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How To Start A Sneaker Reselling Business

How To Start A Sneaker Reselling Business

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How To Start A Sneaker Reselling Business

How To Start A Sneaker Reselling Business

$1.8 million. That’s the price someone paid for the Nike Air Yeezy 1 prototype Kanye West wore at the 2008 Grammy awards!

Reselling sneakers can be big business. There’s a huge market for specific brands and limited edition models. What started as a sneaker enthusiast’s underground movement has become a sizable market and even an investment opportunity. But you need a nose for the right brands, the latest styles, and the capital to buy stock to start with. If you consider yourself a sneakerhead, this may be your opportunity.

This guide aims to provide an overview of the business, practical steps to get started, and answers to common questions.

Business Description

The title says it all: a sneaker reselling business … resells sneakers. But, where customers traditionally line up outside a brick-and-mortar store to get hold of a newly released sneaker, most resellers operate in the digital space to buy larger quantities of sought-after sneakers and resell them to a secondary market at above retail price. This type of business may also specialize in seeking and reselling collector’s items – extremely rare and highly desirable footwear.

Industry Overview

This may sound like an exclusive niche market, but it has been growing exponentially in the last decade and has weathered the stress test of the recent economic downturn well.  Nike and Adidas remain the most coveted brands in the sneaker resale market.

GreyJournal, citing research undertaken by Piper and Sandler, notes that in 2021 (the most reliable statistics as of 2023) the industry was worth $10 billion globally, $2 billion in the US. Compare that figure with 2019, when the sneaker resale industry was worth $6 billion globally. That’s an increase of $4 billion in just two years. These figures are also respectable compared to the estimated global sneaker market, which stood at $100 billion in 2019.

According to Cowan Equity research, the resale sneaker market could be worth an eye-watering $30 billion by 2030. 

The research institute forecasts growth in digital sales, not just to sneaker enthusiasts but also to a new generation of speculators, who buy rare sneakers as an asset, a commodity in their investment portfolio. 

Target Market

A 2021 survey by Cowen Research states that within a 30-day timeframe,  66% of 18 – 34-year-olds purchased from resale sites – up from 54% the previous year.

The reselling segment has particularly shown an impressive expansion, driven by the millennial and Gen Z (anyone born between 1997 and 2012) interest in unique and exclusive footwear. GenZs have grown up with the internet and social media, are generally tech-savvy, and will soon be the largest consumer group in the US and globally. This segment is perhaps currently more open to flipping sneakers. 

You may also consider targeting a more high-end customer segment. If you have been following the sneaker market for some time and have an eye for collector items, consider specializing in this market niche. 

Checklist To Start A Sneaker Business

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Starting a sneaker reselling business can be a profitable endeavor, but it takes more than just acquiring a few pairs of sneakers to get started. There are a few things you’ll need to do in order to get your business up and running, and this checklist will help you make sure you have everything tied up.

Step 1: Research the Market

Understanding the market and assessing the demand is a fundamental step before starting any business, including a sneaker reselling business. Understanding if there’s enough demand not only reduces the risk of failure but sets the stage for a strategically planned and well-executed business that can thrive in a competitive marketplace.

Here’s some tips on how to start your research.

Analyze existing competitors: Study competitors’ websites, customer reviews, and social media channels. How are they performing? What are customers saying? This information can indicate the demand and areas where you can outshine them.

Utilize Google Trends: Google Trends can provide data on the popularity of specific sneaker brands or styles over time. It’s a free tool that can give insights into market interest.

Engage with communities: Online forums, Facebook groups, and other community platforms like Reddit’s r/resell that are related to sneakers can be valuable sources of information. These communities allow you to connect with other resellers, share tips and resources, and stay up-to-date on the latest trends. Engaging in discussions and asking questions can yield honest and direct feedback.

Attend sneaker events: If possible, attend sneaker conventions and related events. These can provide firsthand insights into what’s trending and what consumers are looking for. Also, by attending these events you get the opportunity to network and learn from other business owners doing what you want to do.

Local market analysis: Visit local sneaker stores, talk to owners, and understand the local demand. This boots-on-the-ground approach can provide invaluable insights that online research might miss.

