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The Art of Flipping
The minute Mel Lee stepped out of the adidas Originals boutique at Pacific Plaza last month after purchasing a pair of Yeezy 350 V2 Cream White, she received an offer from a complete stranger loitering outside to buy it off her for S$1000 - about three times the shoes' retail price of S$349.
While Ms Lee chose to keep the sold-out sneakers - which she had to first win an online ballot for before personally buying them at the boutique - there are many who don't think twice about flipping these hard-to-get products for a handsome profit.
The culture of reselling is nothing new: just think of Singaporeans who used to return from their holidays in Europe with luxury goods such as handbags, watches, suitcases (or even coffee capsules) and then selling them for a bit of 'pocket money', taking advantage of lower prices, favourable currency exchange rates or tax refunds.
With the internet, the trend has gained traction in recent years and grown from a cottage industry to a global phenomenon. Marketplace apps like Carousell and online forums make it easy for anybody to get into reselling.
Limited edition sneakers, in particular, have become one of the most highly traded commodities with teenagers even finding their way into the game - 16-year-old high school senior Benjamin Kapelushnik (aka The Sneaker Don) made headlines on the Web last year when he reportedly made US$1million from flipping shoes.
Sneaker-nomics is so big the Financial Times reported in early 2015 that the secondary sneaker market was valued at US$1billion; with Nike footwear dominating and accounting for the lion's share of 96 percent, thanks mainly to its line of Air Jordan basketball shoes.
That changed slightly when adidas dropped the Kanye West-approved Yeezy footwear line that same year - all limited edition and all naturally snapped up in a flash from retailers whenever they are released, before reappearing online at an inflated price.
According to real-time sneaker marketplace and trading platform StockX (which boasts an interface similar to the ones used for trading shares in the stock market, because that is how serious the resell business has become), the brand with the three stripes now accounts for 30 per cent of the secondary market - up from just one per cent about two years ago - thanks to its Yeezy drops.
"It's the influence of popular culture that's driving the hype - it's like Lord of the Flies," notes Jonathan Fong, co-founder of annual homegrown sneaker convention, Sole Superior. "Some people are overjoyed they paid twice the (retail) price just because others are paying four times!"
He adds the wide media exposure that resellers like The Sneaker Don get is fueling the resell market and trend ("Everybody thinks there is a quick buck to be made!") as much as the websites that hype up every new release or reissue.
To curb this, retailers are sometimes forced to come up with ways to weed out the resellers from the genuine collectors.
Local sneaker chain Limited Edt, for instance, has a membership program where long-time customers get first dibs on models expected to sell out; though the catch is that they are only allowed to purchase shoes in their own sizes. During the recent adidas Yeezy 350 V2 Cream White release, Limited Edt even introduced a new method where buyers agree to take home their kicks minus the box to prove it is for their own use and not for reselling.
Other retailers and brands are also introducing online balloting and raffles to solve the problems of unsightly storefront queues or overnight camping which can result in crowd control issues.
Rise of the bots
But using technology to fight resellers have also given rise to bots - similar to automated programs used in the stock market to simulate high-frequency trading - to cart and check out hot sneakers in mere seconds, causing some products to sell out in double quick time.
Mr Fong, however, says the success rate for bots can vary from site to site. "I don't meddle with them but from what I've heard, you have to buy a really good (read: expensive) one and there are still a lot of other hurdles to jump over like VPNs or using a local credit card (specific to the country of the website) to pay," he explains.
Bots are also the main culprits in concert ticket scalping for decades now and both the US and UK have finally taken steps now to criminalise it. Although its use in Asia is not as rampant, one veteran promoter who declined to be named speculates that bots could be among the reasons why recent concerts by Coldplay and Ed Sheeran sold out in record time.
"Those two acts moved tickets faster than anybody else - even quicker than Jay Chou - so to me, that is slightly unusual," the promoter says. "Even though there is usually a limit on how many tickets can be purchased in one transaction, some of these bots are capable of harvesting a large crop because the technology gets better every day, so it is becoming a serious problem in the concert industry overseas."
Just a fortnight ago, all 10,000 tickets for Sheeran's upcoming show in November were snapped up in 40 minutes, with a second gig added immediately and selling out almost as fast.
By the end of the day, top tier seats were commanding up to S$13,516.17 each on online resale ticket marketplace Viagogo - a whopping 54 times more than the original S$248 face value.
