3 ms·

Serious question: why don't sneaker manufacturers move to an auction model, and simply capture the extra margin for themselves? Some arguments I've heard are "

Serious question: why don't sneaker manufacturers move to an auction model, and simply capture the extra margin for themselves? Some arguments I've heard are "fairness" (as if regular people happily drop $500 on sneakers) and the marketing optics of some sneaker brand being hot because there are queues outside stores before a drop.

sneak 6y ago
Because every pair will go for a significantly higher amount of money, and it will exclude the vast majority of their fanbase, the size of which is the reason they go for a lot of money in the first place. Imagine how popular a sports team would remain if normal people could never hope to afford at ticket.
- deleted 6y ago
  [deleted]
forgotmypw17 6y ago
I think this ecosystem of re-selling is part of what creates perceived value and perceived scarcity.
- dalbasal 6y ago
  Exactly. In fact, I'd argue this is what "becoming an asset class" means. Liquidity. Secondary markets. Prices that are disconnected with the underlying sneaker. etc. I think sneaker companies do the opposite to what OP suggests, in fact. They do things like creating abundance in one place and scarcity in another. This creates an opportunity for dealers, speculators, and secondary market activity. That whole complex is what makes sneakers an asset class... which in turn makes it a premium fashion item. Nitpick: The scarcity isn't perceived. It's real, just "artificial" in the sense that they produce limited amounts on purpose, and limit it in other ways.
  - rdtwo 6y ago
    Yes it’s part of the model. If there was no scarcity nobody would pay 220-280 for some sneakers
dalbasal 6y ago
It would be very easy to accidentally kill this whole thing by messing with the economics. Rationalize the price too much and the price might become rational. Being an asset class depends on people treating it like one, that is, as a way to make money. Getting "market" price for the shoes in-store comes at the expense of middlemen, 3rd party auctioneers, investor-collectors, arbitrageurs, etc. Those people are what make Yeezys "an asset class." These things fall apart when you get too greedy. They already create a flamboyantly artificial scarcity. Trying for "market price" as well is probably too far.
- namdnay 6y ago
  > Rationalize the price too much and the price might become rational. Very eloquently put

sneak 6y ago

Because every pair will go for a significantly higher amount of money, and it will exclude the vast majority of their fanbase, the size of which is the reason they go for a lot of money in the first place. Imagine how popular a sports team would remain if normal people could never hope to afford at ticket.

deleted 6y ago
[deleted]

forgotmypw17 6y ago

I think this ecosystem of re-selling is part of what creates perceived value and perceived scarcity.

dalbasal 6y ago
Exactly. In fact, I'd argue this is what "becoming an asset class" means. Liquidity. Secondary markets. Prices that are disconnected with the underlying sneaker. etc. I think sneaker companies do the opposite to what OP suggests, in fact. They do things like creating abundance in one place and scarcity in another. This creates an opportunity for dealers, speculators, and secondary market activity. That whole complex is what makes sneakers an asset class... which in turn makes it a premium fashion item. Nitpick: The scarcity isn't perceived. It's real, just "artificial" in the sense that they produce limited amounts on purpose, and limit it in other ways.
- rdtwo 6y ago
  Yes it’s part of the model. If there was no scarcity nobody would pay 220-280 for some sneakers

dalbasal 6y ago

It would be very easy to accidentally kill this whole thing by messing with the economics. Rationalize the price too much and the price might become rational. Being an asset class depends on people treating it like one, that is, as a way to make money. Getting "market" price for the shoes in-store comes at the expense of middlemen, 3rd party auctioneers, investor-collectors, arbitrageurs, etc. Those people are what make Yeezys "an asset class." These things fall apart when you get too greedy. They already create a flamboyantly artificial scarcity. Trying for "market price" as well is probably too far.

namdnay 6y ago
> Rationalize the price too much and the price might become rational. Very eloquently put