Sneakernomics: The Economics of Shoes
It all started nearly five decades ago, with the help of skateboarding, hip-hop, pop and basketball, the sneaker culture got to where it is today. Pop with a hot pair of sneakers? Trust me, there isn’t a better duo. The music industry has been connected to basketball and sneakers for many years. Jordan, NBA, Converse, Nike’s versatile AFs ignited the whole culture around sneakers which brought together people of different colour and ethnicity. These different backgrounds might be basketball, music and fashion. Their love for each other is what binds them together. Where one industry, one culture, one movement uplifts each other and compliments each other. Similarly, you will often find their fan base is entangled together in one. And when it comes down, the base, the root will always be the same.
Lack of supply and high demand, that’s what defines the Indian sneaker market. Due to the growing popularity of street culture, there’s an upsurge in the demand for hyped sneakers throughout the country, especially the sneakerheads (people who collect and trade sneakers and are knowledgeable about their history). But to meet this high demand, there is a little or almost no change in the supply. When there's excess demand and less supply the market prices automatically shoot up to form an equilibrium. With marketplace sites like StockX people can actually bid for their favorite sneakers. It’s almost like buying a stock in a company and making an investment in it. Luxury multi branded sneaker houses like VegNonVeg, Superkicks, tells us that the sneaker culture in India is running ahead. It’s the companies that need to catch up. The major challenge regarding price are the import duties the brands have to pay, which make some sneakers in India more expensive than in the rest of the world. It is a major challenge for sneaker houses in the country to get limited edition, hype pieces assigned to the country for sale. When they are allotted, online sale may last an hour in which bots are placed which makes it even difficult for an average buyer to deal with and offline, in person, a big launch may last a day or less.
As you dig deeper into the topic, you get to know how small yet influential the community of Indian sneakerheads really is. In terms of consumer taste and preference, there is very little difference between New York and New Delhi The sneakerhead community in India, like the rest of the communities, happily camps out to get their hands on the latest releases. However, the Indian sneakerheads still follow the trend rather than creating it, and that’s majorly because of cultural differences. The sneaker community was indirectly initiated by the pop and basketball culture in the US. Both, basketball and pop not being mainstream in India until recently, made us follow the sneaker community and rather than leading it. What needs to be done for the same is, we need to be trend setters rather than followers.
With nearly 55 million Indians shopping online out of which 90% are between the ages of 18 to 25. Indians are spending more time online, eventually leading to more online shopping. Online shopping with regard to sneakers can be quite creative and different as well. StockX is an online marketplace with various features of a stock market that facilitates auctions between buyers and sellers. Sellers send their items to StockX centers where they are inspected and authenticated. The Detroit based online startup specialises in sneakers among other things and owns offices and authentication centers in more than two countries. StockX features a stock market like variable pricing framework and discloses price histories for some specific items. StockX is most known for sneakers and streetwear, but also offers other clothing and accessories such as watches and handbags. This gives us an idea of how this market actually works, it’s like any other market where there’s demand and supply for the product and the price keeps adjusting itself based on these two market forces. The ‘hype’ around the shoes plays a big part in their increased demand and price.
Moving on, ‘The even bigger fake market’, multinational brands in small shops, copied like perfection, same colour, same design they replicate the newest shoes down to every last crease, contour and aglet. The Tibetan Market in Delhi can play with the mind of a true sneakerhead. The replicas, so similar to the original ones, will make you doubt yourself. Even StockX released data, stating more than 15% of the shoes received were replicas. Now making authentication and inspection of hyped products even more essential in the e-commerce circle.
Furthermore, the sneaker community brings together different people of similar interests. Unlike other communities, the global sneaker community seems to be growing more and more every year. Hip-hop, street style, basketballers, skateboarders, all are tied together firmly by their laces. However, (cherry on the top of the cake) the Indian sneaker community is to bond over high prices and low availability. Indian sneakerheads have to pay 30-50% more for sneakers when price is compared to the UK and USA. Thanks to import duties! Multi branded sneaker store owners in India say import duties are not the only major problem, but also, big brands thinking India is still too new to be considered a potential market. Buying from abroad is the only feasible option that Indian sneakerheads have given the availability, lesser supply of even generic shoes and on top of all this, high prices!