Flipping Sneakers 101
A Data-Driven Guide to Reselling Yeezy and Off-White Sneakers
Over the decades, sneakers have become a fast-growing luxury commodity and a non-traditional asset class that is entrenched in modern society. With top-tier auction houses like Sotheby's and Christie's setting record prices for luxury sneakers, and emerging platforms like Grailed and Otis facilitating the sale and trade of sneakers and their shares, investing in a pair of kicks is more lucrative and convenient than ever. In fact, Cowen Inc. estimates that the sneaker and streetwear resale market may potentially reach $30bn globally by 2030.
The Data
As a sneakerhead myself, I am interested to learn the factors that impact prices of sneakers in the resale market. While Dylan Dittrich, author of Sneakonomic Growth, warned that investors "need to have a feel for trends, for what is going to come into or fade out of style", I was curious if there were any general determinants of sneaker prices when I found StockX's dataset comprising a random sample of Off-White x Nike and Yeezy 350 daily sales between September 2017 and February 2019.
There are eight variables included in the dataset: Order Date, Brand, Sneaker Name, Sale Price ($), Retail Price ($), Release Date, Shoe Size and Buyer State. Using Python, I was able to obtain the Model, Colorway, Color and Retail Multiple for the analysis. I focused on the following three factors and investigated their relationships to each sneaker's retail multiple:
Shoe Size
Color
Time of Sale (from release date)
The Findings
Which sneaker sizes should I sell?
Figures 1 and 2 below show the relationship between shoe sizes and the number of sneakers sold or the retail multiple, respectively, which informs us about the demand and supply of the sneakers. For sizes 9-10 of Yeezy’s and Off-White’s, both the trade volume and resale premiums are high, which signals a strong demand for these sizes. While sneakers sizes 12.5 and 14+ yield high retail multiples, the number of sneakers sold are significantly lower than the other sizes; in other words, although these sizes yield a resale margin, they are risky assets as investors might find them difficult to resell.
Another observation from Figures 1 and 2 is that Off-White sneakers generally outperform Yeezy Boost 350 kicks at every shoe size. As the Yeezy trade volumes are consistently higher than that of Off-White's, we can infer that the supply of Yeezy sneakers in the market are relatively high. Sneakerheads who are looking to invest might turn to Off-White to yield a higher return on investment. It should be noted that there are nuances between the different Yeezy Boost 350 colorways, which will be explored later in the analysis.
Which color sneakers should I invest in?
My initial hypothesis is that monochrome (black, white or gray) sneakers perform better than brightly colored ones, but looking at Figure 3, I found it difficult to elucidate a distinct relationship between color and retail premiums. What stood out to me is how well Yeezy tan and Off-White red sneakers performed; however, their performances could be attributed to the strong demand of the specific models and colorways, as the Yeezy Boost 350 (2015) Oxford Tan and the Jordan 1 Retro High Off-White Chicago are prized possessions among the sneaker community. On average, black Yeezy sneakers also perform better in the StockX marketplace compared to other colors.
When is a good time to sell?
Of the three factors I focused on, the optimal time of sale was the most difficult to pinpoint as sneaker prices are fluctuate significantly day-by-day. I decided to split the analysis into the following segments: Yeezy Boost 350 (2015) colorways, Yeezy Boost 350 V2 colorways and Off-White models. Generally speaking, weeks 30-60 from the time of release are the best weeks to sell sneakers.
As the first pairs of Yeezy Boost 350's to be released, the 2015 colorways generally performed better than the others, with "Turtledove" standing out as the top-performing colorway. Due to the earlier time of release, parts of the data were cut off, so it was challenging to identify the optimal time to sell these sneakers. It is worth noting that the returns on investment of the 2015 colorways are falling over time, so it might be a good idea for current owners of the Yeezy 2015 colorways to sell.
Similar to the 2015 colorways, the V2 colorways seem to be depreciating over time as well. On average, the cut-off point for when the sneakers start to depreciate is around weeks 50-60. A good rule of thumb would be to sell your Yeezy sneakers within the first year of purchasing. Better yet, find a plug who can procure the sneakers even before the release date, as reselling up to 3 weeks prior to the release will give you the best possible resale premiums.
Surprisingly, Off-White sneakers perform better over time and are appreciating assets. For many of the Off-White models, there is a spike in resale premiums at around week 28-35. If you are a proud owner of a pair of Off-White's, wait for at least half a year before selling your prized kicks and your patience will be rewarded. Similar to the Yeezy V2 colorways, treat your early plugs well as the weeks leading up to the release typically fetch higher retail multiples.
In Conclusion
Investing in sneakers is tricky business. Due to the fluctuations in retail multiples between different brands, models and colorways, it takes a discerning eye to identify which sneaker will perform well in the market. Not all hope is lost, however, as there are some statistically-proven steps you could take to prepare yourself for success in the sneaker reselling game. Buying Off-White sneakers, picking the right sizes and selling between 30-60 weeks of the release date are some of the ways you could stay ahead of the curve. Finally, it is also important to stay on top of current trends through meticulous research. Resources like StockX, Grailed and Hypebeast provide regular updates about current drops and trends in the sneaker industry. If you play your cards right, reselling sneakers can be an exciting business.