Aye! I’m usually not one to praise fundraising or valuations. It happens far too often in Silicon Valley. But this isn’t in SV—it’s Detroit! As a former Michigan resident who has spent plenty of time in Detroit—and almost moved there—I’ll always have a soft spot for the city.
Eminem, his longtime manager Paul Rosenberg, and Quicken Loans founder and Cleveland Cavaliers owner Dan Gilbert are investors. The company has partnered with Roc-a-Fella co-founder Kareem “Biggs” Burke and Wu-Tang Clan on different projects. The three-year-old company continues to keep its pulse on the culture.
StockX has the trajectory to validate its $1 billion valuation. From the Wall Street Journal:
The resale market for sneakers and streetwear is more than $2 billion in North America and growing by more than 10% annually, according to Cowen, an investment bank. StockX said it has the potential to reach more than $6 billion in sales by 2025.
Pre-owned goods marketplaces are having a moment. StockX, Poshmark, and others have wisely identified the friction that exists with one-size-fits-all marketplaces like eBay. These newer companies have tailored their service to support specific niches. StockX’s new CEO, Scott Cutler, is a former SVP from eBay. It will be interesting to see which best practices and cultural shifts that StockX will adopt as a result.
StockX has also succeeded because it solves another problem that its sneakerhead customers often face. Saturday mornings can be stressful times for hypebeasts. Everyone competes for the limited sneaker drop. Most people come up short. StockX’s marketplace tracks supply and demand opens the opportunity for those willing to pay. It’s the type of business that excites economists who love dynamic pricing.
Here’s a breakdown of the company’s process and business model. From Forbes:
After a sale is made, the item is shipped to one of the company’s authentication centers, and an employee will physically inspect it and decipher its authenticity. Once StockX has determined that an item isn’t a fake, it sends a payment to the seller and ships the item to the buyer. As compensation for its services, StockX takes a cut on every sale: 9.5% on sneakers and streetwear, 9.9% on watches and 14.5% on handbags.
StockX now has over 800 employees. It plans to use its recent investment money to expand internationally to Europe and Asia. From a revenue perspective, StockX handles more than $100 million in gross merchandise per month. Three-quarters of its business comes from sneakers. That means that its annual revenue is north of $100 million.
Now THAT’S a stat worth celebrating, regardless of where the company’s located. I’m sure that costs are through the roof due to its expansion goals. But the future outlook is still bright.