe industry plods along with a growth rate of 3% annually, the sneaker market is sprinting ahead, with a projected compound annual growth rate (CAGR) of 6.4% from 2024 to 2029. 

By 2029, this market is expected to hit an insane USD 122.51 billion! 

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But here’s where things get even more interesting: the resale market for sneakers is absolutely exploding. 

Once dismissed as a niche for sneakerheads, the secondary market has grown into a global juggernaut, valued at $11 billion today and projected to skyrocket to $51.2 billion by 2032 - a jaw-dropping CAGR of 16.4% - though that of course is a projection and the resale market has hit some bumps recently - more on that below. 

That’s not just growth; that’s a tidal wave of opportunity.

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This trend isn’t just about sneakers; it’s part of a bigger story around alternative assets which I know I talk a lot about in these guides. 

From fine art and wine to rare collectibles, more investors are looking beyond traditional stocks and bonds to diversify their portfolios. Why? Alternative assets often behave differently from traditional investments, offering a potential hedge against market volatility. Sneakers, with their passionate fan base and high demand for rare editions, are uniquely positioned in this space - combining cultural value with financial potential.

For anyone thinking about dipping their toes into this market, sneakers can be a fun and profitable way to diversify. 

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And what about the market?

Well firstly, the sneaker market is dominated by a few very recognisable giants:

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Regional Market Snapshot

When it comes to sneakers, the U.S. still reigns supreme. In 2023 alone, the market is expected to generate $22.3 billion in revenue. Not far behind is China, with projected sales of $15.8 billion. Even more impressive? 

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Market Trends and Challenges

While the overall sneaker market is booming, the resale side of things is hitting some bumps in the road. eBay’s sneaker sales, for instance, have dropped by over 30%, and average resale prices have fallen 16% in just the past year. Popular sneaker models that used to guarantee solid returns are now delivering negative returns for some investors.

So, what’s causing the slowdown? A mix of factors:

• Rising costs of living are forcing people to cut back on non-essential spending.
• Manufacturers are cracking down on bulk-buying bots, making it tougher for resellers to scoop up inventory.
• The resale market itself is becoming crowded, leading to increased competition and market saturation.

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Most profitable sneaker brands for resale

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What do the returns look like?

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Here’s just a snippet of some massive increases alongside more modest increases, so you get a sense of the potential: 

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Nike SB Dunk Low "Paris" (2002)

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• Original Retail Price: $60
• Current Average Resale Price: $19,500
• Return on Investment: ~32,400%

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Air Jordan 1 High "Trophy Room Chicago" (2021)

• Original Retail Price: $170
• Current Average Resale Price: $2,000 - $3,500
• Return on Investment: ~1,076% - 1,959%

New Balance 1906R x Salehe Bembury "Heat Be Hot Lava" (2024)

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• Original Retail Price: $170
• Current Average Resale Price: $523
• Return on Investment: ~207%

Nike Air Force 1 Low "Year of the Dragon" (2024)

• Original Retail Price: $365
• Current Average Resale Price: $866
• Return on Investment: ~137%

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What makes a sneaker valuable?

It’s a mix of scarcity, cultural relevance, and timing.

First, limited supply is everything. Sneaker brands have perfected the art of making their releases feel exclusive. Whether it’s a one-time designer collab or a high-profile celebrity drop, the fewer pairs available, the more people want them. 

It’s basic supply and demand, but with a side of hype.

Then there’s the cultural side. Some sneakers aren’t just shoes; they’re tied to moments that matter. 

Think about Air Jordans and their connection to Michael Jordan’s legacy or Kanye’s Yeezys, which completely changed the resale game. When a sneaker has a story - whether it’s tied to sports, music, or pop culture - it sticks with people, and that emotional pull drives up its value.

Lastly, timing is crucial. 

Trends come and go, and what seems like just another pair of shoes today could become a collector’s item down the line. Understanding what’s hot, what’s timeless, and what could be the next big thing is what sets smart sneaker investors apart.

At its core, investing in sneakers is about more than just the money - it’s about understanding what makes certain pairs special and being tuned into a market that’s equal parts business and culture.

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Risk of investing in sneakers

The biggest one? Market volatility. The sneaker market can be unpredictable. One minute, a pair of limited-edition sneakers might be worth thousands, and the next, they’re sitting on resale platforms for a fraction of that price. Trends shift quickly, and what’s hot today could be out of style tomorrow, leaving you stuck with sneakers that aren’t as valuable as you hoped.

Another risk is condition and authenticity. A sneaker’s value can drop dramatically if it's damaged, worn, or not in the original box. And with the rise of sneaker counterfeits, authenticity is a big concern. Even if you buy what seems like a rare, high-demand pair, there’s always the chance you could end up with a fake that’s hard to resell for anything close to what you paid for it. This means doing your research and knowing your sellers is crucial.

Then there’s the risk of overpaying. In the world of sneaker investing, FOMO (fear of missing out) is real. With the hype around some releases, it’s easy to get caught up and pay more than the sneakers are actually worth in the long run. It’s important to be patient and to make sure you’re not just buying into the hype, but investing in something that has solid long-term potential.

Finally, liquidity can be an issue. Unlike stocks or bonds, sneakers aren’t easy to cash out when you need liquidity. You can’t always sell them quickly or for the price you expect, especially if the market softens or the demand shifts. You might need to hold onto your investment for longer than you anticipated before seeing a return.

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How to invest

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Investing in sneakers might sound as simple as grabbing a pair on release day, but thanks to the massive hype around limited editions, it’s rarely that easy. Sneaker drops are highly competitive, often requiring hours of waiting—or missing out entirely. Ironically, it’s this scarcity and overwhelming demand that makes sneakers such a hot investment.

These days, sneaker marketplaces have taken the spotlight, offering alternative ways to buy, sell, and invest in sought-after kicks. Let’s explore some of the major players:

StockX

StockX is a leading sneaker resale platform that launched in 2015. While it started with shoes, it’s since expanded into jewelry, clothing, and accessories. With its slick app and user-friendly features, StockX is ideal for both sneakerheads and serious investors.

• Key Features: You can buy outright or bid on items, and each sneaker is ranked with trading data and volatility percentages.
• Fees: Expect a 10% transaction fee and 3% payment fee, which may sting for big-ticket purchases, but it comes with top-tier counterfeit protection.
• Audience: Great for investors seeking reliable resale data, as well as casual buyers.

GOAT

GOAT is another heavyweight in the sneaker resale scene and rivals StockX in many ways. However, its key differentiator is that it allows for the sale of used sneakers, making it a go-to option for flipping worn pairs.

• Key Features: Bidding system via app and a diverse product range.
• Unique Selling Point: Unlike StockX, GOAT lets you sell second-hand shoes—perfect if you’ve accidentally worn a pair you intended to keep pristine.

Nike SNKRS

Nike’s own app, SNKRS, is your gateway to exclusive drops and insider access to launches. Limited-edition sneakers, like the coveted “Taupe Haze” Air Jordan 4s, often sell out here first, making it a must-have for early access.

eBay

Even eBay has joined the sneaker resale craze. Sellers can now list sneakers worth over $100 with no selling fees—a tempting option for those looking to cut costs when flipping.

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I hope this has been helpful!

Jason

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DISCLAIMER: None of this is financial advice. Finbrain is strictly for educational purposes.

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