Related: How to write a business plan

Step 2: Write a Business Plan

Writing a business plan for a sneaker reselling business is a step that can be, but shouldn’t be skipped, as it serves as an organizational tool, a roadmap, and a reality check. It’s not about winging it and hoping for the best; it’s about deliberate planning, understanding the unique aspects of the sneaker market, and setting the stage for a successful and sustainable business.

A few reasons why business planning is important:

A roadmap for success: A business plan lays out the path that you plan to follow. It’s like a GPS for your business, providing direction and helping you navigate through the competitive landscape.

Materializing ideas: It’s one thing to have a concept in your head; it’s another to articulate it on paper. Writing a business plan gets those ideas out of your head and into a tangible form, allowing you to analyze, refine, and act on them.

Marketing and sales strategies: How will you attract and retain customers? What platforms will you use for selling? This section should be finely tuned to the unique dynamics of the sneaker reselling world.

Operations plan: This includes details about sourcing sneakers, inventory management, authentication processes, and other specifics relevant to the sneaker reselling business.

Financial projections: Even if funding is not the primary goal, this section helps in setting realistic expectations and budgeting. If seasonality impacts your business, make sure your projections reflect those fluctuations.

Step 3: Register the Business

The process to properly register and make a business reselling shoes legal involves careful planning and understanding of various regulations that differ from state to state. Here’s a basic overview of things to consider to make sure the business is legal to operate.

Choosing a business structure: The first thing you’ll need to decide is what business structure is best for your business. This could be a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. Each of these structures has different implications for liability, taxes, and administrative complexity. Many reseller business owners opt for a sole proprietorship beucase of the cost and ease of getting started.

Related: Comparison of business structures

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: What licenses do shoe stores need?

Step 4: Source Suppliers

Most legitimate suppliers will not provide pricing or set up accounts until your business is registered. They often require proof of business registration and a tax identification number, which brings us to the next step which is sourcing suppliers.

Finding quality and reliable suppliers is a key aspect of starting a sneaker reselling business as it can make or break your venture. There are many places to source sneakers for reselling, including sneaker conventions, thrift stores, and online marketplaces. It’s important to find a reliable source of inventory that you can consistently buy from to turn a profit. Common sources include:

Wholesale suppliers: These companies specialize in selling bulk quantities at discounted rates. Some may have minimum purchase requirements or cater to specific sneaker niches.

For shoes that are in high demand, there are normally restrictions on who gets them and in what quantities. Larger and more established businesses tend to get priority, and new sneaker reseller business may not get the brands or quantities they want.

Industry-specific trade shows and networking events can be excellent places to meet suppliers, distributors, and even fellow resellers. In addition, attending these events can also provide you with insights into industry trends, upcoming releases, and innovative products.

Brand distributors: If you want to specialize in specific brands, reaching out directly to brand distributors can be a good move. They might have certain requirements, like carrying a variety of their products. and volume requirements

For those starting with limited capital or space, some distributors offer drop shipping of merchandise. This allows you to sell products without holding inventory, as suppliers ship directly to customers.

Sneaker marketplaces: Online platforms like eBay and Depop dedicated to sneaker reselling may provide connections to suppliers. Some platforms may also facilitate bulk purchases from various sellers.

Step 5: Set Up Operations

Starting a sneaker reselling business from home offers a flexible and potentially cost-effective way to enter the market. Once you have the business registered, the next phase involves purchasing equipment and setting up operations.

Designate a room or area: Choose a space within your home that can be dedicated solely to your sneaker business. It should be free from distractions and able to house your inventory and equipment.

Inventory shelving: Investing in shelving or racks that will help keep your sneaker inventory in mint condition, organized and easily accessible.

Computer and software: A reliable computer with sufficient processing speed and memory is key for managing your online shop. Consider inventory management software to keep track of your stock.

Photography equipment: Good quality images are vital for online sales. Invest in a good camera or smartphone and consider lighting equipment to take professional photos.

Develop shipping processes: Determine your shipping method, costs, and how you will manage tracking and returns.

