Is a concerning Adidas Yeezy and StockX downward trend developing?

During a recent CNBC interview, Kasper Rorsted, the CEO of Adidas was asked some questions about the brand’s performance and global growth, with the inescapable topic of Kanye West thrown into the mix. For most of 2018, at least since his return in full to social media, “Ye” has made some comments that have done a little more than raise eyebrows. Some analysts, casual observers and others believed then and still believe now those comments and a continued alignment with president Donald Trump has and will affect the Yeezy brand. But is this true? And is it true that the Adidas commitment to West and his Yeezy line remain profitable and a great relationship as Rorsted suggests? He was also asked whether those in the industry that have suggested the Yeezy appeal has peaked were onto something. Here’s the exchange.


Now let’s hone in on the part of the Yeezy/Adidas relationship and desirability of the line. To put this into context, I created 3 main buckets that these conversations have appeared in as we may find it in quantitative and qualitative inputs.

  • No.1 – Is Yeezy hype and desirability slowing down?
  • No.2 – Should Adidas distance itself from Kanye (less supportive) or drop him altogether?
  • No.3 – Are his political views hurting sales of the Yeezy sneaker line?

Answering No.3 without more qualitative evidence than what can be found within Twitter and sneaker blog sentiment is a dangerous path at best without the correct resources to validate one’s hypotheses, but this can be done. For one, the qualitative sentiment needs to be overlayed against final POS (point of sales) data for purposes of separating espoused theory versus theory in use but that’s not the only reason we’d want to do this. We’d also need to do a sizeable survey of the Yeezy consumer. Secondarily, individuals or a group that shares their opinion about a shoe but is a factor of zero influence on consumer purchasing trends is not a strong variable or determining factor for gauging a sneakers saleability.

In other words, it’s just someone’s opinion and we all have them. I have also seen “groupthink” happen repeatedly on Twitter, HypeBeast and other sites. Patterns in user sentiment, however, should not be overlooked when properly framed and we can build effective consensus maps from user sentiment found on these sites but need to validate them with other analysis frameworks.

No.2 has been addressed by Adidas and it’s CEO Kasper Rorsted not only in the video above but during one of the more intense Kanye West moments of 2018 when he claimed: “slavery was a choice”.  Most brands would have dropped Kanye after this incident but Adidas did not. The Adidas brand has no immediate or future plans of creating any distance between themselves and Kanye if we’re to take Rorsted’s comments at face value. Regardless of how one feels about this, we may want to consider that in the world of business it’s just that and nothing more. Business. One can argue that this may be shortsighted and I for one would be willing to entertain such a conversation but I have no insights into whether anyone at Adidas has or cares to think this far down the proverbial rabbit hole or into the future of the relationship. One topic Adidas will have to address sooner or later is Wests increased or diminishing ability to move product.

It has also not been lost on me for a few years now that Adidas needs West more than he needs them but that dynamic may have changed considerably over the last year and a half.

Some have hypothesized and with good reason that the “Kanye Effect”, in which he can don a pair of all white Adidas Ultra Boosts on stage during a performance and have the model become an instant classic and sell out globally is part of his better days and couldn’t occur now for several reasons.

What we can address based on sales data and is a strong indicator around the health of the Yeezy line and maybe a precursory glance into the future of their relationship is question No.1 – Is Yeezy hype and desirability slowing down? Well, if we use StockX sales output as evidence with the known MSRP then we can see a potentially troubling trend unfolding that might indicate there are some hard times on the horizon for Adidas and the Yeezy line.

The Math…

The math is pretty straightforward. If a shoe costs $300 (X) and the average or mean selling price is $250 (Y) across all sizes on StockX, the reseller is already out $50 but the losses or overhead doesn’t stop there. StockX charges a transaction fee based on a 4 tier reseller rating system that looks like this:

  • 9.5% – Seller Level 1
  • 9.0% – Seller Level 2
  • 8.5% – Seller Level 3
  • 8.0% – Seller Level 4

That’s right. Selling the shoes isn’t free. To ensure profitability and sustainability, StockX also charges a 3% processing fee for funds sent to the seller as an incurred expense or deduction of the final sales price that said seller is responsible for. This now changes the overall payout landscape and compounds their losses even further. To be clear, Adidas wins by selling shoes and StockX wins by taking their calculated cut but the reseller, the true engine of the resale market, since they supply the actual merchandise for sale is in a losing position but we’re not done. Wow…there’s more bad news? Yeah, but please don’t slay the messenger.

There are transportation and other costs involved in getting the shoes. There’s packing supplies, gas for their car, “add to cart” fees if this is how the shoes are being obtained, development fees if one is programming these add to cart services, cost of ink for one’s printer for shipping labels and this list is by no means fully representative of all overhead. Maybe more importantly but seldom calculated by most small and large resellers alike is a question everyone reselling shoes at the micro level should be readily prepared to answer, almost before it’s asked…

“What’s my time really worth?”

The shoes have to be obtained somehow and this takes time. How is the cost of that time calculated? It’s tempting to use ones day job or past hourly experiences as a North Star or guide but is that accurate for each person or situation? Conventional wisdom would suggest it may not be, but this is a question better answered by in-depth research to determine the true value of the sellers time. When we factor these variables into the conversation and understand this at some level needs to be profitable to the reseller, we gain clearer insights into how this may eventually affect the Yeezy line and Adidas.

