After Changing the Resell Market, What is Next for StockX and Josh Luber?
Josh Luber and StockX announced the former CEO’s departure from the company on Thursday, September 10, 2020. This comes five years after Luber co-founded StockX alongside Dan Gilbert, Chris Kaufman, and Greg Schwartz. Below is an exclusive interview with Luber from October 2019.
Walking into the dimly lit hotel lobby in Berlin’s posh Ku’Damm neighborhood I meet Josh Luber who, considering up until recently was the CEO and co-founder of one of the biggest resell platforms in the world, almost takes me by surprise, blending into the cozy interior wearing sweatpants and a hoodie paired with the Nike Fear of God Air Raids.
He quickly explains he’s been running from meeting to meeting, and speaking with a lot of mainstream media publications who still can't wrap their head around why teenagers are paying so much money for certain sneakers.
We’re here to discuss StockX, his personal affinity for sneakers, as well as the state of the resale market and how it’s changed over the years, what the future holds, and why resellers aren’t actually the bad guys you think they are.
As soon as we sit down Luber is engaged and in his element. Though he wouldn’t call himself a reseller, the market and all its moving parts are his bread and butter. “I'm way more of a collector,” he says. “Everything I sell is something that sat in my closet for a year and I never wore and I’m like ‘Why did I buy this?’”
Still, Luber is tuned in to almost every recent release and the current resell market. His Fear of Gods, for example, were bought on StockX because they weren’t selling for much over resell and, according to Luber, are currently undervalued. He also has around 30 bids out at any given time for older releases he missed out on or are too expensive. “About two, three months ago, I bought the Skunk SB Dunks, which I'd wanted forever,” he says. “I had a bid out there, it was a little less than market and someone came along and hit it.”
Luber’s strategy of placing bids on older releases and waiting for someone to lower their ask is just one of a myriad of ways to use StockX. Buyers can be patient, like Luber, or pay the lowest ask straight away, knowing that the transaction is safe and guaranteed authentic. Interestingly, Luber reveals that around 25 percent of StockX’s business is under retail. “It’s not stuff that bricks. If you go into JD Sports or Foot Locker, they might have six styles of Stan Smith. If you want one of the thousand of other colorways theyve produced, where are you going to get them?” he asks. “StockX,” he answers before I have a chance to.
Some of StockX’s biggest “power sellers” as Luber puts it — those that make the most money — deal in sneakers with lower price points (sometimes under retail) and lower margins, making it a volume game for them.
When it’s suggested the resellers selling general releases are representative of a new age of resellers Luber disagrees, instead pointing to the change in buyers and consumer behavior as the biggest difference between the resell market today and the market before StockX and other platforms were around. “Whereas, five, ten years ago it was just us right? Now it's them and us,” says Luber, alluding to the fact that the sneaker industry and general interest around limited releases and collaborations has grown immensely in the last few years, introducing a new type of buyer to the market.
“StockX has made it more accessible for people who never tried to wade through eBay or Facebook groups to buy shoes,” he adds. “This person bought their last pair of shoes at Nike or JD sports and it's made it easy to be able to buy it on StockX than anywhere else.”
According to Luber, people have always been buying sneakers, it’s just that more people from the retail sector have moved over to the resale market because “it’s more acceptable, it's easier, and it's authentic.”
It’s all about access, access that resell platforms like StockX have provided. Paired with the increased popularity of sneakers new prospective buyers have seen doors opened to them that were previously closed, which Luber believes is the reason the market looks so different, not the evolution of resellers.
“On the seller side it's always been about requiring supply. They've evolved as places moved away from first come, first served or as stores move to raffles, resellers move to bots,” says Luber.
“The resellers always find a way to get their supply, so that's just evolved alongside how the brands have changed their release processes.”
Luber also comes to reseller’s defence when I mention resellers’ reputations might be worse today than they used to be. “Resellers are still doing the work and providing the service, so people acquire the shoes from them,” he says. “Back then, we were constrained by geography or by knowledge. Nobody asks 'Where did you get those?' anymore. No one is upset about the free flow of information.”
If anything, more information for the average sneakerhead, and brands’ attempts to even the playing field, have provided resellers with a different type of obstacle to overcome. Still, more often than not, they manage to get their hands on the product and redistribute it to those willing to pay a premium.
“The difference between supply and demand is so great that the chances of winning are effectively zero anyway. Then, when you take into consideration bots and all the other things, it goes from effective zero to absolute zero.
