Richard Xia, 31, walks into a room and the first thing you can’t help but notice are his shoes.
This streetwear enthusiast loves collecting pieces from brands like BAPE and Supreme. In 2018, the Hwa Chong Institution and National University of Singapore graduate decided to start Novelship, a sneaker and streetwear company, with his longtime friend and classmate Chris Xue.
“The idea to launch Novelship came from our mutual interests in sneakers and streetwear. As passionate sneakerheads, we saw a huge market opportunity in the Asia-Pacific region and wanted to solve our own buying and selling issues. sale of sneakers and streetwear, namely the availability and authenticity of the products.
Today, the company employs around 70 people, has five processing centers and operates in six markets, including Japan, Taiwan and Malaysia.
From Carousell Shop to $2 Million Funding
The founders started selling sneakers on Carousell in 2017 with their own savings of $9,000. “In the beginning, Chris and I were just listing things day after day. I think we probably ran a couple hundred ads a week just to try and get more exposure. It was a good start for us. to build our user base and some of them are regular Novelship users till today.
The company then branched out to its own marketplace website. The goal was to streamline the shopping process for streetwear drops so that streetwear fans can easily buy and sell authentic and exclusive fashion items online.
Novelship’s interface is designed to resemble the sneaker dealer marketplaces familiar to sneakerheads, where deals (offers) and listings (sales) are displayed for easy transactions.
Popular brands on the site include Nike, Air Jordan, Adidas Yeezy, Fear of God, Supreme, and Bearbrick. Besides sneakers and streetwear, collectibles are also sold.
In 2019, he pocketed approximately US$2 million in a seed round led by Global Founders Capital, bringing his total raised capital to US$2.3 million. Plans then were to fuel its expansion into key high-growth markets across Asia.
The business has yet to achieve profitability, Richard explained, as its main focus right now is to expand rapidly to serve more customers in the region first. “We are rapidly approaching a nine-figure annual pace,” revealed Richard.
Sneakers as investments
Collection of these items is not always for personal consumption. Novelship’s footwear and streetwear offer unique investment opportunities for buyers, Richard said.
“Sneakers and streetwear as “alternative assets” help those looking for additional sources of income and present major business opportunities for sneakerheads or even first-time buyers locally and regionally. Customers can buy and sell hot releases for profit on the go,” he said.
“Personally, what makes sneakers one of the most traded assets is that sneakers are a catch-all—they look great, are very comfortable to wear, and are flexible.”
Richard thinks he is also a collector. At one point in 2021, he’s collected almost 50 pairs. “I resold some of the things I don’t use, so right now I have about 30-40 pairs of shoes.”
However, there is one caveat that interested collectors should know before entering this space. “The reality is that some sneakers work great while others don’t, but most sneakers don’t fail completely, which means they’re relatively safe as an asset.”
So what is the best brand if I want to invest in my first pair of shoes? Richard said that for a beginner venturing into reselling or investing in sneakers, it’s best to opt for a classic pair such as the Nike Air Jordan 1 Retro High OG.
“No matter the silhouette, colorway or models, the Air Jordan 1 High tends to hold its value very well and is very likely to increase in price. Another type of sneaker worth investing in would be the Nike SB dunk or a sneaker collaboration with a designer or celebrity,” he said.
“One of the most valuable releases we had last year was the Nike x G Dragon PEACEMINUSONE 2.0 which was a release of Air Force One with Peace Minus One G Dragon.”
As for profitability? Richard said they look at retail premiums to calculate the profitability of certain makes and models. The retail premium is derived from the deduction of the selling price from the retail price.
Shoes like Nike SB Dunks get the highest average retail premium of 121%, Richard shared. Meanwhile, Air Jordans account for around half of all sales in Singapore and Malaysia.
Spot counterfeits and keep them authentic
At Novelship, his goal is to serve consumers in the ASEAN region and conduct all product transactions seamlessly. Its average turnaround time is five working days.
