Five years ago, StockX launched a modern take on the e-commerce model: bring the best elements of the stock market to the retail landscape, such as dynamic price tickers and ledgers that track every sale. The model felt fresh, but it led to nearly every piece of early StockX press coverage posing the question, “What is this exactly?”
Now, five years into the journey, co-founder and COO of StockX Greg Schwartz is beyond the need to begin every conversation by explaining what his company does.
“StockX has really evolved over the past five years,” explains Schwartz. “So frankly, if you asked me ‘What is it?’ back then, my answer would be the stock market of things. And while the company was founded on those stock market mechanics, today, we really think of ourselves as the world’s leading marketplace for products of current culture.”
That phrase brings likely brings one category to mind–sneakers. It was the first item StockX listed back in 2016, and it’s what the company built its reputation on. The opportunity was apparent five years ago, and even more so now: The sneaker market in North America is currently north of $2 billion, and Cowen reports it may top $30 billion by 2030.
But sneakers are to StockX what books were to Amazon: the beginning of something big
“StockX is something that has grown into much more than just sneakers,” says Schwartz. “We’re now in multiple categories with more of a global opportunity.”
“StockX has grown into much more than just sneakers. We’re now in multiple categories with a global opportunity.”Greg Schwartz, co-founder and COO, StockX
It’s these multiple new categories that really define the story of StockX. The retailer has evolved from being “the world’s first sneaker stock market” (as described by Nasdaq in 2016) into a powerhouse e-commerce brand with a focus on data, transparency, and authenticity. StockX now sells electronics, collectibles, handbags, and more, but one thing still stays the same—a commitment to StockX’s original customer segment.
“We still focus on this current culture area, which ties not only into customers on the platform but the products we offer too,” says Schwartz. “I think that speaks to the growth of this company from stock market hypothesis all the way to what we’re building today. It’s been an incredible evolution.”
Need to Know
- StockX, one of the leading resale e-commerce platforms, generated over $400 million in revenue in 2020.
- In April 2021, StockX raised funding that valued the company at $3.8 billion—roughly triple the company’s valuation of $1.3 billion in June 2019.
- StockX reported $1.8 billion in gross merchandise volume for 2020, nearly double its $1 billion total for 2019. The site also saw global active buyers increase by more than 90% in 2020 alone.
- StockX’s biggest selling category is sneakers, though new additions such as electronics (including new gaming consoles and graphics cards) have propelled sales forward.
- The future of StockX is IPOs (initial product offerings). StockX partners with retailers such as New Balance to debut new products in a Blind Dutch Auction, which allows StockX to “level the playing field by providing access” to hard-to-find items.
Where stocks meet retail
StockX thrives by creating a trustworthy and accessible middle ground for customers to acquire hard-to-find items. Let’s say someone has a pair of shoes they want to sell—for example, Nike’s Air Jordan 13 Retro Flint 2020, which was StockX’s highest-selling shoe last year. The seller lists their product (it must be deadstock, which means never worn) on StockX, then a shopper can find it and buy the pair.
The seller then ships the sneakers to StockX for verification, and once authenticated, it is shipped to the buyer. In order to turn a profit, StockX charges a payment processing fee as well as a seller transaction fee.
The model seems straightforward enough, but the nuance comes from how the products are presented and verified. StockX’s product pages come across as a mix of eBay and Robinhood, with a little bit of Nike and Adidas thrown in for good measure.
There is only one page for each product, so no need to bounce between different listings with differing quality photos and descriptions. Each page feels incredibly dynamic, with the price of the last sale, different bids and asks, a 12-month historical chart, and a graph of the product’s latest sales adorning the corners of each listing.
“This is the real-time nature of a live marketplace,” says Schwartz. “And that is what StockX is all about. It isn’t a static listing. This is dynamic pricing that’s based on supply and demand.”
StockX managed to bottle the tension and excitement that comes with prices constantly surging and dipping and turn it into a retail model. The result is a shopping experience that’s engaging and just a little bit addictive.
“People thought that it was very foreign to have a product page that had both a buy button and a sell button,” says Schwartz. “We did something that hadn’t been done before by being more transparent with the data. That product page really drives home our value add—as a buyer, you can see all elements of supply, and as a seller, you see all elements of demand. It ends up being really powerful for both sides of the equation.”
“This is dynamic pricing that’s based on supply and demand. This is the real-time nature of a live marketplace.”Greg Schwartz
There is a chance someone might look at a StockX product page and find it “busy,” with numbers and charts and sales histories throwing a ton of information at the viewer. But that’s the beauty of the model—over 60% of StockX users are under 25, and this is a generation that was born online and is incredibly familiar with the power of data.
“I think that by having this demographic as our core customer base, it really helps that we’re an online platform that prides itself on transparency of data and is doing something new to present that,” says Schwartz.
StockX’s Retail 2.0
In April 2021, StockX made headlines when it raised a new funding round valuing the company at $3.8 billion. A few billion dollars is nothing to sneeze at, but the most surprising piece of news attached to the raise was that StockX had effectively tripled its June 2019 valuation of $1.3 billion in under two years.
That huge jump in value underscored an incredibly busy 2020 for StockX. One of the biggest moments for the retailer came when it decided to start listing electronics, including the Playstation 5, Xbox Series X, and the newest NVIDIA graphics cards. All three items were incredibly hard to acquire at launch (and still are, for the most part), so the inclusion into StockX’s culture-defined catalog made sense.
The decision to include electronics immediately paid off, as StockX reported $1.8 billion in gross merchandise volume for 2020, nearly double the $1 billion total for 2019. The site also saw global active buyers increase by more than 90% in 2020 alone.
