Having opened its door in 2018, dropout has since become a statement store in the European fashion streetwear industry. The Milan-based enterprise provides its customers with a large stock of authentic limited edition sneakers and exclusive brands via its physical retail location in the Italian fashion capital and via the e-commerce dropoutmilano.com.
While the days of resale prices for sneakers regularly in the thousands of dollars seem to be mostly gone, the question surfaces as to whether the sneaker resale industry remains as relevant and if lay, non-sneakerheads, individuals are still keen on spending premiums in order to guarantee themselves the latest in-demand releases.
We have spoken with Kola Tytler, 27-year old entrepreneur and founder/director of dropout, about where the sneakers resale industry seem to be heading and what the current and next trends are in the market.
“There are certainly been a slow-down in the prices, we are now less likely to see sneakers go for 8-10x their retail value, something that was more common in 2015-2017”, explains Tytler, “now releases are more frequent and brands such as Nike, Adidas and New Balance have decided to commit to artificial scarcity as a solid marketing strategy: every other week we see pairs of Dunks going sold out in minutes on the SNKRS app or New Balance 550s selling out in all the doors lucky enough to stock them.”
Tytler goes on to give his idea on where the market is heading and what this mean for businesses like dropout.
“It is interesting to see how the lower prices in the resale market are somehow democratizing the opportunity to wear limited edition fashionable trainers, we continue to see more and more individuals who have no interest in being a sneakerhead coming in and requesting sneakers that come at a lower price point. I think that eventually businesses like dropout will become as common as regular sneakers retailers, something that may be attested by the significant investments carried out by formal VC funds and omnichannel players in businesses involved in the resale market (think StockX, GOAT, Flight Club…dropout itself closed a funding round in late 2021)”.
Following their respective several funding rounds, StockX and GOAT have officially reached unicorn status, something that may have felt unachievable in the early and mid 2010s for businesses operating in the sneakers resale industry.
“It is true however,” continues Tytler, “that our businesses are to a certain extent highly reliant on those brands decision to continue push out limited edition sneakers and for customers to continue being influenced by atheletes, celebrities and media personalities to wear them. Because of this I think that there will be a movement over the coming months and 1/2 years for big players in the sneakers resale industry to diversify further and consider different ways of capitalizing on the large market still present. We know already that those buying limited edition sneakers are interested at least partly, in streetwear or find it attractive enough to spend amounts higher than average to secure said products: with this information businesses can develop strategies to promote associated or new lines of products to feat into the thirst of this public.”
Prior to launching dropout, Tytler, who is actually based in London and also works as doctor in the NHS, had created with a friend a system to track the value of sneakers online and decide in an automated manner which items would be more likely to increase in price in the secondary market. Tytler used the system to effectively invest heavily into sneakers, regularly cashing out and pumping more money into trainers, until eventually he teamed up with some close friends in Italy to open dropout.
“We still use HypeAnalyzer algorythms to aid and guide our business decisions”, explains Tytler, “at the end of the day, AI and machine learning are also on-the-rise and I think that all we actually did was pretty much anticipating the trend, within the sneaker industry. At the moment we are very closely looking at New Balance, as the rapidly increase demand and search volumes suggest that it will be the growing dominant force over the next months. Of course Nike and Jordan brand remain the top focus of any resale business, as they continue to please novices and aficionados of the sneakers-world with their collaboration and ever-changing colourways.”