Top US sneaker reseller Stadium Goods is now tapping into the Chinese market
Chinese sneaker enthusiasts will soon have access to these popular but hard-to-find sneakers, thanks to a partnership between the New York-based retail and consignment store Stadium Goods and Tmall Global, an extension of Alibaba's business-to-consumer operation.
Stadium Goods, which is one of the largest players in the US sneaker resale market, expanded into the growing Chinese market earlier this month, launching with low-priced items which will be followed by trophy case products later.
"As a leader in the sneaker marketplace, we're excited to be partnering with China's most premiere destination for selling and buying," John McPheters, Stadium Goods co-founder and CEO, said in a statement. "We believe together, Tmall Global and Stadium Goods will offer sneaker enthusiasts throughout China the most premium level of customer experience and authenticity for the Chinese consumer."
Chinese consumers are spending more on sportswear due to the rise in popularity of professional basketball, and a growing interest in exercise and fitness among middle class consumers.
"You never know how much volume is going to come when you launch a new channel," McPheters told Business Insider, "but I've always had high hopes for the Chinese market. Turning it on and seeing the sales come in is fun."
For a long time, if a sneaker aficionado in China wanted to buy authentic shoes, they usually had two options. One was to ask friends abroad to buy the shoes and bring them to China. The other option was to shop on Taobao, Alibaba's biggest consumer-to-consumer online store. That option is a lot like eBay, where people buy and sell to each other.
The authenticity of sneakers bought from Taobao is not 100% guaranteed, but that hasn't stopped passionate sneaker fans from buying them online.
When the Stadium Goods Retail Store opened last October in Soho, New York, Stadium Goods got a taste of just how strong that desire was during its first two weeks in business. A Chinese dealer walked into the store and paid $10,000 for about 50 pair of Nike Air Jordans for resale back in China, according to McPheters, and similar Chinese shoppers have made appearances at the store since then, and Stadium Goods regularly fields questions from Chinese customers looking to purchase through the site.
McPheters found that the interest in specific styles in China is exactly the same as in the US, and said China's growth potential prompted the launch on Tmall.
"People estimate that [the sneaker resale market] is a billion dollar business," McPheters said. "In my mind, all those estimates are really based around the United States alone... and the majority of that is online transactions."
"If you think about China, the e-commerce market is almost double the size of the US… So I think it could be a $1 billion business in China," he added.
In its first three week of business on Tmall, Stadium Goods sold 83 pair of sneakers, with the Adidas NMD_R1 - S79166 and Adidas NMD R1 - S31510 being the top sellers, according to the transaction history of Stadium Goods Tmall store.
As of this writing, Stadium Goods has put 1,500 of their total 5,000 styles of sneakers up on Tmall with prices up to RMB 2,000 (about $300 US dollars, before tax and shipping). Chinese consumers would be subject to an additional 30% tax when they buy sports goods valued at more than RMB 2,000 from non-Chinese residents sellers, according to the adjusted China parcel tax policy for cross broder e-commerce.
McPheters said Stadium Goods can obviously sell more expensive items, including those in their trophy case, but they wanted to launch with the lower-priced items before pushing everything else live.
The process of shipping the Sneakers to China takes two weeks and the shipping fee is RMB 60 ($9 US dollars). That might make it harder for Stadium Goods to adapt to the consumer climate in China where people are highly price-sensitive.
"Taobao customers have higher expectations towards delivery timing. Most of them will prefer domestic shipment to overseas," said Patrick Xu, who has been selling sneakers on Taobao for five years.
"With their current price, Stadium Goods will have little competitive advantage," Xu predicted. "If they don't offer a competitive and affordable shipping price, it would be difficult to build their customer base."
Xu also mentioned that the abundance of sneaker retailers in the market already creates a price ceiling that forces him to keep the price down in order to get business going.
"Their retail price, along with shipping costs and tax, will tend to turn Chinese customers away, as paying for these extras are not part of their consumer habits," Xu said.
Kai Liu, a student at Chongqing University, has been a loyal sneaker fan since high school. After browsing the Stadium Goods Tmall store, he told Business Insider he wouldn't consider buying there for a simple reason: it's too expensive.
Liu took Nike's Lebron 10 EXT QS "Brown Suede" shoes as an example.
The original price for that sneaker is RMB 1928 - about $290 US dollars. It's "reasonable and acceptable" for Liu, but when you add RMB 236 ($36 US dollars) tax and RMB 60 ($9 US dollars) shipping fee, the final price is RMB 2224 ($335 US dollars) - nearly 300 RMB ($45 US dollars) more than the product's original price.
By comparison, the same sneaker on another Taobao store where Liu has shopped and verified its products, only sells for RMB 1820 (including RMB 20 tax, or $275 US dollars), making it RMB 404 ($60 US dollars) cheaper than buying from Stadium Goods.
In addition to the price, adapting to China's digital ecosystem is also a challenge. China's digital ecosystem is hugely interconnected and fragmented, Danielle Bailey, research director at the data analytics firm, L2 in an email to Business Insider.
"'If you build it they will come' won't necessarily work," said Bailey, who heads research on APAC markets, adding that "social media, online forums, and online influencers are hugely impactful" in China's e-commerce market.
"Pretty soon we will flex our muscles on the content side," said McPheters, referring to Stadium Goods' marketing strategy once the business picks up speed on the transaction side.
Stadium Goods is not the first retailer of its kind to the Chinese market.
"All the major global sportswear brands - Adidas, New Balance, Nike, The North Face, and Under Armor already have an official presence on Tmall," Bailey said. "The hugely popular BAPE and brands like EVISU and Y-3 are also there."
"The Chinese consumer is a very sophisticated and knowledgeable consumer,"she added, "they have moved beyond the flashy logo stage of new luxury and are looking for niche brands to differentiate themselves and communicate that they are in the know."
For his part, McPhethers said he is optimistic about China. "Getting it together and launching on Tmall is a huge amount of work and a lot of blood, sweat and tears. Now it's live, it's breathing, it's transacting. It's a very exciting time for us," McPheters said.