KixRx Is Riding the Retro Nike Sneaker Bubble
Five years ago, Dan Schwartz was managing Incredible Feets, a sneaker shop on Long Island, overseeing salesmen and stocking new kicks. To make a little extra scratch on the side, he also resold limited edition and rare sneakers online. After months spent selling new shoes for new shoe prices during the day and watching Air Jordans and Foamposites sell for thousands on eBay at night, he became convinced that it was time to make a move. He branched out on his own, buying rare sneakers that he could store in his parent’s garage and clean in his parent’s basement before reselling for a profit.
“I had to take it on my own and just run with it,” says Schwartz, 29.
It was the right call. In 2012, the first full year in operation, KixRx, Schwartz’s company, brought in roughly $600,000 in revenue. Last year, it was $2 million. Dan is on track to pull in $3.5 million this calendar year and operating out of a warehouse rather than his parents’ garage. He estimates that his profit margin is between 30 and 40 percent, which means he’s making quite a bit more than he did at Incredible Feets. “It’s just supply and demand,” he says.
It’s also exceptionally good timing. According to Matt Powell, the Vice President of Industry Analysis for Sports and Leisure Trends at The NPD Group and the go-to source for sneaker economics, the Air Jordan line, Dan’s specialty, represents 11 percent of the growing $22-billion sneaker market. Shoes are often released as limited editions, so prices tend to skyrocket after they hit the market. Powell estimates that the resale market is worth around $200 million a year, but admits it’s hard to pin down a figure because most sales are private. Whatever it is, it’s enough to keep Schwartz busy.
KixRx works as a middleman. The company has two things going for it: It’s a professional operation, which appeals to nervous buyers, and Schwartz specializes in cleaning up shoes, only selling mint-condition kicks. Schwartz maintains stock by buying both individual pairs and collections from sneakers hobbyists under his “Cash 4 Kix” program.
He’s the guy collectors call when they want to get rid of shoes and when they want to buy some more. Recently, Schwartz has been focusing on building relationships with suppliers and wholesalers.
Last summer, Schwartz spent $600 dollars on a rare two-pair pack of exclusive Jordans he expected to sell for roughly $1100 dollars, a higher margin than his typical sales. When they arrived, he recognized them as part of a discontinued set and changed the price tag to $3000 dollars. He unloaded them easily – the most expensive pair he’d ever sold.
That was one good day, but Schwartz has been having a lot of good days.