“After sneakers, we ended up where we are today—in apparel, collectibles, trading cards, and now, electronics,” says Schwartz. “It all ties back to that same customer and what they are passionate about. That the same person that has a passion for streetwear is also very into gaming.”
While electronics provided a substantial boost to StockX’s bottom-line, they are just one component of the retailer’s expansion plan. Arguably, the most important piece of the roadmap is something StockX calls an Initial Product Offering, or an IPO for short.
Not to be confused with the Initial Public Offering StockX is reportedly pursuing later this year on the real stock market, this other form of IPO involves a radical attempt to disrupt traditional retail strategies.
Here’s how it works: StockX will secure a new product—typically sneakers—that have never been released to the public. StockX will then set up a Blind Dutch Auction, where customers can place anonymous bids on the item. Once the auction ends, StockX gathers the top bids that match the quantity it has in stock to determine who will win, then prices the item according to the lowest bid in that group.
For example, let’s say StockX is dropping 1,000 new pairs of sneakers as an IPO. Once the auction ends, $240 ends up as the lowest price of the top 1,000 bids. That means everyone who placed a bid above $240—which StockX calls the clearing price—will get to take home the shoes at that lowest price of $240.
“So much of StockX is about leveling the playing field by providing access,” says Schwartz. “With the IPOs, these are items that otherwise might sell out in minutes and end up being a frustrating experience for the buyer, and now they end up getting a product that in most cases is lower than what they’re willing to pay on the secondary market.”
In 2020, StockX completed two IPOs with New Balance and TEAM WANG. The New Balance IPO brought in 14,000 bids vying for 400 pairs of sneakers. The average clearing price ended up at $415 (different sizes had their own clearing prices), a substantially higher price than the $140 to $200 price tag New Balance shoes typically carry on release.
This model is how StockX has a chance to completely reinvent the fashion retail model. IPOs can be a win-win for customers and brands. New Balance effectively doubled its sales revenue for one pair of sneakers by working with StockX, while fans were able to secure shoes without having to play the “hit refresh and hope to get lucky” game or pay exorbitant prices. And, of course, StockX is collecting a piece in the process.
“When you look at IPOs, it shows that the traditional wholesale-retail model is antiquated,” says Schwartz. “That doesn’t apply to every product—maybe wholesale pricing works for paper towels and plastic cups. But for everything else, supply and demand is a better way to price items. And that’s how StockX works. We don’t set prices. We let the market ensure that it’s fair for both sides.”
“So much of StockX is about leveling the playing field by providing access.”Greg Schwartz
StockX’s senior economist Jesse Einhorn summarized the model, writing in a recap of the New Balance IPO, “Consumers have a fair chance to get the product they want at a price they are willing to pay (or often less!); and brands can realize the true market value for their products while minimizing the headaches of trying to bring high-demand products to market fairly. Simply put, everyone wins in a StockX IPO.”
Schwartz even believes the IPO model could one day replace the MSRP model, at least in the non-commoditized retail world. The benefits are far too vast to ignore, especially as retailers continually push towards DTC models and find new ways to connect directly with shoppers. If shoppers know a product they want will be listed as an IPO, they can go to StockX at their leisure and still get a consistent retail experience without the hassle of typical product drops.
“You get all the benefits from buying from a brand directly,” says Schwartz. “The trust and transparency and not having to constantly just see sold out or wait in line for hours, which was how this industry used to work.”
While the idea of eliminating MSRPs may seem distant right now, there is a clear incentive for retailers to work with StockX. It has a built-in audience, a seamless and transparent buying experience, and the opportunity to put products in the hands of true fans.
In fact, that last advantage is arguably the most compelling—StockX realizes that when shoppers take part in IPOs, they are more likely to keep and enjoy the product for themselves, rather than flipping it for a quick profit.
“You’re letting brands participate in a premium while still getting that product to the end consumer in a more efficient manner,” says Schwartz.
A slightly different version of the IPO, called DropX DTC, saw 14 releases by StockX in 2020. Brands such as New Era, Topps, and Kendall Jenner used DropX to release new products and collectibles directly to consumers, except these functioned without a Blind Dutch Auction element.
Brands are increasingly flocking to StockX to list products because they know their core audiences live there. In 2020, the site welcomed over 200 million unique visitors, and when a retailer lists something on StockX, they have the opportunity to introduce their brand to the right sets of eyes.
The future of resale
The future looks good for StockX. Collectibles have never been more popular, and the resale market is booming as millennials and Gen Z-ers with disposable income look to buy products that both scratch the nostalgia itch as well as hold considerable long-term value.
There is room for StockX to expand as well. Different styles and brands of apparel are being added every day, and because StockX is continuing to scale up its verification processes by opening new authentication centers around the world, there is a massive opportunity to reach new markets in Southeast Asia and Europe.
One area that seems perfectly suited for StockX is the inclusion of NFTs (non-fungible tokens). These unique digital collectibles are having their own moment, led by the surge of marketplaces like NBA Top Shot that digitize professional basketball highlights and sell them via packs, with some highlights going for upwards of $250,000. While Schwartz says there is “nothing to share now” in terms of StockX entering the NFT market, he realizes the product fit makes sense.
“We’re definitely monitoring what’s happening with Top Shot and NFTs,” he says. “There are definitely opportunities in digital collectibles in addition to what we’re doing at StockX. It’s an exciting trend, especially given the power of primary and secondary markets coming together. But today we’re focusing on our core categories and bringing those to an increasingly global customer base.”
As StockX continues to expand and reach new audiences—both in location and age bracket—it may lead to shoppers putting the current retail ecosystem under a microscope. According to StockX, a better model exists, and it’s just a few clicks away.
Editor’s note: This story has been updated to reflect StockX’s funding round announced on April 8.