What marketers can learn from the sneaker industry

Creating a product that your purchasers add value to, offering market customisation, bespoke editions and strong community - there's a lot the sneaker industry can teach marketers, says Jason Dooris in this guest post.

For most of us, raffles are a Friday night institution at the local, where we part ways with a fiver in the hopes of snaffling a tray of meat – and, obviously, it’s no great shakes if we miss out.
jason-dooris-atomic-212-croppedBut for a select group of people, a raffle is their only possible chance of snaring the thing they desire most in the world…

A pair of shoes.

Okay, I’m likely to be strung up by my laces up for saying ‘a pair of shoes’. The kicks in question are actually limited edition sneakers, the people after them are known as ‘Sneakerheads’, and the raffles – far from being a quaint throwback to primary schools and RSLs – are a marketer’s dream.

What are the odds?

In February this year, Yeezy Boost 350, sneakers designed by Kanye West as part of his ongoing collaboration with Adidas, were restocked around the globe.


Sounds innocuous, right? A pair of shoes created by one of the most, ah, controversial, men on the planet is being restocked – as in, you’re not even getting the first run of them. Surely you’d find them in the bargain bin a few weeks later?

Fat chance.

Swedish-based boutique Sneakersnstuff wrote an Instagram post about the five raffles it had held offering customers the chance to buy the sneakers (that’s worth noting too: win a raffle and you don’t win the sneakers, you win the chance to buy them!).

Seeking to explain that they “understand the frustration from our followers that didn’t win a pair”, Sneakersnstuff gave a detailed breakdown of the numbers for each of the five raffles, and thus the actual odds of having your name drawn out of the proverbial hat:

“That in total is 18860 people that wants to buy one pair of the 210 pairs that we had available.”


So your odds of scoring a pair of Yeezy Boost 350s from Sneakersnstuff were roughly one in 90.

They concluded their post: “We wish that all of you guys could buy a pair BUT its [sic] just not possible. I mean if we could have sold 18860 pairs we would have been really happy. Believe us!”

With an RRP of around $200, selling a pair to everyone who entered would have seen Sneakersnstuff pull in around $3.8 million – so, yeah, it’s easy to believe they would have preferred to make straight sales than turn away 89 in 90 willing customers.

But Adidas think in billions, and it’s the people who don’t get their limited edition sneakers that make them that money.

The resale market is worth billions

In his excellent TED Talk from October last year, Josh Luber gave a breakdown of the sneaker resale market, saying, “in the past 12 months, there have been over nine million pairs of shoes resold in the United States alone, at a value of $1.2 billion.”

What’s happening is that many of the people who win raffles, or spend days camped outside stores to score a pair of limited edition sneakers, immediately put their purchase on eBay to double their money.

Or hold off a bit and sell the pair for more than ten times what they paid.


Click to enlarge

Sneaker companies don’t see a dollar from these resales, so why don’t they just flood the market, end the illicit trade, and make huge profits in the process? Because it wouldn’t work in their favour in the long-term.

“They would rather err on the side of leaving money on the table than risk disrupting the secondary market and all the marketing, brand cachet, PR and hype that comes with having a really vibrant secondary market,” Luber said in an interview with FiveThirtyEight.

Scarcity gains the brand that most elusive of cultural cachets: coolness.

And that coolness helps fuel the millions of sales of average sneakers that people wear for a season then throw away.

How raffles make a product cool

It can be nigh-on impossible to define what makes a brand cool, but Siobhan Curtin, marketing manager for Piaggio, gave it a red-hot go a few years ago:

“It has to retain an air of exclusivity, but at the same time appear to be achievable to everyone.”

Be exclusive, but achievable to all. That’s exactly what these raffles do for sneakers, giving people one chance in 90 to ultimately spend what is a reasonable amount of money on something that immediately becomes worth far more.

The crazy part is, if sneaker brands tried to create scarcity in the market by hiking the prices on their special edition kicks – marking them up to retail for the thousands of dollars people pay online for a second-hand pair – they’d lose all credibility.

There’s a willingness within the sneakerhead community to pay top dollar for someone else’s good fortune.

Perhaps because it’s not like someone buying dozens of tickets to a sold-out concert and then scalping them at outrageous prices. You can’t just sit online and snaffle a dozen pairs of these shoes at RRP – you’ve got to either win them via raffle, or earn them by waiting in a bastard of a queue for hours or days at a time (in the case of the latter, the mark-up isn’t really even a profit, it’s merely being paid for hours worked).

Were Kanye-designed shoes simply sold in-store for $2000 a pair, a kid working his first job wouldn’t save up for them, nor would he want a different pair of Adidas that sell for $100 (and you can be sure a second-hand pair would be worth far less than retail).

But if that same kid doesn’t win the raffle for a pair of Yeezy Boost 350s, he’s still going to pick up a pair of Adidas next time he’s in Sneakersnstuff.

And while it’s not millions of dollars in sales, the store gets the contact info for thousands of highly targeted consumers thanks to the raffle.

So the consumer gets a pair of shoes, the brand gets credibility, and the retailer gets to make a sale and some seriously worthwhile data.

All your local gets out of the raffle for the seafood tray is money to help buy the district footy team’s new jerseys.

I can’t help but feel they’re doing it wrong.

Jason Dooris is the CEO at Atomic 212


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