A pair of Air Jordan 3s
SNEAKERS & FASHION

With Nike’s Reselling Connections Exposed, Where Do Sneakerheads Go From Here?

The saga of the Hebert family may be blowing over, but the battle for the future of sneaker resales continues.

Sneakerheads have long been saying it, and when Bloomberg ran an exposé on the billion-dollar sneaker reselling business, they finally got their confirmation.

As part of a massive story on the evolution of sneakers as an investment asset, reporter Joshua Hunt profiled a 19-year-old reseller in Portland, Oregon named Joe Hebert who cleared six figures each month buying and reselling sneakers at a jacked-up price online — and often flaunted large quantities of rare pairs on his popular Instagram account.

At one point in the story, Hebert mentioned that it was the particular information he possesses about which sneakers to buy and sell, rather than any special computer program he uses to help secure massive stockpiles of a given shoe, that separates him from his competitors.

“If you know the right people here, [Portland] is the city to sell shoes,” he said to Bloomberg’s Hunt, as it “can give you access to stuff that, like, a normal person would not have access to.”

Sneakerheads know that Rip City is home to both Nike and Adidas’ operations in the US, and those remarks proved to be damning for Hebert. It turns out that Joe’s mother is none other than Ann Hebert, then Nike’s vice president and general manager of North America. Just days after the report was published, Ann Hebert left her job abruptly after 25 years at the company with no immediate explanation.

For many in the sneaker community, this news served as confirmation that the massively popular (and somewhat unethical) business of reselling sneakers actually connects directly with the shoe companies that benefit from this practice.

How Sneaker Resellers Take Advantage

The Nike conundrum is a simple one. While the reselling business is deemed “unfair” by consumers who struggle to get their hands on the most sought-after sneakers, the setup basically ensures Nike will sell out of their entire stock of those same sneakers, often in mere seconds.

With even the biggest brick-and-mortar shops like Foot Locker and Champs Sports steadily fading away and sales moving online en masse, Nike doesn’t have to wait patiently for their sneakers to fly off shelves nationwide — it’s usually a done deal the moment the sneakers hit their SNKRS app. In essence, they’ve become wholesalers to resellers, a direct chain that then allows those resellers to manipulate the market as price-setters.

Now, the going rate isn’t the $110 for the Dunk model that Nike chooses; it’s the $200 or more that resellers and outlets like RoundTwo and Fight Club set.

This problem is not specific to Nike, but to the sneaker industry as a whole. Adidas has suffered from its own bout of secondary market influx with Kanye West’s Yeezy line. In fact, one of the more famous photos of Joe Hebert depicts the teen standing with a warehouse full of Yeezy Boost 350 sneakers, flaunting the mass buy he was able to secure.

Any retailer that operates online without the proper security measures can be exploited. And that’s where resellers take advantage.

The StockX Era

Fortunately, not all resellers are gaming the system, and there are plenty of opportunities for above-board reseller markets to grow trust with consumers.

Some have sold collections to invest into their own brick-and-mortar stores, operating as consignment shops all around the country. Others built online communities via forums or platforms like Facebook, where enthusiasts can buy and sell with an agreed-upon honor code.

Then, of course, there’s StockX, which has become a safe haven for those looking to sell their sneakers in a risk-free environment through intermediaries, similar to places like Goat and Grailed.

Though some of the more entrepreneurial resellers will supersede the third parties and sell directly to consumers, a third-party setup through a platform like StockX offers a less invasive alternative for buyer and seller. These digital middlemen offer security that hand-to-hand meets can’t guarantee, with respect to both personal safety and authentication of every sneaker, piece of clothing, or item of memorabilia that gets sold.

Additionally, third parties have centralized the market in both setting prices and giving consumers a one-stop shop for all of their hyped-up needs. 

The Future of the Resale Market

Ever since sneakers started flying off store shelves in a matter of seconds, the resale market has existed. One particular issue has bothered consumers about the Hebert family saga, however. Even as Joe stated that he received no privileged information, preferential treatment, or discount codes from his mother, Ann Hebert is largely credited with accelerating Nike’s large-scale shift to “direct to consumer” sales online.

The same shift that allows resellers to capitalize.

The world is going more and more digital by the day, so Nike was likely always headed in this direction, but the Hebert drama highlights the challenges in doing so.

Joe’s decision to speak with Joshua Hunt from a phone line in Ann’s name gave the Bloomberg reporter the fuel he needed to put two and two together, but that wasn’t the only sleuthing going on this year in the industry. Just weeks before the Heberts’ story broke, Michael Jordan’s son, Marcus, came under fire for what many had suspected was backdoor selling of a rare pair of Jordan 1s.

He was commissioned to sell the pair through his Florida-based clothing store, Trophy Room, but they quickly found themselves in the hands of renowned resellers — and subsequently onto StockX for upwards of $2,500 — weeks before their scheduled release date.

Resellers later revealed that the sneakers had been purchased from Trophy Room directly at a price hiked up above the $190 suggested retail. Some even paid as much as $1,200 for early access and bulk orders of the rare sneakers limited to just 12,000 pairs. Marcus Jordan blamed a massive Nike distribution center in Memphis that’s known as a repeated source of leaks and unauthorized pairs reaching the streets.

Subsequently, a Complex story presented receipts of shipments from Orlando allegedly containing pairs of the sneakers in question.

This scandal has been largely brushed aside by the casual public now that the worst of the fallout from Bloomberg’s cover story has come and gone, but it has not been forgotten by sneaker enthusiasts. If Michael Jordan’s own son could run up prices and facilitate backdoor sales of a pair of shoes, who else is in on the jig?

The whole situation may feel disheartening for those who just want to walk into a retailer and buy the sneakers they like at their leisure. In a weird way, however, they still can.

For a price.

Gone are the days where the rarest of sneakers were simply impossible to find; now, they’re all available at the tap of a screen. Like all valuable commodities, however, they exist at the mercy of a market. It’s arguable that this is the lesser of two evils, as backdoor sales are hardly a new practice; managers at chain stores have always been able to hold pairs for friends or family or themselves. Today, if you want a pair of sneakers, you can absolutely have them. You just have to be ready to pay what they’re worth.

The rise of digital collectibles, NFTs, trading cards, sought-after streetwear, and other hyped assets continues, opening up a whole new community of savvy investors and dealers. In many ways, these items are all more “available” than they’ve ever been before.

They’re just more and more at the mercy of a difficult-to-regulate market.