As a staple for sports and comfort, sneakers have become a popular investment in recent years. From limited edition shoes to designer brands, with the right strategy, investing in sneakers can become part of a diversified investment portfolio. Read on to understand the pros and cons of sneaker investing and what to consider if you want to enter the sneaker space.
How Does Sneaker Investing Work?
As an alternative investment product, sneaker investing is a way to capitalize on enthusiasm and rarity around certain sneakers. You can always purchase stocks of popular sportswear brands like Nike Inc., Adidas AG or Puma to spread out sneaker investing risks.
Below, you’ll find a guide on how to invest in sneakers directly. When investing in sneakers, you’re not purchasing sneakers to wear but instead buying a product to hold like any other investment. Here are the points to consider:
Research and Knowledge is Crucial
As with any investment, it’s important to do your research and gain knowledge about the sneaker market. Learn about different brands, models, collaborations and limited editions. Understand what makes certain sneakers valuable and desirable. There are forums, discussion boards and specialized knowledge around sneaker investing. Be sure to research and learn before jumping in.
Selecting the Right Sneakers
Look for limited-edition releases, exclusive collaborations or sneakers with a strong brand reputation that have the potential for price appreciation. Factors such as rarity, hype, brand popularity and historical resale value can contribute to the investment potential. Look at both major sneaker brands and luxury brands offering exclusive sneakers.
Purchase and Hold
Once you’ve identified sneakers with investment potential, you can purchase them through various channels such as online retailers, specialized sneaker marketplaces or in-store releases. Some investors use bots or other automation tools to increase their chances of buying limited releases. You can also search for new sneakers on resale sites or investor sites, but you’ll need to verify their condition — are they new in the box with papers or tags? After purchasing, it’s common to hold onto the sneakers for a certain period to allow their value to increase.
Timing the Market
Timing is crucial in sneaker investing. Understanding the demand and supply dynamics and market trends can help you decide when to buy or sell. Some investors sell sneakers shortly after release if there is high demand and limited supply, while others hold onto them for a longer period, anticipating a rise in value over time.
Selling and Profit
When you’re ready to sell, you can list your sneakers on various platforms, including online marketplaces, sneaker consignment stores or social media channels. Market demand and the rarity of the sneakers will influence the selling price. If you’ve made the right choices and the sneakers have appreciated in value, you can make a profit from the sale.
Risks and Challenges
Sneaker investing, like any investment, carries risks. Market trends can change, and demand for certain sneakers can fluctuate. Some releases may not be as successful as anticipated, leading to potential losses. There is also a risk of counterfeit products, so it’s important to authenticate the sneakers before buying or selling them.
What Sneakers are Best to Invest In?
Sneaker trends vary with time. Nike, in general, and Nike Jordans specifically, have enduring popularity and resale power. You can also consider limited releases from Adidas, ASICS, Yeezy and New Balance.
Collaborations will often increase in value, with current investors looking at Travis Scott x Air Jordan, Virgil Abloh’s Louis Vuitton x Nike Air Force and the Adidas Yeezy Boost 350 by Kanye West. Sneaker market fluctuations can be unpredictable, and no sneakers are guaranteed to appreciate in value.
Things to Consider When Investing in Sneakers
Before you get started with investing in sneakers, you'll want to consider the following key points.
1. Rarity and Exclusivity
Rarity plays a significant role in a sneaker’s investment potential. Limited production runs, exclusive collaborations and regional releases often drive up demand and prices. Look for sneakers with limited availability or unique features that make them stand out from regular releases.
2. Brand Reputation
Consider the reputation of the brand behind the sneakers. Brands with a strong heritage, a loyal customer base and a history of desirable releases tend to hold their value better in the market.
3. Authenticity and Condition
Ensure the sneakers you’re considering are authentic and in good condition. Counterfeit sneakers can greatly impact their value, so verifying their authenticity through reliable sources is important. Additionally, the condition of the sneakers, including factors like wear, cleanliness and original packaging, can affect their resale value.
4. Historical Resale Value
Research the historical resale value of the sneakers you’re interested in. Analyze their price trends over time, considering factors such as initial retail price, demand and scarcity. This data can provide insights into potential future appreciation.
5. Hype and Popularity
Consider the level of hype and popularity surrounding a particular release. High-profile collaborations, celebrity endorsements or sneakers associated with cultural moments can create significant demand. It's important to differentiate between genuine long-term desirability and short-term hype.
6. Size and Fit
The size and fit of a sneaker can impact its resale value. Generally, more common sizes (such as US 9-11) tend to have higher demand, while extremely rare sizes (like US size 6-7 or US size 14) may have a smaller target market. But the rarity of certain large sizes can sometimes further increase value. Balance rarity and demand when assessing potential investment opportunities.
7. Holding Period and Timing
How you invest in sneakers will be different depending on your goals. Determine your investment strategy, whether you plan to hold onto sneakers for the long term or capitalize on short-term opportunities. Timing the market can be challenging, so consider factors like release dates, demand trends, seasonal fluctuations and the liquidity of your investment.
Sneaker Investing Advantages
Sneaker investing is a unique opportunity with many advantages. Here’s why you should consider sneaker investing:
- An accessible entry point to investment
- Cultural and personal significance
- Potential for high returns
- Long- and short-term investment opportunities
- Combine a passion with investment
Sneaker Investing Disadvantages
While sneaker investing comes with many advantages, it’s not without risks. These include:
- Potential for counterfeit products
- The speculative nature of this type of investment
- Limited liquidity
- Sneakers could lose value
- Niche investment opportunity that might not sustain performance long term
Should you Invest in Sneakers?
Whether sneaker investing is a good choice for your diversified investment portfolio depends on your interest and goals. As with most investments, you need in-depth knowledge and will still assume risk. If you love sneakers or want the possibility of fast returns on short-term sales, sneaker investing can be a fun way to make money.
Remember to maintain a diverse portfolio and don’t only invest in sneakers. Learn more about how to invest in stocks, exchange-traded funds (ETFs), mutual funds and investing in real estate to build a diverse portfolio for long-term wealth.
Frequently Asked Questions
Are Jordans an investment?
Yes, many sneaker investors use Jordans as a good entry point into the world of sneaker investing. Look for classic Jordans or celebrity collaborations that can increase value.
Are shoe stocks a good investment?
Shoe stocks or major athletic brands that make sneakers can be a good investment. For example, Nike stock outperformed the market and rose over 35% over the last five years. But Adidas stock dropped 11% over the last five years, proving that no investment is without risk.
Is sneaker reselling profitable?
Yes, for many investors, sneaker reselling can be profitable. Keep the sneakers in the original box with all tags or paperwork to earn the maximum.
About Alison Plaut
Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.