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Not everyone has the luxury of buying every sneaker release for retail on the day that it drops. This has spawned sneaker consignment stores that keep people laced in pairs that released last week—or 10 years ago. Although a lot of people shop at consignment shops, they probably don't exact;y know what goes on at these stores.
To gain a better understanding of how the consignment store process works, we checked out Soled Out NYC in Highland Park, N.J.. Tony Chen, the shop's owner and founder, and Aaron Lee, his business partner, operate a small retail store that is growing its rep through selling a variety of sneakers and getting things moving on social media. You can check out their shop's page here, and their Instagram account here.
We talked to them to find out what you don't know about the consignment business. Take a read, you might be surprised. Here are 10 Things You Never Knew About Consignment Sneaker Stores.
This is how the consignment process works.
If you didn't know, this is how it all goes down:
"A lot of the time, people will email us with a list, and we'll price out the DS sneakers. But if anything is worn, we need them to bring it in so we can make a fair price based on the condition of the sneaker," Chen said. "Then we check to see if the sneakers are authentic. We check out the insoles, the stitching the tags, everything. If we sell one fake sneaker, our reputation will go down the drain."
"The split is 85-15, the customer gets 85 percent. They agree the sneaker has to be on consignment for a minimum of 30 days, and then sign all the paperwork," Chen said. "After that, we'll email or call them when the sneaker is sold. They have the opportunity to pick up the money in one lump sum when all the sneakers are sold, or they can pick up the money piece by piece when each of the sneakers they put on consignment are sold."
Stores wait for prices to settle before they buy pairs to put on consignment.
A lot of resellers want to cash in on the immediate hype that a sneaker release brings. But they shouldn't expect consignment stores to buy into over-exaggerated prices. "One sneaker, for example, is the Tiffany Dunk Hi," Lee said. "There was so much hype over that shoe, and people were asking how much we were willing to buy them for. We knew it was an over-hyped shoe, and people wanted $500-$600 for them. But we knew the market was going to be oversaturated with them, and in a week or two, not that many people were going to want them anymore. If we had paid around $400-$500 for a pair, we'd be taking a hit. Now they've settled down, and are somewhere around $300-$350."
Hype is what keeps a consignment store going, but it's worth having something for everyone.
As much as people hate sneaker hype, it's a very real thing. And it's what brings people into the doors of a consignment store. "There are people who come in here just to touch the Red Octobers," Lee said. "They ask if they can just see it, and respond like, 'Oh my God, I'm touching my grails."
This reaction actually brings in more business, even if the customer doesn't buy anything. "Then they'll go and tell their friends, and they'll come in as a group, and all be amazed by the sneakers," Lee said. "That's hype, that's what keeps bringing people in. That's what keeps running a consignment store."
Don't think, however, that's the only thing that a consignment store banks on. "We've got to keep up with the hype, we've got to stay relevant," Lee said. "But we do keep older Air Force 1s and Nike SBs—even though they've dropped in value—because we want to have a little bit of something for everyone."
The stores can't raise prices just because of new hype.
Certain sneakers will jump in price because of a rapper co-sign, or no reason at all. That doesn't mean that the price will go up at the consignment store. "If that happens, we're not going to change the price on the consignment, because then we're going to rip the customer off," Chen said. "We want to make the consignor happy, and get their sneakers sold as quickly as possible. The consignor can't raise the price of the sneaker until after the first 30 days of consignment. We want to give the impression that we're going to serve the community, not run them for everything we can."
They base some of their business decisions off of reactions on sneaker blogs.
We all read sneaker blogs (you're reading one right now), and this includes those who run consignment stores. "We read Sole Collector, Sneaker News, Complex, and any of the sneaker media outlets," Chen said. "We check out the comments on the posts. If the site asks, 'Cop or Drop?' and everyone says, 'Drop, drop, drop,' then we pass on it. But if everyone is saying, 'Cop, cop, cop,' and tagging their friends, this is something we have to look for."
The one sneaker they won't take is...
If you're trying to consign Jordan Spizikes, think again. "We open up the box, and if it's a pair of Spizikes, we won't even consider taking it in," Chen said. "We have a problem selling them at the retail price. I don't want to take the risk on them. I wouldn't buy them for $100, I wouldn't buy them for $80. The most I'd spend on a pair of Spizikes, honestly, would be $20—if they were still deadstock."
It's worth taking risks—sometimes.
You know the saying: "Scared money doesn't make money." The same rings true for consignment stores. From time to time, they take risks on sneakers in hopes that it will pay off in the long run. "Last year I bought a pair of the Nike Air Max 1 "Kid Robot" hyperstrike samples. It was the pink ones, but not the normal ones—these had the stitching on the back. I took a big risk: They were $1,200. They didn't have an O.G. box or insoles. It was a big risk, but it paid off. I sold them for $2,000, but it took six months to find a buyer," Chen said. "I didn't even know I had the samples until someone told me, I just thought it was the regular hyperstrike."
Be aware: There are crazy scams out there.
If you thought about trying this yourself, you need to know there are people who will try and scam their way into a sneaker come-up.
"There are a lot of scams going on right now," Chen said. "One that I've heard about but never personally witnessed: There's someone going around as a third party who tries to act like the seller and the buyer. He's interacting with both parties: The person who wants the sneaker and the person who's selling the sneaker. He tries to get a price out of the buyer, and then he convinces the seller to sell at that price. In the end, he acts as both parties. The buyer is going to pay him, but he's going to try to and get the buyer to send the sneakers to an address that isn't confirmed through PayPal. The seller is going to be shit out of luck on their sneakers."
Buy, resell, repeat.
Customers don't just buy sneakers from the store and call it a day—there are ones who buy sneakers, wear them, and then sell them back. "Some customers, they don't have a steady source of income. So they develop a hustle of 'wear it, flip it, wear it, flip it," Chen said. "But we're going to buy the sneaker back at a lesser price, because it's worn. A customer bought a pair of Yeezy 1s for $1,400. He put them back on consignment for $1,000—and he got back $850 because the sneakers had been damaged in the snow—literally two weeks later. That's just how it works."
It pays to keep things on ice.
Chen told us they stock up on certain sneakers and wait until the market is right for them. "We're taking certain stuff and we're going to keep it on ice until it grows in price," he said. What sneakers are those right now? He said, "The 'White/Infrared' VIs and 'Powder Blue' IIIs and Xs."
Working in such a small store has its challenges and benefits. That means that older releases, such as the "Fire Red" IIIs and Vs, are stored away until there's a larger demand. "Later down the road, when people wear out their pairs, they'll come through the store, and we can say, 'Boom, surprise, we got you,'" Lee said.