Let’s look at some of the sales data from the last Yeezy releases on a single platform, that being StockX for the purpose of this article.

Calculation Framework

I created the following sneaker graphs in Sketch and used a Mean Median Mode Range Calculator, inputting the sales price of the last 20 pairs of each of the 4 last Yeezy releases to compile my end data points or value figures. The Sales History graphs are snapshots from the StockX site. The calculator also provides the “ascending order range” allowing me to easily find the daily “low” or “high” within any given range of numbers.

This release did not sell out immediately and many interested individuals reported they had no problems adding the shoes to cart if they wanted them and that’s a big if, which we’ll get into in a second. This was a global phenomenon, not isolated to North America only. The shoes are still available at some destinations for retail at the time of this article’s publication. In gathering insights from LinkedIn, Twitter and HypeBeast, a small percentage of consumers, those that make up the main base for this style actually thought the shoe was too expensive or “overpriced”, which was the most used keyword in my consensus map in analyzing the why behind this last release “sitting”.

In talking to users and asking them questions such as “why didn’t you buy a pair?”, I repeatedly heard that a price point of $200-$220 would have been a “cop”, but not at $300. Where did they get this $200-$220 price point from? The V3 and previous Yeezy 500 cost between $200-$220. On the most recent 700 Wave Runner “Mauve” release and the restock of the 2017 “Solid Grey” 700, Adidas raised the price by some $100-$80 for the North American market.

Europe, where Rorsted states in the video above show growth challenges and could worsen due to Brexit, also saw a notable price increase.

Let’s look at the resale data for the restock of the Yeezy 700 Wave Runner “Solid Grey” that preceded the Mauve 700 using the established framework from above.

The Solid Grey Wave Runner 700 not only sold out when it restocked but did much better than the Mauve in terms of going resale prices but again this data would be misleading if I didn’t point out that these final sale prices are NOT the resellers final payout. Remember the transaction fee + payment processing fee I mentioned above in addition to the resellers own overhead. None of these variables are reflected in the above sales history screenshot. Resellers still did not break $100 in profit per pair but they certainly were not selling them below the MSRP as we saw above based on the Mauve StockX “Sales History” snapshot. There are 2 observations here:

  • The two Yeezy 700 Wave Runner’s may have been released within too close of a timeline from each other.
  • Both these releases had much greater production numbers than previous releases, meaning the exclusivity heuristic or artificial scarcity was lost, potentially diminishing appeal since they were more widely available and easier to obtain.

Moving along, let’s look at the sales data for the 500 Utility Black that preceded both the 700’s.

Resellers faired much better on this release but keep in mind once again the overhead and that the final sale prices above are not the actual payout amounts, meaning almost no resellers made over $75 profit per pair. The average profit is probably closer to or below $60 per pair when other factors are considered. Not terrible depending on how many pairs the reseller had but we don’t know that because individual resellers are not identified on StockX. Observation:

  • Historically, darker colored Yeezy’s, the Black Pirate and 350 V2 Black Red being huge exceptions, have not sold well at launch.

When I did a mock simulation of trying to sell a pair at the mean price point of $325 (you can’t sell at cent values on StockX so I had to drop the $0.10) it showed my payout as a tier 3 seller (after 8.5% transaction fee + 3% processing fee) as $287.63.

Let’s look at one more set of resale data, shall we?

The Yeezy V2 Butter is a losing proposition for resellers. The trending low is below the MSRP of $220 and the average mean of the last 20 pairs sold, less overhead, including the cut StockX takes leaves the reseller at a price less than $220 and this is without yet factoring in the unknown other overhead related reseller costs. Were we to continue the “Sales History” screenshots, we would see an even clearer picture emerge and despite what Rorsted says, the data suggests something else entirely. Things do not look good for the future of the Yeezy line but I believe this can be fixed.

But why is this? What are the reasons and insights we’ve gleaned from this report and other analysis?

  • As Yeezy’s become more accessible, the resale prices decline.
  • If everyone can have a shoe due to market saturation, eventually no one will want said shoe.
  • The cost of entry is creating a barrier to entry for some consumers.
  • Resellers are losing money on Yeezy models. Humans only buy to resale what will make them money.
  • Opening Yeezy stores would be a mistake based on this trend.
  • Adidas needs exclusives and general release distinctions. All of the last releases have been too easy to obtain.
  • Consumers have seen more sneaker choices in 2018 than ever before. Yeezy’s are no longer the new, bright shiny thing to have.

If this data and trending pattern continue without Adidas making key strategic changes to the Yeezy line the line as stated above is already in trouble. Based on the poor reception to Yeezy clothing thus far and the decline in interest of Yeezy footwear Adidas may also want to reconsider any and all plans to open Yeezy stores. Hopefully, it was contingent on the POS data of more widely available models.

If Adidas makes over 1 million pairs of a Yeezy model and they sell out in 7 days at a high in-store or online sell-through rate and traffic density based on analytics around user behavior such as time spent on page, checkout flow and how easily the sales conversion took place, then a Yeezy store makes sense.

For several reasons, such as a potential follow up to this article or a deeper study, I’ll be following future releases, sell-through times, production numbers, user sentiment, and resale value.

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