Step 6: Establish Sales Channels

With the suppliers figured out it’s time to get your sales channels set up. Selling merchandise in the sneaker reselling business is not confined to a single method or platform. From established online marketplaces to your own e-commerce website, and from social media to physical retail spaces, there are a lot of options.

Choosing the right one(s) depends on your budget, target audience, and business model and many successful sneaker resellers leverage a combination of these channels to maximize reach and sales. Here’s an overview of some of the popular channels for selling sneakers:

Established Online Marketplaces
eBay: One of the most well-known platforms for reselling products, eBay offers a wide reach and tools to help manage listings and sales.
StockX: Focused specifically on sneakers, StockX provides a secure platform for buying and selling authenticated products.
GOAT: Similar to StockX, GOAT is a marketplace dedicated to sneakers, offering a trusted environment for both buyers and sellers.

Your Own E-commerce Website
Shopify: A popular choice for building your own online store, Shopify offers customizable templates and integrates with various payment and shipping options.
WooCommerce: If you prefer using WordPress, WooCommerce is a powerful e-commerce plugin that allows you to create a personalized online shop.
BigCommerce: Another option for creating a standalone online store, BigCommerce provides various features and integrations tailored to your needs.

Social Media Platforms
Instagram: With its visual focus, Instagram is a great platform for showcasing your sneakers. You can create a business account, use shopping features, and engage with a community interested in sneaker culture.
Facebook Marketplace: Beyond just social interaction, Facebook allows businesses to list and sell products directly through its Marketplace feature.

Pop-Up Shops or Local Markets
Temporary retail spaces: Depending on your location and target audience, you might consider setting up temporary physical locations at local markets or shopping centers.
Collaboration with local stores: Partnering with local boutiques or specialty stores to showcase your products can provide a physical presence without the overhead of a full retail location.

There are several ways to go about setting up a sneaker resale business. Many successful traders have started this as a side hustle, then expanded their reach, stock, and customer base. You can start as big or small as your budget allows!

Instead of starting a full-fleged business, you might prefer to invest in just a couple of pairs and hold on to them until they have grown in value. If this is the case, the specialized platforms mentioned earlier will still be a good option for you as they reach an established target audience.

Step 7: Create a Marketing Plan

With your sales channels set up, it’s time to let people know about your business so they can start buying your sneakers. One of the most important things you’ll need to do is to create a marketing strategy becuase even with the best sneakers, if people can’t find them, all of your effort was for nothing.

First, you’ll need to identify your target audience. Are you trying to reach sneakerheads, fashionistas, or athletes? Once you know who you’re trying to reach, you’ll need to decide what type of marketing will be most effective.

One way to reach sneaker lovers is through online forums and social media groups dedicated to the topic. These forums are often full of passionate enthusiasts who are always on the lookout for new brands and retailers to check out. By creating a presence on these platforms and engaging with potential customers, you can let them know about your business and what you have to offer.

You can also use social media platforms like Instagram, Snapchat, and Twitter to showcase your products and reach a wider audience. Hashtags are a great way to connect with potential customers who are interested in specific types of sneakers. Use hashtags and engage with potential buyers to get your products seen by a wider audience

Another way to market your sneaker reselling business is through word-of-mouth. Sneaker culture is all about personal relationships and recommendations from trusted sources. If you have a loyal customer base, they can be some of your best Brand Ambassadors, spreading the word about your business to their friends and followers. You can also encourage customers to leave reviews on popular sneaker retail websites, which can help attract new visitors to your site.

No matter who your target audience is, though, it’s important to create a strong branding strategy. Your brand should be distinctive and easily recognizable so that potential customers will remember your name when they’re looking to buy sneakers.

Related: Low-cost ideas to market a new business

Step 8: Prepare to Launch!

With the major steps out of the way, there are likely still a few things that need tended to. Every business is going to be different, but here are some of the common steps that may still be needed:

Business insurance: Obtain appropriate business insurance coverage to protect against potential liabilities, such as product liability and theft. This is worth considering even for a home-based business as homeowner’s or renter’s insurance won’t typically cover a business-related loss, such as fire or water damage to inventory.

We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.

Set up bookkeeping: Implement a bookkeeping system to track income, expenses, and profits accurately. Popular accounting software options include Wave Accounting (FREE) or Quickbooks.

