Flip Tax: The Cons of Being a Professional Sneaker Reseller

Part two discusses the mental, physical and financial downfalls of sneaker reselling.

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After previously highlighting many reasons why sneaker enthusiasts enter the reselling game, many look-over or are unaware of the possible negatives that come with the territory. With all business ventures there will be ups and downs accompanied by a little tightrope walking in-between. Over time, certain aspects of the game have changed and developed but it isn’t always for the best. Negative aspects of the sneaker reselling business can effect more than just the reseller as it also harms the providers of product which in turn circle back to the hustler looking to make a profit. Here we look at the main reasons why becoming a professional sneaker reseller, in any capacity, may not be the right path for you.

The Culture Has Been Lost

The appreciation of a growing culture is long gone. The sneaker industry is more than a showcase of who can put together the best fit and nowadays it has incorporated a fascination with who can capitalize off of the same brands that they buy product from. Campout conversations transitioned to discussing your personal relation to the shoe you hoped to purchase, to how much one plans on flipping it for, without any sense of hesitation. Resellers obviously may not view this as a negative of the game, but it indeed removes the culture’s uniqueness in relation to fashion as a whole. Distinct inspiration, background stories and even unforgettable sneaker ads are easily lost in translation when dollar signs become a main priority over footwear’s cultural and artistic impact. Just ask anyone outside of your local hyped boutique — some barely can recall the history of the player of which the shoe is modeled after, let alone the colorway or even the model being sold.

A Shift in Marketing

Image via Complex

The glory days of waking up a little early to make it to your local sneaker boutique just in time for that Saturday release are merely memories of yesterday. Release date promotion leads to resellers pitching lawn chairs, tents, paying others to stand in line and whatever you can think of to earn a solid buck flipping your highly coveted Air Jordan sneaker, amongst many other notable brands. As a result of the development of social media, frenzies are caused when breaking news surfaces such as Kanye West announcing a Yeezy Boost release date. In turn, brands have had to get pretty crafty in order to sell their product to footwear lovers and resellers in a manner that’s efficient, provides fairness and eliminates danger. But let’s keep things totally real, if you happen to know someone who can tamper a raffle or push you to the front of the line, chances are you’re ahead of the game. Not only have procedures such as raffles completely made consumers forget about the phrase “first come first serve,” new frustrating ways to purchase said sneakers have emerged such as adidas’ Confirmed App, Nike’s RSVP system “The Draw” via SNKRS, and social media contests/practices of putting your Twitter fingers to use by finding circled hashtags that follow up with you sliding in their DMs. Not only have these implemented procedures removed the initial desire for copping your favorite pair without expecting to jump through hoops, the reselling game has made sure that these policies are here to stay, making it unfair for the sneaker fan who simply wants to build an impressive collection with genuine passion. The game hasn’t only changed for the reseller, but for the brands as well. These new and “fair” practices are the only way companies can prevent customers from suspiciously buying large amounts of pairs in one sitting as well as huge crowds that have the potential of inflicting danger upon themselves or the rest of the public.

Sneaker Violence And Civil Unrest

Although sneaker related crimes have existed since the beginning of the culture, it’s arguable that the sneaker reselling business has contributed to its continuance of unfortunate and downright despicable violence. With added profit in the mix, it isn’t surprising to see frequent news stories surrounding sneaker drop offs that go awry or planned robberies being captured and later senselessly posted on social media. Attackers are attracted to sneaker loot equivalent to cold hard cash and no signs of tampering or serial numbers to worry about, while victims face dire consequences ranging from fistfights to assault with a deadly weapon. As many within and outside of sneaker culture continue to rise up against companies who they think foster the initial violence, it is an equation that may not be solvable and this is thanks to the environment created by the sneaker industry’s own members, with resellers being a strong focal point due to footwear’s growing worth and resale value.

Market Unpredictability

Some pros may think they have the game down to a science, but the sneaker industry’s unpredictability can certainly harm a reseller’s primary goal. These factors include unexpected restocks, a flip price not meeting expectations and a shoe’s release not living up to its own hype. Whether you’re a reseller or not, we’ve all been a part of the industry’s inconsistencies. Specific models with an extensive history of demand may gradually find themselves remaining in stock at retailers, which is a plus for those battling frustration in copping pairs they missed out on growing up, but it’s ultimately a disappointing statistic for resellers who usually buy in bulk to ensure a hefty profit. Now, a resellers’ business is stuck with an overabundance of inventory but without the structure of organized corporations who have the ability to sell at a fraction of their initial investment, thus recuperating loss and ultimately breaking even or possibly even still coming out ahead. Cause and effect — a brand may retaliate and produce more for consumers to buy up, which in return saturates the market, lowering the general interest and “popping” the bubble before the cycle starts all over again.

Business 102

Image via Maxim Apryatin/Shutterstock.com

Yes, resellers learn valuable lessons in business as discussed previously in the pros section, but beyond their initial understanding of sales parameters like supply and demand, the first thing about investment — the cardinal rule — is “buy low, sell high.” Businesses normally purchase their inventory at wholesale prices as it allows for flexibility to match the demands of any given market. Should they need to lower prices or “go on sale,” the wide range from wholesale price and suggested retail price allows for this. Resellers’ margin from retail price to their resell price is much higher and while it may seem like a sliding scale, businesses survive on the wholesale pricing model to account for many factors, one of which is overhead. The necessities needed to conduct a sneaker business can span from a storage room and adequate maintenance (security, mold prevention), to an assisting staff crew and even service equipment like computers, internet, a means of transportation etc. Resellers thus may start small with a few pairs here and there, but once the business starts to grow and the above overhead costs begin to accumulate (imagine even the incredible data charges on a smartphone begin adding up) the resell pricing model just won’t work, especially if the aforementioned small timers — those who don’t have overhead and can afford to lower their prices — are the competition. And let’s say a business does grow to the point of expansion where a retail space and the overhead is in its future; securing a loan from a bank or investor will prove far more difficult for the “high risk venture” resell pricing model, since the pool of consumers who are willing to pay resell prices is both minuscule and paired to an unbalanced cost ratio of product-to-overhead.

Love it or hate it, the resell game is here to stay, but it’s up to you to determine whether the risks are worth the possible rewards. Are you willing to compete against hundreds of hopefuls with the same goal as you? Are you up to the challenge of facing constant shame from true sneakerheads aka true OGs in the game, or the possibility of bottoming out financially and ending up stuck with a warehouse-size inventory of unmovable product? The choice is yours to be one of the main reasons why the sneaker industry has taken a drastic turn over the years, possibly for the worse.

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