“So [the resellers] are still providing that same service of access and acquiring the product. They're the ones putting in the time and the effort to sleep outside a sneaker store or pay people to do that or to write bots to do that. There's work and money and time involved in all that.”
What it comes down to for Luber is that resellers are putting in the work, just as they did 10 to 15 years ago, and that you can’t knock the hustle. “It’s still the same work, right? And that's why they should get paid for that.”
And then there’s the issue of the mega hyped releases that can be flipped for a massive profit. “Who wouldn't want to buy anything that cost 200 dollars and is worth 1000 dollars?”
What people are actually pissed about, says Luber, is that they want to be the only ones with the product, not that they are losing out to resellers. “People don't want mass supply, what they want is to be the ones to get it and nobody else to get it. Somebody has to lose in that equation, right?”
Even with platforms such as StockX, the resell market is mostly unregulated, with buyers and sellers setting the prices, which can be unpredictable and, at times, volatile. Luber believes that the IPO (initial product offering) method of dropping product that StockX has successfully introduced is the future of not just resale but also the buying experience as a whole.
“The whole idea is that it would allow brands to take more control of their release to put shoes into the market at a fair market price.” According to Luber, it would stop questions about whether sneaker culture is too focused on monetary gain.
StockX IPOs are basically blind auctions, where sneakerheads determine the price of a release by blindly bidding pre-drop. For example, if 20 pairs of a certain shoe are set to be dropped through StockX, the 20 highest bids will win the right to buy the shoe for the lowest winning bid, which sets the market price. Essentially, almost everyone who has a winning bid gets the shoe for less than they were willing to pay. Often, the market price is somewhere between the retail price of the shoe and the resale value, meaning brands get more for their shoe than they would have through a traditional retail drop and those that get the shoe don’t have to pay full resale value.
In terms of what the future of IPOs are, Luber goes a step further to suggest it could replace traditional MSRPs as a whole. “The idea that a Travis Scott Air Jordan 1 should retail for 200 dollars is antiquated. It has no bearing on the real value of that product,” he says. “It's a tiny, tiny part of our business today. That's the future. I truly believe that it's just a better model for certain products.”
When faced with the suggestion that IPOs could effectively kill resale because the market would be determining the price of certain releases, which is basically what the resale market already is, Luber isn’t convinced, though he does believe that there will be some major changes to the behavior of buyers and, in turn, how the resale market functions. What it comes down to, again, is access. “Resale is going to look different. There will be a lot less of the quick wins, scoring 800 dollars a pair. You might only make 150 dollars a pair but [through IPOs] you're going to to have access to more [releases].”
The higher original purchase price will no doubt eat into the margin when reselling shoes and Luber also believes IPOs put the shoes into the hands of more people that ultimately want to keep them (the incentive being that they will be paying less than the resale price). The high margins with traditional retail prices, according to Luber, provided too much of a monetary incentive to flip sneakers. “If you buy a pair of Travis Scott's today and you get them for 200 dollars, even if you love that shoe, you're like ‘I should probably just sell it and get 800 dollars.’ If you paid 600 dollars for it, now you're like ‘Oh I'm super happy I got it for less than 1000’ and ‘I'd rather just keep the shoe than flip it and make 400 dollars.’”
IPOs won’t totally kill resell value, they merely speed up the process by bypassing sneakerheads that were looking to flip them for a big profit. Only those willing to pay the blind auction market price end up with the shoe. Theoretically, more first-hand buyers will keep the product and less pairs will make it onto the resale market. Then supply and demand takes over, as was the case previously.
While Luber believes that IPOs can help level the playing field somewhat, he has no qualms about how drops go down at the moment. “It’s a totally free market and a lot of things that we think of as shady in terms of acquiring shoes aren't illegal,” he says. “Nike doesn't like for Foot Locker employees to sell sneakers out the back door but it's not illegal.”
He compares what’s happening currently to the ticketing industry. “Fifteen years ago teams and leagues were wrestling ticket scalpers and were trying to shut down ticketing websites. Today, StubHub is the official resale market place for baseball. It's the convergence of retail and resale into one market. That's what happened in ticketing, that's what the stock market is, and that's what we're trying to do.”
It’s clear to Luber that sneaker culture has irreversibly changed. It’s no longer about the journey to find a shoe no one else has, and for Luber IPOs and reinventing retail and how people shop is the logical next step, though he admits he doesn’t know how long it will be until that happens. For now, StockX will continue to test the waters with smaller IPOs but the end goal remains clear: Luber has already changed the resell market, now he wants to change the retail market.
