Photo: Nike
Nike decides to ‘just do it’ in the sneaker resale market
Nike is selling used sneakers directly to consumers.
The company has announced the launch of Nike Refurbished, a program that takes sneakers returned by customers within 60 days of purchase and inspects and cleans them up for resale at a lower price to the brand’s loyalists.
Nike is initially making Refurbished shoes available in 15 of its stores with plans to expand to more locations this year and beyond.
The market for secondhand sneakers has grown significantly in recent years, with the high end, in particular, taking off. Nike is the clear leader in this category. Sneakerheads spend hundreds and even thousands of dollars to purchase some of the brand’s iconic models. A recent article on Six Figure Sneakerhead listed specific Nike shoes as 11 of the top 12 highest priced sneakers in the current resale market.
Nike puts returned sneakers into three categories, depending on their condition: “like new” shoes worn only “for a day or two,” “gently worn,” and “cosmetically flawed.” Items in this last designation could have some defect as a result of an error in the manufacturing process, or perhaps a smudge by the previous owner.
In all cases, Nike inspects returned sneakers and refurbishes them as close to brand new as possible before giving them their condition designation and sending them off to one of the brand’s stores for purchase. Pricing for each item is based on the model and its relative condition.
Shoe boxes include messaging telling shoppers what conditions the shoes are in. Each of the refurbished models is covered by Nike’s 60-day wear test. Customers can return the sneakers at any point during that time if the shoes do not meet their requirements.
The brand is promoting the new service as not just a less expensive means for loyalists to buy sneakers, but also as part of its Nike Zero program to achieve its zero carbon and waste goals. Returned sneakers not included in the Refurbished program are either donated to Nike’s community partners or recycled for use in other products.
Nike was recently named as the most valuable apparel brand in the world for the seventh consecutive year by Brand Finance.
Discussion Questions
DISCUSSION QUESTIONS: Do you see Refurbished as a program that Nike will scale in a big way (including moving it online) or will it remain a niche offer? What are the implications of Nike Refurbished for the brand and those selling its sneakers on the secondhand market?
Poll
BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Ryan Rosche
Vice President, BRR Architecture
I think this is a smart initiative by Nike. Clearly the used sneaker market is a big enough opportunity on its own, and so this program is on point. But it’s even better because as a sneaker manufacturer, Nike adds additional credibility and confidence to consumers buying used. This reminds me of GameStop’s program of selling used games, which was relatively successful. The challenge is to scale the program and handling used sneakers will require entirely new processes, but I think Nike will successfully navigate this.
I think the main driving force behind Nike’s refurbishment program is to bolster their green and environmental credentials. They want to be seen to do their part to minimize waste. There is also a degree to which this allows them to have a small resale program which, if successful, they could expand. There is a lot of consumer interest in resale and secondhand, so Nike is sensible to test this area more.
The initiative may stop some product going into the wider resale market, but its impact will be minimal. A lot of resale is about vintage product – which won’t be eligible for return under the refurbishment program – and related to new product drops which traders quickly buy and then resell on various sites.
I hope someone at Nike has done some serious market research to get to this decision. Maybe there is a group of aspirational Nike sports shoe consumers that can’t afford the new product and would buy it, at a significant discount, used and refurbished.
Although there is a resale sneaker market, attaching the official brand to it seems like either a greedy or desperate move. They want to be an aspirational brand that is moving away from third-party retailers, yet here they go creating a low-end retailer-style discount rack.
There will be some market for these products. It will have little effect on the bottom line, more retailers and small entrepreneurs will be alienated, and to some degree it will weaken the brand. Yet in the end, for a company of this size, this tactic will be irrelevant.
The vintage sneaker market is huge and growing. I know a sneakerhead who purchases new shoes, then sells them at a profit months later. This move on Nike’s part may earn them some environmental cred, but the more compelling argument is to consolidate mindshare in this market, and reap the financial rewards.
Nike’s relentless drive towards hyper-personalization, improving and enhancing the brand equity, and their digital marketing efforts now includes a compelling sustainability initiative with their Nike Refurbished initiative. These are the types of green environmental and sustainability strategies that will resonate with an emerging Gen Z consumer segment.
There’s been plenty of interest in the resell market, and Nike is primed to capitalize on this emerging consumer segment. Nike certainly has the capabilities, resources, and capital to ensure that the resell process is executed to their best standards and that the operation is scalable across their network of stores.
The footwear space has a foundational sustainability problem, just as fast fashion does. Many of the shoes that are made today cannot be easily taken apart and recycled sustainably. Also, sustainability is important enough that many consumers have started to take notice and brands have to address it head on. On the other hand, the second hand market is growing rapidly for apparel and footwear given the ease of use of digital platforms. Nike is bold enough to address it head on. In the short term, it might lead to some cannibalization in very few and specific categories, but in the longer run Nike will build a better brand cachet and gain from this move. Ultimately, there are only so many gently used shoes that will turn back on the sales floor. I would say that Nike should bring their “Reuse a Shoe” recycle program to the forefront of this initiative as well and get all the swag for being a responsible company while they are at it.
60 days!? How many people return their sneakers within 60 days of purchase? While this will give some comfort to those who want to be sure they are buying a shoe that is comfortable for them, I can’t imagine there are enough people out their to make this a scalable or even niche activity.
I can’t speak to the economics, but this is in line with how Nike is impacting the world – and not just with sports shoes and apparel. People – especially Gen Z – love when companies give back and have community and/or global impact.
Nike could have sold refurbished sneakers long ago, but they probably did not in the fear of impacting their branding. But now, with consumers placing a premium on purpose-driven organizations and the Gen-Z/Millennials’ love for used products, the timing is right for Nike to make money from returned products while upping their image further.
This is a great move for Nike. Those who are loyal to the brand, true sneakerheads, are looking for ways to get access to limited release sneakers. It doesn’t need to scale in a big way to be successful. But it does provide another service to their customers who are already extremely active in the secondary market.
Score one for sustainability and score one for resale.
Nike Factory Outlet stores have become a reliable channel to buy slightly outdated shoes that first line retail returned. Now they’ve done the same at the individual consumer level with Refurbished.
Gently used items are a bit of trend, as evidenced by the growth of The Real Real, ThredUp (now partnered with Gap and Macy’s), and Poshmark. In fact, a Poshmark survey found 16.5% of Gen Z’s wardrobes are secondhand items, compared to 12.5% of Millennials’, 14% of Gen X’s, and 9.5% of baby boomers’.