DETROIT (WXYZ) — It’s one of the fastest-growing companies in Michigan, and it’s located in our backyard.
StockX gained notoriety quickly with Sneakerheads for it’s innovative approach to sell what’s known as “deadstock” — shoes that have never been worn that are hot commodities for collectors. After it’s latest round of investments, it’s also gaining notoriety with investors with a new $1 billion valuation for the company.
Scott Cutler, the company’s new CEO, explained to 7 Action News that while the sneakers are a visible component of the company, they’re truly a tech company that’s tapped a burgeoning market.
The resale industry of sneakers is big, and it’s getting bigger. StockX is essentially a consignment shop on steroids that holds millions of dollars worth of goods at any time. The website operates similar to the New York Stock Exchange — there’s a number of variables in the value of products they sell, but it’s a true marketplace that lets the buyers set the price.
“For items that are sought after and scarce the prices can be amazing,” explained Cutler, who currently worked with eBay, StubHub and on the NYSE. “We have shoes selling for tens of thousands of dollars, but because we’re a dynamic marketplace some things are selling for below what they sell in retail.”
What sets StockX apart is it’s ability to earn trust with it’s buyers. Essentially, they have to sniff out fakes and ensure the process isn’t infiltrated with fake shoes.
You’ve likely heard of fake designer bags and jewelry rings. Sneakers are no different, and when a specific shoe spikes in price the fakes begin rolling off assembly lines, each new version getting harder and harder to differentiate. That’s why StockX puts a lot of resources into their “authenticators,” including a massive amount of training.
Cameron Lamberti, a level two sneaker authenticator, told 7 Action News he can sniff out some fake shoes simply by looking at the box they arrived in. Depending on the shoe, there is anywhere from 20 to 30 different things he’ll review to decide whether a shoe gets the desired StockX authentic tag — a tag that shady online dealers will even try to “fake” in order to sell shoes, a sign of how important the authentication process is.
“Other people try to use them to make fakes,” explained Lamberti, holding a bag of fake StockX tags that show whether a shoe has been certified.
The actual tags come with a QR code that lets the buyer know everything from who unpacked the shoes in the authentication center, to who reviewed the shoes. If this sounds like a lot of work, you may not be aware of the high value sneakers can fetch to the right buyer.
A quick browse of the StockX website on July 12th will show you that a pair of Nike MAG Back to the Future sneakers released in 2016 have a high bid of $27,001. There’s dozens of shoes selling at $15,000 or more.
Wonder how @stockx became a $1 billion business? Sneakers are a HUGE commodity, but while this is a company that's drawn #sneakerheads it's truly a tech company -- and it now has 500+ Detroit employees after launching in February, 2016. pic.twitter.com/ubmZ3ZBsNu— Matthew Smith (@MattSmithWXYZ) July 12, 2019
“You have this opportunity to offer more products than anyone else can,” said Cutler.
Cutler explained that unlike retailers, their goal isn’t to clear the shelves. They deal with multiple brands and view their products as commodities connecting sellers and buyers in an online market that gives the users more control.
The company landed in Detroit after Detroit billionaire businessman Dan Gilbert, and co-founder Greg Schwartz, acquired Campless — a website designed by Josh Luber to track sneaker resale prices on eBay. It was quickly transformed into what the company calls a “stock market of things” when it officially launched in February 2016.
While sneakerheads have flooded the site and created the company’s billion dollar valuation, they’re moving in additional directions with street wear and jewelry.
The company has built authentication centers in Detroit, New Jersey, Arizona and London. They’re preparing to grow into the Amsterdam market, a sign that the Detroit-based business has a global reach with sellers and buyers located throughout Europe and China.
How does it all work? StockX lets bidding play out, once a bid is accepted the seller ships the item to one of the authentication centers, which ensures the authenticity of the shoes before sending them to the buyer. StockX is the middle man that makes money by charging the sellers a transaction fee.
As hard as it it is to believe, a company worth $1 billion could still be looking to grow. Celebrity investors like Eminem, Mark Wahlberg and Karli Kloss have invested and the industry is projected to grow to $6 billion by 2025 — that in addition to the new markets like streetwear and jewelry that the company has only recently begun to dive into, there’s no telling how it’ll change the look and footprint of the three-year-old company that’s quickly gaining notoriety.