- The multibillion dollar sneaker resale industry has operated in a gray area for years.
- Following a scandal at Nike, practices such as kicking and backdooring are coming under scrutiny.
- Sneaker dealers say industry standards will not change, despite pressure from shoe manufacturers like Nike.
The sneaker resale world is still in turmoil after a scandal at Nike involving a top executive and his son’s sneaker business.
Nike’s vice president and general manager for its North America division, Ann Hebert, resigned in early March after a report highlighted her ties to her 19-year-old son’s sneaker resale business. Bloomberg Businessweek reported on February 25 that Hebert’s son used his credit card to purchase more than $ 100,000 of limited-edition sneakers for resale.
Although Hebert managed Nike’s direct-to-consumer sales strategy and oversaw the SNKRS app, it is still unclear whether she helped her son’s business.
The sneaker and streetwear resale market is expected to reach $ 30 billion globally by 2030, with the value of specific hype pairs often reaching more than 10 times their original retail value on resale sites like StockX . In the aftermath of the scandal, the shady marketplace based on industry connections, clandestine deals and ‘bots’ – or software applications that speed up the online payment process – has come under scrutiny. , with people criticize the sneaker dealer community and its methods of obtaining product.
But according to top sneaker dealers, robot makers, and cook group owners, the multibillion-dollar sneaker resale industry has operated in a gray area – and the situation with Joe Hebert doesn’t. is no different. And while recent events may have brought these issues to the forefront of the conversation, sneaker enthusiasts say this scandal alone is unlikely to change the way the resale game is played in the future. .
“This is how the world works”
Bloomberg reported that Ann Hebert shared information about her son’s resale business, West Coast Streetwear, with Nike in 2018. After Hebert left the company, Nike told Bloomberg that there had no policy violation or conflict of interest issues and Hebert made the decision to resign.
Insider has spoken to various sneaker dealers and business owners about recent events at Nike, some of whom have requested to remain anonymous or partially anonymous in order to speak more candidly. While all agreed that Hebert’s Nike connection, in the form of his mother, likely gave him a business advantage in the industry, many saw the situation as yet another example of a questionable method that resellers of sneakers use to run their business.
âIt happens all the time,â said sneaker dealer Danny Hasbani, who made hundreds of thousands of dollars in sales from his resale business in 2020. âSure, that’s a bad look for Nike but other than that, there is no problem with that. “
For example, it’s common for resellers to rely on âplugsâ or industry insiders who disclose details of high-profile declines before they happen. Cook’s groups, or member-only forums that charge a fee for information about the sneaker resale market, have been known to pool these resources for the purpose of playing with the system. Robots to grab hot sneakers before the average consumer allows resellers to artificially inflate demand. At least one of these tools is often necessary for success in a sneaker fall and is standard in the resale industry.
While people accused Joe Hebert of possibly using discount codes for Nike employees to purchase shoes, two top sneaker retailers said these types of codes are often used by other retailers who know also how to get them.
“I’m pretty sure there are a lot of other people doing this every day and not bragging about it, which is why they can do it without their Nike connections being fired,” said one another sneaker dealer who owns a group of cooks to get sneaker robots. “Yes, he had an unfair advantage, but that’s just the way the world works and a lot of other people certainly do too.”
As Hasbani said, most dealers see Hebert’s connection to his mother as another “crazy cheat code” in the sneaker resale system. In other words, Joe Hebert was just doing what all the dealers do. If it wasn’t her mother helping her, it would have been someone else.
“[Even] without that Nike connection he would still do the exact same thing, âsaid Michael, the founder of Notify, a large group of sneaker cooks with thousands of members.
The backdoor, or the process of getting pairs at or near retail price before a sneaker hits the public eye, has also come under scrutiny in light of the recent events, although this has been a problem in the industry for years.
In February, a sloppy release of the much-publicized Trophy Room x Air Jordan 1 illustrated this. The shoe marked a collaboration between the Jordan brand and the Orlando Trophy Room store, founded in 2016 by Michael Jordan’s son, Marcus, and reportedly limited to 12,000 pairs.
But images of the shoes leaked to social media in December, with some pairs appearing on the resale market weeks before they were officially discontinued. According to a report from Complex, Trophy Room sold thousands of pairs to dealers for around $ 1,000 each before the sneaker went public. In a Tweeter, Marcus blamed the sneaker leaks on Nike’s Memphis distribution center, which housed the sneakers.
While Nike employees are technically advised to keep sneaker information to themselves, two former Nike employees who worked with the brand’s high-temperature shoes previously told Insider that Nike often turns a blind eye to people. who were leaking information to cook sneaker groups or forums.
âI think it’s a lot worse than what happened here,â said Michael of Notify, referring to the Trophy Room incident. “But I just think Joe is a much easier target than MJ’s son.”
As Hasbani put it, “everyone just wants to blame the dealer right now.”
Will anything change?
In a hands-on meeting with the brand’s North American team last week, Nike CEO John Donahoe addressed recent events and said Nike is looking to audit its product launch process for restore consumer confidence, Complex reported. According to Donahoe, Nike is working on “anti-bot technology” to combat this problem and is seeking to clearly define its policies for employees and their families, given the boom in the resale market.
Despite efforts to control the resale market, sneakerheads believe little will change in the future.
âFor better or worse, resale is here to stay,â said Jamaal, or âMaallyMall,â a sneaker collector and content creator who co-hosts a YouTube sneaker show. “As long as there is money to be made, those are the conditions.”
According to Jamaal, as long as the sneakers remain “couture” and difficult to obtain, the system will continue to favor the profiteer reseller who uses all the tools at his disposal. It’s a zero-sum game, one that leaves the standard sneaker lover aside if he fails to adapt to the norms of sneaker culture.
As Jamaal said, “Resale is the new retail business.” And these days every sneakerhead has to think like a dealer.