'Flipping' Sneakers Is Highly Profitable

fromWNYC

Maybe you won't pay several hundred dollars for a pair of sneakers, but there are a lot of people who will — providing they are the right sneakers. Demand for certain models has spawned a robust market for resellers — people who buy up the available supply and resell them for a profit.

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They may be made of just rubber, plastic and nylon. But for many people sneakers are so much more than something you put on your feet. They're an obsession. Serious fans are willing to pay top dollar to get certain shoes, but the profits do not all go to major retailers like Nike or Foot Locker. As Ilya Marritz of member station WNYC reports, there is a cottage industry of independent sneaker re-sellers who've figured out how to make a fast buck by flipping trendy shoes.

ILYA MARRITZ, BYLINE: If you wander some night through New York's Times Square - or the shopping district of any big American city - you might see a scene like this - amid the swirl of human traffic and pulsing lights, a line of people waiting patiently outside of a shoe store, a really long line. They sit in camping chairs, drink Big Gulp sodas, and get blank stares.

UNIDENTIFIED WOMAN: This is crazy. I don't get this.

UNIDENTIFIED MAN: You see people here, they are fiends, man.

MARRITZ: Luis Olivo is patrolling the line for Foot Locker. He gets it.

LUIS OLIVO: I call them Jordan's children. They'll do whatever to get them Jordans.

MARRITZ: Because on this night, at midnight, the Air Jordan Playoff 12 goes on sale. Almost 30 years after the first Jordans hit the market, they're still wildly popular.

Many people are buying for themselves, but not Tony Holmes, a 25-year-old wearing dark Gucci glasses. Holmes is a reseller. He buys shoes and flips them, for a living.

And these retail for what?

TONY HOLMES: One sixty after tax - 173, basically, 175.

MARRITZ: And what do you think you can resell them for?

HOLMES: Two fifty to 300 off the bat.

MARRITZ: A neat 70 percent profit, if Holmes gets the price he wants. There's no question, he says, the shoe will sell out tonight.

In the world of the sneaker reseller, hype is the sunshine that makes the crops grow. The more pre-sale buzz, the higher the price the next day on Craigslist or in the consignment shop. Foot Locker is well aware of the fact that scalpers buy up a lot of the hottest new shoes and they tolerate it.

Matt Powell, a retail analyst with SportsOneSource, says Nike actually encourages this by setting prices lower than what the market will bear.

MATT POWELL: I think they always try to keep the supply below demand level. They want their shoes to sell out in a relatively short period of time, because that creates excitement for the next one around.

MARRITZ: It's that difference between the price tag on the box and what fans are willing to pay that the reseller lives on. Sometimes it's a couple hundred dollars, or even a thousand. When we meet later, Holmes tells me it's worth it, even if the money is less than that.

HOLMES: Even if I make $50 a pop, if you make a little bit of profit off of each sneaker, the goal is to get them in quantity.

MARRITZ: That's also the strategy for husband and wife team Rich and Jo Barrow. Two years ago, they started their own resale Web site, Shopademics. Tonight, they're among the first to emerge from the store. They've also hired a couple dozen buyers to get around the store's one pair per person rule. Rich Barrow doesn't expect to leave this place until 9:00 or 10:00 in the morning.

RICH BARROW: Then I pack all this (bleep) and mail it off to all my customers. Put it up on the Internet, anything I have left over.

MARRITZ: You're going to hardly sleep.

BARROW: I don't sleep. That's the whole point of this.

MARRITZ: Meanwhile, Jo Barrow is stuffing shoe boxes into big formless plastic bags.

JO BARROW: I don't want people to see me getting 40, 50, 60 pairs out of this Foot Locker. I don't want people to know what I have.

MARRITZ: This is not a new game. People have been reselling sneakers at least since the first Air Jordans came out in the 1980s. But the Internet and cell phones are making it easy for buyers to find sellers, and vice versa. Today, any sneaker fan can become a reseller if they have the patience to wait on line.

Some people sort of zone out. Tony Holmes takes the opposite approach. He's quick to comment on the passing parade. And he can be harsh.

HOLMES: Whoo. Look at my man right here. Like "The Vampire Diaries." Nikki Minaj wannabe.

MARRITZ: When I leave the Foot Locker at 1:30 in the morning, Holmes is still far back in the line. After he gets the sneakers, his next destination won't be bed. It'll be another shoe store that opens its doors at seven.

For NPR News, I'm Ilya Marritz in New York.

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