Investing in limited-edition sneakers: Getting off to a good start, Money News
More and more investors are turning to alternatives to generate income. But what can new investors turn to and what are the pitfalls to avoid?
During Workday Afternoon, Claressa Monteiro spoke with Richard Xia, CEO and Co-Founder of Novelship, to learn more about sneakers as an investment and how to dive into the sneaker scene.
Claressa Monteiro: Could you start by sharing on Novelship?
Richard Xia: We are Asia’s fastest growing online marketplace for authentic limited edition sneakers, apparel and collectibles. We started primarily with sneakers – and that’s where our strength lies – but since last year we’ve also started moving into apparel and collectibles.
Claressa: What should we know about sneakers as an investment?
Richard: While sneakers started out as practical shoes, they are now part of a huge global market, valued at around US$300 billion (S$403 billion).
It is a huge industry in itself which is mainly driven by growing global demand. And because of this huge increase [in the sneaker scene], a secondary market has also emerged. This time tied to limited edition sneakers. This [new] is also estimated to reach US$30 billion by 2030.
This industry is also full of passionate people – also known as sneakerheads – who can easily tell you the story behind every pair of sneakers.
As a result, there is a very strong collectible value behind each pair, and when coupled with the fact that many of these sneakers are non-reissues, an investment market is formed.
These collector values can also rise and fall based on market sentiment and the general trend of supply and demand.
Claressa: If I were to buy a pair of limited edition sneakers from one of the big brands, can I expect the value of the pair to appreciate after 10 years?
Richard: As with all investment opportunities, it really depends. Not all limited-edition shoes perform well, and not all limited-edition shoes have long-term shelf value.
It all depends on factors such as the sneaker itself, historical patterns, the number of shoes released versus demand, and various long-term trends.
All of this plays an important role in deciding whether the particular pair of sneakers will be a good investment opportunity or not.
READ ALSO: Are sneakers the next big investment opportunity?
Claressa: Could you explain some of the pitfalls that a novice [alternative] should the investor monitor?
Richard: First of all, this market is a very rapidly changing market. On our website we see new releases from different brands, weekly, fortnightly, monthly or yearly. We see a lot of new releases every year.
Therefore, you would find [investing] difficult if you were to enter the market without any prior knowledge of sneakers. For any newbie looking [owning] sneakers as an alternative asset, my recommendations would be to enter the sneaker space and understand the sneaker culture.
Ask yourself these questions: What kind of culture drives different pairs of sneakers? What kind of historical patterns can we see? What silhouettes and colors are relevant for each country?
For example, in Singapore, the color black is more valued than in most other countries, while the color red is the most valued in Japan. So there are differences based on cultural nuances [that should be observed].
Claressa: How do we start and what would be considered a safe entry point [when attempting to own a pair]?
#1 Always ensure authenticity
Make sure you get your sneakers directly from the source, from someone you really trust or from a marketplace like ours, because we have authenticators that guarantee everything is authentic.
Keep in mind that if your sneakers aren’t authentic, they won’t have any resale value.
#2 Do lots of research
Be sure to conduct plenty of research and dive into the sneaker space. Keep track of a silhouette/brand/series you [personally] are interested.
This will naturally entice you to check out the latest releases or new colorways of that particular series. Once you follow this new information, then you can make better investment choices.
Claressa: How much money are we talking about here [for investment sneakers]?
Richard: On our marketplace, the average market value has fluctuated between $350 and $400. So, something between $200 and $400 would be a safe entry point as there will be more people who can afford it, making it relatively easier for you to resell the pair.
You need to understand that if a sneaker is very expensive – say in the thousand [dollars] range – the number of people who can afford it or are willing to buy it [at its price] would be lower. Therefore, if you trade between the entry range, you will get maximum liquidity for your asset.
Listen to the full podcast anywhere and enjoy more features on Awedio: SPH’s free digital audio streaming service to learn the best ways to keep authentic sneakers, and the ideal length of time to keep them.
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This article was first published in SILVER FM 89.3.