What if online marketplaces conducted sales like a stock exchange?
Described as the first online consumer “stock market of things,” StockX is a new online marketplace that promises to bring the transparency and efficiency of equity trading to the online sale of high-end, limited edition items.
The Detroit start-up will initially focus on collectible sneakers in a partnership with Campless.com, which since 2012 has built a wealth of information on sneaker prices by tracking re-seller activity on eBay auctions.
EBay controls about a third of the secondary sneaker market. The remainder of sales come mostly from niche websites and urban shops, as well as individual re-seller websites.
One major advantage of StockX over an eBay-like auction is transparency. Participants in the StockX exchange can find historical price and volume metrics, real-time bids and offers (asks), time-stamped trades and additional analytics on every sneaker model presented on the marketplace.
While prices can range widely on an auction-type site, the transparency helps set a “fair price” for both sellers and buyers. Like equity stocks, prices move higher or lower based on bids and asks.
The other benefit is trust. On eBay, a buyer has to trust a seller’s rating and manage any problems directly with the seller.
On StockX, all sales are anonymous, with StockX serving as the middleman between buyer and seller. When an item is sold, the seller ships the item to StockX’s facilities where it is authenticated and then shipped to the buyer. Beyond helping avoid counterfeits or any product quality issues, StockX helps buyers avoid any surprise shipping charges or delays that often come with auction purchases.
The start-up will initially focus on proving its model in sneakers but eventually explore women’s handbags, watches, comic books, baseball cards, coins and secondary sales of other non-commodity items.
“We are going to bring the kind of trading platform and visibility to tangible products that financial and commodities markets have used for decades,” said Dan Gilbert, the founder of Quicken Loans who is a major backer. “We believe this is the right time to extend this fundamental concept to appropriate sectors of the online consumer marketplace.”
- World’s First Online Consumer “Stock Market of Things” Launches – StockX
- Gilbert launches StockX, the ‘stock market of things’ – Detroit Free Press
- Detroit native starts online marketplace for high-end items – Washington Times
- Dan Gilbert And Campless Founder Launch A Marketplace For Sneakers – TechCrunch
Source: stockx.com/nike-air-max
Discussion Questions
DISCUSSION QUESTIONS: Do the dynamics of stock trading make sense for the online resale of consumer products? Do you see the opportunity being limited to a few niche items or extending more broadly across many non-commodity items?
Poll
BrainTrust
Chris Petersen, PhD.
President, Integrated Marketing Solutions
Ralph Jacobson
Global Retail & CPG Sales Strategist, IBM
There are two key benefits of the StockX model which are appealing for today’s omnichannel consumers: transparency and trust.
Some models similar to StockX already exist for specialty merchandise which carry higher price points. There are websites specializing in things like cameras and lenses which track prices of specific products over time and provide a daily price comparison of what is available by model.
What makes StockX unique is the trust factor on top of transparency.
A big problem on eBay and other sites is counterfeit and “grey market” goods. StockX’s system of having sellers shipping the goods to them for authentication is a unique model that would provide high value.
Assuming that shipping charges remain competitive to the end consumer, and that StockX can guarantee authenticity of the goods, this could indeed be a breakthrough business model that will work in many categories.
Shoppers will be attracted to the commercial transparency and presumably trusted middleman in the StockX business model. They have obviously identified a niche market that will benefit greatly from this model. Their success will be predicated upon finding more market ecosystems where there is an active community. The market for watches and valued collectibles will certainly benefit from this business model.
I’m intrigued by the fact that Dan Gilbert, the founder of Quicken Loans, is backing this venture. Perhaps this model can be used for online mortgages and other financial vehicles.
I’m curious how the general public might react to this site. Will they see it as all that different from similar comparison shopping sites? I like the approach and for specialty items that may or may not be frequent purchases, this may create some buzz. I’m not certain that mainstream, staple products would enjoy the same shopper enthusiasm.
The dynamics of stock trading make sense, but unless StockX can find a niche that is not filled by eBay, the likelihood of its success seems limited. When it first started eBay was all bid and ask pricing. Then they discovered that many consumers just wanted to buy something, not bid, so the Buy It Now feature was added and was immediately successful. Will consumers want to go back to a bid and ask system, even with more transparency?
The concept makes sense, especially if we think in terms of yesterday’s discussion regarding “valued at” pricing and the “never was” price. This forum kind of lets everyone know how the consumer values a particular product and what s/he is willing to pay of it. It will have a significant impact on the makers and retailers of products — good or bad — when the transparency sets in for each and every product offered.
There may be categories in which this concept will take off but others are sure to follow. One consequence is that a lot of information about each product will have to be published and made public so that the buyer can assess the bid value and make a so-called informed decision.
As someone familiar with the secondary sneaker industry, our experience indicates that Instagram, not eBay, is the major controller of the market. Most of the shoe collectors are unbanked and use Instagram to take photos, have followers and direct message buyers/sellers.
This sounds like a good model for other high-line items but I’m very familiar with the sneaker market to know Instagram is how the majority of the sneakers are being sold.
StockX comparisons with a “stock market” don’t seem very apt to me. Equity shares are abstractions whose prices are agreed upon based largely on their expected future value. They may be expected to be bought and sold many times.
Collectible merchandise is not liquid in the same sense. I suppose sneaker traders try to buy low and sell high, but that’s a niche market. Other collectibles, like baseball cards or watches appeal to limited audiences too.
Where StockX has competitive potential, I think, is its promise to act as an intermediary for the protection of buyer and seller. Authentication of goods is a non-trivial responsibility that may be challenging to deliver across a varied assortment of traded categories. If StockX can do that reliably and also confirm each item’s provenance, it may earn a place as the trusted platform for collectors.
I think this will have limited appeal at best. Bidding for items gives the consumer the chance for them to buy it for the price they are willing to pay in a real-time fashion. The StockX model is more supply and demand driven, so consumers are paying market price based on historical cost and/or supply and demand valuation. There is no “deal” here, other than the consumer paying a fair price based on the perceived transparency of all the available data-points for them to help understand if the price is fair.
Aside from the uniqueness of selling items consumers can’t get easily in other venues (e.g. collectable sneakers), I don’t see a superior value proposition for this business. If this does succeed, it will be on the niche item model or on products that are very complicated to estimate value unless a lot of transparent facts are known about it. At that point this becomes more a research tool then a buying engine, which could be a good side model for them to explore as well.
I can see this leading to a bubble bursting in the Nike Air brand, due to over-inflation. (Said like the late great Louis Rukeyser.)
This seems like a niche market to me at best. The process seems inefficient to me with the extra time and cost involved with shipping the item twice. As others have pointed out, I’m wondering if StockX has the expertise to validate the authenticity of a variety of categories and what time is required to complete that process.
Maybe for closeouts and retail rejections, but not much hope for anything else. There is simply to much to lose in terms of profit taking for all of the players.