StockX, an online start-up platform for buying and selling sneakers has earned $1 billion-plus valuation and a new round of funding. The Detroit-based online sneaker-resale startup was endowed with the unicorn status in less than three years of its founding.
The online market place site was launched with a vision that customers must buy and sell sought-after sneakers online with utmost price transparency.
In the new round of funding, the startup raised $110 million from DST Global, GGV Capital, and General Atlantic taking the total funding to $160 million.
On Wednesday, it also announced hiring a new CEO after co-founder Josh Luber stepped down from that position.
The new incumbent Scott Cutler has been a senior vice president of e Bay. Luber will continue on the board of directors.
StockX is aiming a big slice of the thriving sneaker resale market. “Globally, it’s maybe $6 or 7 billion,” said Luber.
“But the global retail sneaker market is $100 billion. And that’s actually the market we’re a part of,” he added.
Founded in 2016 by Luber, billionaire Dan Gilbert, and Greg Schwartz, StockX had its trigger when Gilbert noticed his son buying sneakers ranging from Nike, Adidas, Converse, Under Armour on eBay, turning them around and making a good margin during resale.
That prices of shoes vary depending on where it is bought became the cardinal business secret behind the sneaker resale platform.
The benefit that StockX is rendering to people is evident in the testimony of Nic Wilkins who has been using this site to sell a portion of his sneaker collection in the past for some extra cash in college.
Thanks to StockX treating sneakers as tradable commodities Wilkins is now aiming big money and profit and will trade 10,000 pairs of shoes and snag a 25 percent profit out of the $1 million sales.
Price transparency is ensured by Stock X casting itself as a “stock market of things” in which customers can buy and sell shoes on real-time pricing just as an investor trades on stocks.
Stock X has enhanced the trust factor by guarding against counterfeiting inherent in these types of transactions. By positioning itself as an authentic middleman Stock X makes sure after every sale, the item is shipped to an authentication center for inspection by an employee to confirm its authenticity.
Business model emphasizing consumer trust
If the item is not a fake, the payment goes to the seller and the item will be shipped to the buyer. For the services, StockX takes a 9.5 percent commission on the sale of sneakers and 9.9 percent on watches and 14.5 percent on handbags.
StockX heads a rising group of online marketplaces that have turned resales of sneakers into a big business. Competitors include sites like GOAT Group, Stadium Goods and Bump.
Stock X is on a higher growth track and the monthly volume has crossed more than $100 million in gross merchandise and there is an average of 8 million monthly unique visitors.
Sneakers continue to be major vertical of business despite expanding into watches, handbags, and streetwear.
The payroll has more than 800 employees and authentication, centers are spread in Detroit, Arizona, New Jersey, London with the Netherlands coming up as the latest.