The dangerously erratic world of Hype resale: Know the Mechanism of it all

We all know about the recent supercilious surge of the sneaker industry and essentially all things HYPE. With time, it's becoming harder and harder to own a simple pair of Jordans of your choice, even though most fashion houses and other resellers may make it look otherwise.

If tomorrow, you, as a conditioned sneakerhead who understands the culture, wanted to buy a new release of a Jordan, the exorbitant resale prices would gravely discourage you from going through with the purchase. OK, leave the case of the sneakerhead. Even if a regular customer wanted to make a purchase of a new release Yeezy because he/she liked how it looked/fit (ignorant of the hype), they would most definitely be demoralised to even enter the sneaker space.

And thus, such an environment is an alarming atmosphere to have in a market fueled by deep historical nostalgia and an appreciation of retro pop culture. Turning this into a sole business, as far as all matters go, is counterproductive to the shelf life of streetwear fashion.

Breaking Down Hype

More or less, three things will come to your mind when you hear "Hype"- Jordans, Yeezys, and Supreme. But there’s a lot more to it, and a more materialistic understanding is essential to realising the core of the resale problem.

Hype is essentially exaggeration, publicity, and promotion of an idea or product. Be it Harry Potter in the 2000s, Star Wars in the 80s or Ford in the 20s, hype always existed. It was even worse in the 30s after the great depression. Today, however, it has taken the shape of branding and is generating a desire to own a product.

When you come to streetwear and sneaker culture, which has to an extent spread all over India, the hype is created by a perfect combination of quality product, marketing and celebrity endorsements. Only after this does the principle of scarcity come into the picture.

Scarcity, in the case of Supreme and Air Jordans, means limited production. It’s all about supply and demand. People want things that other people can’t get, and they’re willing to pay more money for them. Simply put, if everyone can get one, nobody wants one. This is exactly what these brands have avoided by producing goods in very limited quantities and creating a false scarcity. Now the buyer of such products will get a sense of distinction and privilege, which is why he won’t be hesitant to make such a purchase. By creating a high status for their products, Supreme now has the power to slap their sticker on literally anything and be sure that their product will not only be sold out instantly but also resold at double the retail price, whilst keeping their profit margin high.

Now let’s be real. Even after knowing the cruel tactics of these companies, your desire to buy expensive useless crap is not going to end, is it? But why? "Conspicuous Consumption’’ shows off by buying something other people can’t afford. A very important economic concept that has been pivotal to the growth of modern sneaker resale.

Sneaker Market’s new face

However, as the global sneaker resale market has grown to a $6 billion industry, the once-community-driven culture of buying and selling sneakers has shifted from a social experience among like-minded collectors to one of faceless transactions driven by profit.

While investors have flocked to the businesses fueling the sneaker reselling boom, many overlook a fundamental flaw in the model: commoditizing sneakers works against the very consumers on whom the industry was founded.

At the peak of the pandemic, resale prices rocketed as high as 54% above retail, fuelling a growing frustration amongst sneakerheads who were tired of taking Ls (losses) to resellers who'd monopolised the market. And the nostalgia that once tied sneaker loyalists to the brands they covet can only go so far without a fair shot at buying them. That’s why the next big boom in the sneaker industry isn’t resale — it’s customer experience.

Commercialization Can’t Thrive Without Culture  

You might think it's the shoes, but the most important aspect of sneaker culture is the people. For decades, the industry has thrived on sneakerheads' sense of belonging in an inclusive community united by a mutual love of sneakers and the rich history that surrounds them. Businesses that prioritise community have seen tangible benefits from online advocacy and brand loyalty via self-organised events. However, brands should not overlook the intangible benefits that strong communities provide.

But as sneakers have risen into their own unregulated asset class—one that often yields better returns than stocks or crypto—the people driving sneaker culture have taken a back seat to the profits of the resale industry.

The way ahead

While legacy brands like Nike and Adidas strategize on how to serve consumers who feel pushed out of sneaker culture, a rise in independent brands, creators, and smaller companies is spurring innovation in the space. I mean, just take a look around; in the past few years, so many individual streetwear brands have gotten the limelight and are emerging to form a whole new culture of fairly priced, stylish streetwear.

Not only do sneakerheads want fairness and inclusivity, but there's also a growing desire to rebuild the personal connections that once defined the culture, but have begun to fade in the age of faceless transactions.

In the sneaker world, we're approaching a tipping point in terms of consumer dissatisfaction, but when a system is broken, innovation always emerges. It's an exciting time in the industry, with old and new players vying to bring creative experience and connection back to the culture. Those who succeed in developing community-first models will win in the long run.