L
ast July 30, Joe Hebert woke up early and drove to
a small warehouse he’d leased in Eugene, Ore., the
track-obsessed college town where Nike Inc. was
born. He was expecting an important delivery:
600 pairs of Yeezy Boost 350 Zyon sneakers. Released by
Adidas 12 days earlier, they’d sold out within hours and now
commanded more than $100 above retail on the secondary
market. Many sneakerheads would have felt lucky to snag a
single pair of one of the world’s most sought-after styles.
Adidas AG produces just 40,000 pairs of
each Yeezy release, which are priced at
$220 retail and sold through its Yeezy Supply
website using a digital lottery.
When his shoes arrived, the 19-year-
old, who’s known to his customers as
West Coast Joe, stacked the hundreds
of boxes like poker chips on the sun-
drenched pavement outside the warehouse. “It’s
easy to get a lot of this style, and they pretty much
always sell,” he said, in one of a series of conver-
sations we had last year about his business.
What Hebert meant by “easy” was this: The
day these Yeezys were released, he’d awoken at 3 a.m., signed
on to the messaging platform Discord, and rousted 15 mem-
bers of his “cook group,” a term sneaker resellers use to
describe their allies in arbitrage. When the shoes went on sale
an hour later, Hebert’s team swarmed the Yeezy Supply web-
site using specialized computer programs such as Cybersole,
GaneshBot, and Kodai, each prepped with Hebert’s credit
card information and capable of gaming a system meant
to limit purchases to one pair per cus-
tomer. By 6 a.m. the shoes were sold out,
and Hebert’s bots had rung up $132,000
on his American Express. His company,
West Coast Streetwear, resold the shoes
in almost as little time as it had taken
to buy them, clearing $20,000 in profit.
“Anything that’s releasing that I know I
can make a guaranteed buck on, I’m gonna go
full into,” Hebert said. “That’s just my style.”
Flipping sneakers has been a viable busi-
ness proposition for decades. The demand side
emerged as far back as 1985, when Nike dropped
the Air Jordan 1, a culture-shifting sneaker that
sold faster than the company could manufacture
it. The supply side followed soon after, when
some retailers began selling the few pairs they could get for
more than Nike’s $64.95 suggested retail price. A year later,
the company doubled down, limiting the initial release of the
Air Jordan 2 to just 30 stores in 19 cities and adding $40 to the
price. The Air Jordan 3, which marked the debut of Tinker
Hatfield’s iconic “Jumpman” logo, was so popular that Nike
has reissued it countless times without ever really satisfying
demand. The advent of EBay in the mid-1990s brought non-
retail sellers into the game, and the market only grew fromthere. EBay’s annual sneaker trade reached $388 million
in 2014, and analysts pegged the broader resale market at
$1 billion. Last July, Cowen Inc. estimated the latter figure had
grown to $2 billion in North America alone.
The sneaker boom has created opportunities for a new
generation of speculator. Hebert and other young resellers are
the first to treat footwear as a bona fide asset class, products
as worthy of informed valuation and investment as any other
commodity. The sneaker market, for them, is a lot like playing
the stock market. In the hours after siphoning up shoes from
retailers, they essentially sell short-term futures based
on street sentiment. By the time prices plateau,
ultra-rare shoes such as the Air Jordan 1
OG Dior—a collaboration between
Nike and the Parisian fashion house
that was limited to 8,500 pairs—have
become “grails” worth $10,000 or more,
while more attainable stock has been bundled
into tranches and sold on to other resellers at
a bulk discount. Like their new fellow travel-
ers, the day traders of Reddit, sneaker resellers
have used community and technology to exploit
a system that wasn’t quite ready for them. But unlike the
GameStop crowd, they aren’t really making a point along the
way; they’re just making a profit.
For these traders, the pandemic offered yet another
opportunity. Cowen’s report pointed out that some of the fast-
est growth in the secondary market came in the months after
the Covid-19 crisis began, driven in part by steep discounts
from shoe companies that faced double-digit sales declines.
“Foot Locker was panicking, and a lot of smaller boutiques
were panicking, doing like 50%-off sales,” Hebert said.
“Just trying to dump all that stuff.”
Shoppers were avoiding stores and
flocking instead to e-commerce plat-
forms such as StockX, where young
entrepreneurs like him were offer-
ing “deadstock.” The term, once used
by retailers to describe unsold, dis continued
items gathering dust on store shelves, has been
adopted by resellers, who emphasize that the
styles are no longer made and the items are still
in their original packaging. Jesse Einhorn, senior
economist at StockX, says that May and June
were the platform’s two biggest months since its
February 2016 launch. It likely got a bump, too,
he notes, from ESPN and Netflix’s airing, starting in mid-April,
of The Last Dance, a 10-part chronicle of Michael Jordan’s final
season with the Chicago Bulls, which drew many older buy-
ers into the market for the first time.
That was also a breakout time for West Coast Streetwear.
“I remember the night the stimulus checks hit. My sales tri-
pled,” Hebert said. “In May we did $600,000.” This would have
vaulted him into the upper echelons of sneaker resellers at
StockX, according to a company spokesperson, who says those38
Bloomberg Businessweek March 1, 2021Adidas Yeezy Boost 350
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