Sportshub Tix, which managed the sales of both Coldplay and Sheeran's shows, however, rule out any foul play. "Our ticketing system has multiple layers of hardware and software in place to protect against any intrusion of our network and/or application," explains Chin Sau Ho, Senior Director for Corporate Communications and Stakeholder Management at the Singapore Sports Hub, "We have not encountered any unusual behaviour that has led us to suspect activity by ticket bots (and) we also conduct regular security audits, are PCI compliant and continue to be vigilant."
He adds that while there is no legislation in Singapore against scalping, Sportshub Tix's terms and conditions of sale prohibits it and offenders could have their tickets voided without refund or compensation. That was the case when Coldplay's promoter Live Nation Lushington voided "a number of tickets" that it found for resale last year - scalpers and resellers were asking for as much as S$800 on tickets that were originally priced between S$78 to S$298.
But tighter security measures can have their drawbacks too - earlier this month, U2 fans in Canada were fuming after standing in line for hours when they had to have their credit card details checked against their tickets before gaining entry to the concert venue.
The danger of ending up with fakes is another problem when one buys from the secondary market. Two tertiary students were caught cheating Jay Chou fans and sentenced to 21 months probation in March after being found guilty of illegally duplicating tickets for the Taiwanese Prince of Pop's sold-out shows last year.
Sneaker collectors sometimes post photos on forums asking other users to help them authenticate their purchases but Mr Fong says the method is not completely foolproof. "No one is an authority - you can say it's real or I can say it's fake - but who went to Nike University?"
For Sole Superior events including this year's which is planned for November, Mr Fong says they explicitly warn vendors not to sell replicas and have on occasion blocked those who refused to comply.
"We try to screen (the shoes) on the day itself but if someone lugs 200 pairs, we can't look at everything," he adds, "Still, a physical swap-meet like ours is safer compared to buying online and a lot more effective because if you post it on Carousell, you'll just get some lowballer every other week."
There are also others like The Fifth Collection which goes out of its way to assure their customers that the used Hermes Birkin handbag they are buying is the real deal. To do that, the homegrown luxury vintage fashion re-commerce platform, founded by husband-and-wife team Michael and Nejla Finn, has invested in an authenticating app called Entrupy to weed out knock-offs.
Essentially a highly efficient, scanning tool, the technology was developed by a team of scientists at NYU and takes microscopic pictures of the surface of a luxury item, before using computer deep learning to compare the images against a proprietary database of millions of pictures of authentic and counterfeit products.
"While human experts can be great at authenticating and evaluating luxury goods, they only do so up to 70 per cent accuracy and can sometimes leave a margin for human error," say the Finns. "Entrupy closes this gap and does the job with up to 98 per cent accuracy. We're very proud of it, and as a result, we have already put ourselves and Singapore at the technological forefront of the fight against luxury counterfeiting."
The technology is an important one as the Finns say that the second hand luxury goods market is "larger than most people realise and is growing many times faster than the luxury goods industry as a whole". Since establishing itself in 2013, The Fifth Collection has seen its business grow three times year-over-year.
They attribute their success to the changing local perceptions about the role of secondhand goods in a modern lifestyle: "Today, we have some of the savviest individuals in Singapore buying and selling with us, each with a unique combination of motivations - for some, it's about spending smarter regardless of wealth (most of our customers range from above-average to high income); for others, it's about modern sustainable consumption and fighting over-consumption."
Mr Fong also has advice for those who tend to get too caught up in the hype and find themselves overpaying for something in the resell market: "If you miss out (on a pair of sneakers), just wait and it'll probably come round again. You have to be patient; remember they're just shoes and something else cooler will probably come along the way."
What’s currently burning up the resell market
Anything the iconic skate brand releases is guaranteed to sell out – including the controversial red brick (a real one) it released last year – making Supreme a reseller's dream come true (and a nightmare for collectors). Visit any of its boutiques and chances are you'll find empty display shelves.
Pop artist Brian ‘KAWS’ Donnelly puts his own spin on Nike’s classic Air Jordan IV earlier this year and the KAWS x Jordan IV sneakers which retailed for US$350 sold for as much as US$3015 at its peak. Prices on StockX now average around US$1500. KAWS also collaborated with Uniqlo earlier this month and the bigger versions of his Snoopy plush toys sold out within a day before appearing online for about S$150 – three times its retail price.
Rolex Daytona (Stainless Steel)
For decades, demand for the stainless steel versions of the Rolex Daytona watches has outstripped its supply. The latest version unveiled at BaselWorld 2016 is no different and commands a premium of S$5000 to S$8000 above its retail price of about S$17000 on the grey market. Some authorised retailers might have caught on, leading Rolex Singapore to issue a letter earlier this year to remind them to stick strictly to recommended retail prices for all watches including in-demand ones like the stainless steel Daytonas.