The Business of Sneakers is Changing and Black Entrepreneurs Have an Opportunity to Lead • ThePowerBloc
The profitability of E-commerce has allowed sneaker companies to make a once unimaginable move—they are taking sneakers out of stores.
More accurately, manufacturing brands have decided to limit the quantity and quality of sneakers that enter their retail partner’s, once coveted relationships, brick and mortar spaces. This is will make it hard to get the hottest new pair of kicks from brands such as Nike from anywhere besides, well, Nike.
I know it sounds shady, but companies do this all of the time. Last year, Apple decided that instead of relying on one of their partners to continue producing chips for their Mac’s, they would instead open their own chip factory and produce the chips themselves. Amazon decided to cut out FedEx for a while and build its own delivery business to see if they can master same-day delivery for Amazon Prime. Companies do this to hold on to more money. They use the extra cash flow to get bigger. They invest in research and development, buy smaller companies, pay their investors more money via higher dividends or issue stock buybacks.
Back to the story though. Historically, Black business owners who love participating in the sneaker industry opened stores and became well-known brands in their own right. But with the change in supply, stores are starting to suffer. Some entrepreneurs have already pivoted to the resale space, using exchanges like GOAT and StockX even though the competition is fierce. Stores like Flight Club and Stadium Goods have become major consignment stores. But can Black businesses pivot to dominate the sneaker exchanges many Black people compete on?
One company is showing us something different.
Sole360 has entered the chat. Co-founders Ariana Davis and Terrence Whaley discovered a niche area that has been rooted in our culture since many of us were kids. Creating a community that allows people to trade sneakers. In 2020, over 7 million sneakers were purchased in the US. With brands further consolidating the market and customers competing for even more limited sneaker releases, the opportunity for Black people to both save money and get new kicks hits two birds with one stone.
Think about it. More than 13% of consumers spend beyond the $200 mark for sneakers. Simply put, sneakers are becoming more of an asset class and are gaining significant value over time. Where most exchanges are focused on trading sneakers for money, Sole360’s future goal is to expand the community and allow sneakers to be traded for other sneakers in higher volume, just like how assets are traded for other assets (instead of US Dollars) in certain financial markets.
Creating businesses like these are a clear example of how Black businesses can shake up an industry and create new ways for consumers to gain value from what they already own and love. Since we’re the ones who have shaped the sneaker culture (from Michael Jordan to PJ Tucker), we should be the ones leading new ways of how sneakers can be bought, sold, or traded. When it comes to running a business or managing your finances, you don’t need to reinvent the wheel. Sometimes all you need to do is throw some rims on it.
Carl H. Joseph-Black, J.D. is the founder of The Dime and runs The Blacklist Social Club. You can contact him anywhere on social media @CJoeBlack