Asked how he ensures product authenticity in the market, the co-founder said product authenticity is a very serious part of the business.
“It is our primary duty to ensure that users only get real and authentic sneakers/streetwear through our platform. Our proprietary technology enables seamless transactions with rigorous quality checks and a single sign-on process – a combination in-house branding and image recognition experts on all processed products – to ensure that every item traded in the marketplace is 100% authentic.
“If we determine a product is fake or used, we will refund the buyer, return the item to the seller, and, if necessary, take action against the seller to remove it from Novelship,” he added.
In Novelship’s experience, the two common knockoffs are Yeezy and Air Jordan 1 due to their popularity. “When it comes to unique fakes, we have seen sneakers that are very realistic and of good quality due to the materials used or the fact that they were sewn by hand. However, these unique fakes are not as common as production would be expensive and you could buy it at almost retail price or even higher.
How to Store Shoes as “Assets”
To ensure that these “assets” increase in value, how to do so might be a revelation to some.
“Preservation plays a big role, so it’s important to never wear them, if you intend to maximize resale value!” Keep your limited-edition sneakers in the shoebox for as long as you can and store them in a relatively cool, humidity-controlled climate.
“Avoid touching the sneakers too much and don’t stack them on top of each other during storage as this could bend the box down over time and cause the sneaker to collapse as well. Invest in a good storage rack and keep them off the ground so they don’t get moldy or dusty,” he added.
“More importantly, what tends to kill suckers is humidity. Moisture causes leather or leather in some cases to get wet and then crack. Once this cracking process starts, it’s really difficult because it can cause oxidation (white soles turn yellow over time).
Richard recommends putting the shoes in a good storage box like glass or plastic to store them. “However, there is no 100% guarantee that the sneakers will remain in pristine condition, there will be some degradation because ultimately many of these releases, even if they cost S$500.00, are not really made of better materials than the standard Nikes that come out.
When asked why investors should consider sneakers over other assets like cryptocurrencies and non-fungible tokens (NFTs), which have gained traction in recent years, Richard commented: “Digital currencies are not for everyone. Due to its technicality, most people find it difficult to fully grasp the concept. In fact, the unnecessary complexity of cryptocurrency was deliberate to avoid regulation.
He adds that a meaningful way to accumulate wealth is by collecting limited-edition sneakers. “For some investors, collecting rare and beautiful items as an investment tool makes the experience more meaningful.”
“I would ask the same question of people who collect expensive art, how would they pay millions of dollars for something that will deteriorate over time? I think it’s the same logic. There are sneakerheads and collectors who would go the extra mile and encase their collections in a crystal case to preserve quality as much as they can. For them, it is a way of expressing their creative identity.
Covid-19 endemic and future plans
For 2022, the brand is focused on continuing to grow its business through the recent launch of its Android app (Novelship already has an iOS app) and exploring setting up drop-off points in its key markets. for consumer convenience. Novelship is currently fully online.
There are also plans to work with celebrities and influencers to provide a curated product selection and to host exclusive releases on the website.
If anything Covid-19 has taught business, it’s to be nimble to change. “Like many other businesses, we were hit hard by COVID-19. Our logistics channels were cut off and we could not reliably ship from Singapore. This meant delays in receiving items from customers. When the circuit breaker happened, our warehousing team and logistics flow were further disrupted,” Richard explained.
“However, the entire team quickly developed multiple contingency plans while implementing various security processes at the same time to ensure we could continue to operate our business.”
Richard added that the pandemic has also pushed him to be more innovative in his approach to business.
“Despite challenges and setbacks, it has helped me focus on achieving my milestones – it helps me keep things under control, celebrate wins and have visibility into where we stand as a team player. Additionally, the surge in online shopping during the many months of lockdown and increased restrictions has certainly helped the company through this time.
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Featured Image Credit: Novelship
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