Sneaker culture just got an early Christmas present on Wednesday after Nike (NKE) changed the rules of online selling, targeting the bots and resellers everyone hates.
It’s nearly impossible to get to the front of the line online when the most popular shoes drop, as users with bot computer programs use automation to grab limited releases.
Usually these buyers don’t even cling to shoes. Before long, more enterprising users are looking to flip the rarest sneakers for ridiculous profits compared to what they paid for the shoes.
After years of complaints online, Nike is taking steps to level the playing field for the less tech-savvy.
Under the updated rules, Nike says it can cancel orders placed with automated ordering software or technology on its website or apps.
The company also said it may charge restocking fees, refuse to issue refunds, and suspend or terminate the accounts of people using its direct-to-consumer channels to resell items. The company also reserves the right to impose purchase quantity limits,
Underground Sneaker Culture
Sneakerheads see themselves as collectors of modern art, with the latest drops of Jordan Brand, Kanye’s Adidas and Lebron James treated like paintings by Picasso, Renault and Basquiat.
The rarer the shoe, the more resale value the sneaker has. The sneaker resale market is worth $6 billion worldwide, according to shoe review site RunRepeat, with the U.S. market accounting for $2 billion a year.
Sneakers account for 25% of the entire second-hand clothing market.
The markups for sneakers are crazy on the used market. The Nike Air Yeezy 1 “Grammy” sample sold for a record $1.8 million last year via famed auction house Sotheby’s.
A pair of Jordan 1s take second place with a resale of $615,000.
Nike has made the secondary market a priority in recent months.
Last year, Nike claimed second-hand market StockX was allowing counterfeit versions of its sneakers on the platform as part of a lawsuit against the company.
The big picture at Nike
Nike’s latest move has garnered mostly positive reactions on social media.
But the company still has an uphill battle after saying last month that “higher margins” will be needed to reduce its bloated global inventory, which will put pressure on profit margins at the world’s largest sportswear company. .
Nike, which beat Street’s first-quarter profit forecast by a penny, posting net income of 93 cents per share on revenue of $12.7 billion, said stocks rose 44% over last year to reach $9.7 billion, with an unprecedented 65% increase in its key market in North America.
Nike said moving goods would likely squeeze margins between 2% and 2.5%, with most of the pressure coming in the current quarter. A soaring U.S. dollar, which hit a new 20-year high against its global counterparts earlier this week, will likely cut its annual revenue forecast by $4 billion, Nike said.
The surge in inventory “reflects the combination of late deliveries over the past two seasons and early holiday orders which are now expected to arrive earlier than expected and a prior year which was affected by factory closures in Vietnam and in Indonesia,” chief financial officer Matthew Friend told investors. a conference call late Thursday.
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