Open a bank account: Open a separate bank account dedicated to business transactions to keep finances organized.

Accept credit cards: Set up a merchant account with a payment processor to accept credit card payments both online and in-store. Square or Stripe, and PayPal.

This material is property of StartingYourBusiness.com

Greg’s Tip: What was once a niche hobby, the sneaker business has exploded into a cultural phenomenon. With that growth also brought in people selling fake sneakers, so the challenge of a successful sneaker business is to have a system to ensure that every pair of sneakers is genuine.

Greg's Business Tip

Common Questions When Starting A Sneaker Business

How much does it cost to start a sneaker reselling business?

Starting a sneaker reselling business typically requires an investment ranging from $500 to $10,000, depending on various factors such as the initial inventory, location, and scale of operation. Below, I’ll break down the tyical initial costs to consider.

Initial inventory: The core of your business is the sneakers themselves. You’ll need to invest in an initial stock. Depending on the brands and models you choose, this can range from $1,000 to $5,000.

Website or storefront: If you’re going online, you’ll need a professional website. Basic e-commerce platforms cost around $30 to $300 a month. For a physical location, the initial deposit can vary widely based on location, but expect an upfront cost of at least $1,000.

Business registration and licensing: Depending on your location, registering your business might cost anywhere from $50 to $500.

Marketing: To kickstart your brand presence, an initial marketing investment may range from $100 to $1,000. This includes basic social media advertising and promotional materials.

Shipping and packaging supplies: If selling online, anticipate spending $50 to $200 on initial shipping and packaging materials.

Miscellaneous costs: This includes things like a shelving, photography equipment, computer, etc.

How much money can you make with a sneaker reselling business?

The profit in sneaker reselling can vary greatly, depending on factors such as the rarity of the sneakers, mark-up, volume of sales, and overhead costs. On average, the mark-up on resale sneakers can range from 20% to 200%. Here’s a rough formula to illustrate the profit potential for a new sneaker business:

Revenue: Suppose you’re reselling sneakers bought at $100 for a 50% mark-up, meaning you sell them for $150 each. If you sell 25 pairs a month, your total monthly revenue would be $3,750.

Expenses: Let’s consider expenses including the cost of goods sold ($2,500 for 100 pairs), a monthly website fee ($50), marketing ($100), shipping and packaging ($100), The total expenses would come to $2,750.

Profit: Your monthly profit would then be the revenue minus the expenses:
($3,750 – $2,750 = $1,000)

So, by starting small with 25 pairs and keeping a tight rein on marketing and other expenses, a new sneaker reselling business owner could make a profit of $1,000 in the initial phase. It’s a promising start, especially for something that can be done in your spare time. As your understanding of the market grows, you can make informed decisions to increase both the scale and profitability of your business.

What skills are needed to run a sneaker reselling business?

Tech savvyness: You will need to know your way around platforms, bots,  and eCommerce sites and practices. We recommend you investigate platforms such as stockx, Grailed, Stadium Goods, or Goat to understand the opportunities and competitors. 

And if you haven’t already, familiarize yourself with software and automation tools such as GaneshBot and Cybersole. For example, most companies now limit the purchase of a new pair of (desirable) sneakers to one pair per customer – understanding that system and how to use it to your advantage will be crucial to your success. 

Understand how to build a customer base: With your business being online, you will rely on compelling content, good imagery, and product placement across your social media channels. Instagram and TikTok are likely the most valuable platforms for this.  

Industry knowledge: This is a crucial part of the business. Determining a specific sneaker’s value and resale value is critical to your business’ success. You’ll also need to stay on top of industry trends and know when a company is launching a new collection or limited edition sneakers. 

We recommend you explore mechanisms to ascertain the authenticity of a sneaker and its value. You’ll want to ensure that you spend your money on the right kind of shoe and will achieve a profit reselling it. 

Related industry events:
Sneaker Con 
The Sneaker Exit 

What is the NAICS code for a sneaker reselling business?

The NAICS code for a sneaker reselling business is 448210, which is classified as a shoe store.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

How To Start A Sneaker Reselling Business

How To Start A Sneaker Reselling Business

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