We have all seen the sensational headlines about teenagers making millions of dollars reselling sneakers. We think “Really? Is that possible?”
A report published on Statista in 2019, estimated that the global sneaker resale market was valued around 6 billion U.S dollars.
Whether this will be your new side hustle or full time career, it’s all about the bottom line.
So how much money do sneaker resellers make?
It’s a tough question with a complex answer. You must first understand a few truths about the resale business as a whole.
- Pricing & profits
As a reseller you are able to set your own profit margins but you are bound to what the market demands. This is based on active sales listings vs previously sold listings.
You have the freedom to list your pair of Yeezys for five hundred dollars but if ten other sellers are offering the same pair for only $300.00, your Yeezys will stay in your closet collecting dust.
Many resellers will take lower profits to move shoes quickly. While others will keep their prices at or higher than what the market demands to make the highest return on investment.
There are many strategies to source and flip sneakers. Each has its own earning potential. You can view them as either “High volume/ Low profit” or “Low volume/ High profit” strategies.
Below is how I would categorize each. I view this list as interchangeable. With enough resources, expertise and capital, you can defy categories.
|High Volume/ Low Profit||Low Volume / High Profit|
|Buying & selling used sneakers – Shopping local thrift stores, friends/ family closets, or hunting online: ebay, fb groups, grailed, goat, offer up, etc.||New releases / Hyped sneakers – Chasing the next hot shoe: Waiting in line, entering raffles, or using bots.|
|Retail Arbitrage – Shopping online sales racks, manufacturer outlet stores, or any store where you can find undervalued sneakers||Buy & Hold / Grail hunting – Buying sneakers on the resale market in hopes that the price will appreciate over time.|
|Consignment – Selling shoes for other people and taking a commission.||Designer sneakers – Hunting deals or new releases from luxury brands like Gucci, LV, or Off-White|
|Non hyped / New releases – Shopping general releases. Under the radar releases that don’t make the news.||Buy outs – Buying an entire collection of new or used shoes from a collector.|
Ok, so how much earning potential does each strategy offer?
For “High volume/ Low profit” strategies – I would set a goal of $50 profit per shoe. For “Low volume / High profit”, use my 2x rule, “For any shoe you purchase, sell it for 2 times the purchase price or more if possible.
Always seek the highest return on investment but know that it may take longer to do so.
- The cost of doing business
There’s no way around it — you will have to spend money to make money.
Managing money in the sneaker game can be tricky because you need to continuously set money aside to buy more shoes.
How much to set aside for inventory strongly depends on how much you plan to sell and where you source inventory. (see table above)
Buying sneakers isn’t the only cost you’ll have to factor in.
Eighty dollars in profit on a new pair of Yeezys might not sound bad. But that’s not your true profit if you’re reselling sneakers online.
Popular market places like stockx, goat & eBay take a percentage of every sale you make. Then you have shipping costs. (This depends on where you sell your shoes) I’m not talking just postage.
Factor in boxes, tape, packaging materials and any gas you may need to use going back and forth to the post office – if the post office doesn’t do pick-ups in your area. These fees aren’t huge, but they do eat away at your profit margin.
Each platform has its own ever changing fee structure. Below is a list of the current fees for the most popular websites to flip your sneakers:
|Ebay||12.55% + 30 cent. Or Sell sneakers $100+, Pay no fees.||Charge your own shipping fee or offer free shipping.|
|Stockx||12.5% , After 3 sales = 12%, 30 sales = 11.5%, 100 sales = 11%||Free (US sellers) Prepaid shipping label provided|
|Grailed||11.9% + 30 cents||Charge your own shipping fee or offer free shipping.|
|Goat||12.4% (good standing acct) can increase to 25% + 2.9% cashout||Free (US sellers) Prepaid label|
|Flightclub||9.5% + $5 seller fee per item, 2.9% cash out||Free (US sellers) Prepaid label|
(Updated: June, 2021)
Gross Profit vs Net Income
Gross profit represents the income or profit remaining after the costs of sneakers have been subtracted from the revenue/sold price.
$300 (resale) – $220 (cost) = $80
Net income is the profit that remains after all expenses and costs have been subtracted from revenue/sold price. (Also referred to as the “bottom line”.) These expenses can include: packaging, shipping, taxes, and marketplace transaction fees.
$300 (resale) – $220 (cost) – $37.50 (stockx fee) = $42.50
PRO TIP: It’s important to keep track of all your costs and understand how much you will earn on each sale. You should create a spreadsheet to do so.
If you are chasing new releases, it can come with a unique set of expenses.
It’s no longer as easy as going online and clicking add to cart. Websites are overloaded with traffic and new sneakers sell out in seconds. You need an edge for a chance to cop any hyped sneakers. So you better be ready to drop $300 – $4k on a sneaker bot(s).
Don’t forget Taxes
Flipping sneakers is subject to income taxes. I set aside 20% to 25% of my reselling profit for federal, state and local income taxes.
It’s best to keep track of all your sales to make Tax season less stressful. I recommend quickbooks, wave, Scout app or a simple spreadsheet.
OK, so how much money do resellers make?
Predicting a reseller’s income depends on the strategy of the reseller. You can either be a “New release chaser” or a “Sneaker broker”.
The “new release chaser’s” income potenital (Low Volume / High Profit)
I analyzed the resale value of every sneaker that was released in June, 2021 using data from StockX.
A total of 124 sneakers were released. 43 had an average resale gross profit of $49 or more. 14 sneakers are reselling for double or more than retail cost. We will call them “Hype Releases”(see chart below)
Let’s say a reseller only focused his efforts on getting the hyped releases. He was lucky enough to cop at least one pair of each shoe listed above. He would have made $2943.00 in gross profit in June. That’s over 35k per year if those profits remain consistent.
It’s important to note:
- “Hype releases” are often the hardest to get. Luck is a huge factor. So is the use of sneaker bots. (another expense)
- Pro resellers are going after multiple pairs when they cop. Being able to flip 5 pairs of the Jordan 4 x union LA sneakers (GSP: $689) would be great for the bottom line. You can do the math.
- How much inventory can you afford to buy? The Average retail cost of sneakers in June was $144. Copping all 14 hyped releases would have cost $1755.00.
The “sneaker broker’s” income potential (High Volume/ Low Profit)
I made a career sourcing undervalued sneakers already on the market for under $100. My goal was to make $50 gross profit per flip. This strategy is all about high volume.
So if you flipped 60 shoes per month, you can expect to make $3,000 gross profit. If done consistently every month equals $36k per year.
So is there any truth to those sensational headlines? Is it possible to be a six figure or seven figure reseller?
Yes, but it’s going to take hard work, good research, a bit of luck, and a good amount of capital to do so.
But it also makes a great side hustle if you only have a few spare dollars and hours per week.