Stock Pick 101
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Sneakers: More Then a Hobby, a Growing Business


-Andrew Richman

Collecting sneakers are a hobby of many people, including mine. Yet, steadily they are growing into much more then a hobby. They are turning into a business. The business is simple, yet complex with many intricacies only a seasoned reseller would understand.

The model is simple. Buy sneakers for as cheap as possible, which is generally buying them for their retail price which tends to range anywhere from $160 to $250, and then attempt to sell them on sites such as eBay for higher prices. You may ask, why would anyone buy them for higher prices if you can just buy them for what they would cost at their retail price? Well, it is all about the availability. The shoes that generate the most attention have very limited quantities. They sell out instantly at stores across the country and over online sites. You may have seen people lined up at your last visit to the mall. Those people were probably preparing to camp overnight for the sneakers the next morning. Yes, I said camp overnight for sneakers the next morning. That is how much a sneaker could mean to someone. The limited availability of these sneakers is what makes it so attractive to someone.

The most basic principle of this business is profit margins. Attempt to buy at the lowest price possible, and sell at the highest price possible to someone who might have missed out on that particular sneaker. Once you purchase the sneaker that becomes your expense. At some times that is your only expense. Once you can resell the sneaker for a higher price, you subtract how much it cost to buy the sneaker and the remaining money becomes your profit. Typically, profit falls anywhere from $75 to $250. Another question one may pose could be, how do you know someone will buy the sneakers? Someone ALWAYS buys the sneakers. Young teenagers and adults are itching at the opportunity to jump on a pair brand new, limited edition sneakers.

The main player in this business is Nike. They produce the majority of sneakers that the consumer is interested in. Basically all of the shoes of interest are basketball sneakers. Nike owns over 80% of the $2.6 billion dollar basketball market. Nike’s stock has seen a steady climb from 2009 until now. Obviously, it is not just the sneakers that have to do with Nike’s climb, but the amount of revenue that the sneakers generate is a huge factor. The other main player in this business is Jordan Brand, a division of Nike. Michael Jordan, the greatest NBA player of all-time influenced the sneaker business in a way no other human being ever has, or ever will. He became so popular and such an asset for Nike they gave him his own line of sneakers and it has grown into an absolute cash cow. Annually Jordan Brand still generates over $1 billion per year. When you break down the sneaker market and group Jordan Brand differently then Nike, Jordan Brand actually owns 71% of the shoe market.This business is only growing and has seen a tremendous rise over the past few years. For a young person, it provides a good way to learn about simple business practices by doing something they enjoy.

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