[COLUMN] About the ‘Limited-Edition’ Resale Market

The Rise of The ‘Limited-Edition’ Resale Market

Due to the global economic deceleration, demand for alternative investments, not traditional ones such as real estate or stocks, has especially arisen amid MZ generation. Limited-edition items are in the spotlight as the most valuable assets to invest in.

The definition of a limited-edition item is a product which is only produced in very small numbers, intending to create a sense of rarity or exclusivity among potential collectors. In addition, one of the significant characteristics of limited edition item is that the total production scale of same model or the time taken after release will be factored into the price.

Sneaker culture has permitted mainstream culture over the last decade -evolving from an underground subculture regarded as enjoyed by a few into a global trend that has propelled the sneaker to an iconic fashion staple, collector’s item, symbol of status, and even alternative investment vehicle. Also, it has been strengthened further by various marketing and branding strategies of major retailers, as well as participating of athletes, celebrities, and sneakerheads. This phenomenon stimulated people to desire for limited-edition sneakers, eventually it made the sneaker resale market work.

The sneaker resale market, the secondary marketplace where buyers (or investors) pay the price with premiums over the sneakers’ MSRP(Manufacturers Suggested Retail Price) for coveted limited-edition sneakers, has exploded to a $2 billion USD industry in US(2018). In Korea, its valuation at $0.25 billion in 2018 is estimated at $0.5 billion in 2021.

The main issue of Limited-Editions Market

As the popularity of the limited edition sneakers market has rapidly grown, the number of damage cases derived from counterfeit goods has also increased rapidly.

An OECD report released in 2019, the market size of counterfeit products amounted to $ 59 billion USD per year as of 2016. According to the World Economic Forum (WEF), counterfeiting and piracy cost the global economy an estimated $ 1.77 trillion USD in 2015, which is nearly 10% of the global trade in merchandise.

The reason for the rapid illegal reproduction of limited edition sneakers was found in their production system and process. Multinational companies from the footwear industry have been outsourcing production to factories in China since 1980s. Specific industries often clustered in the same city or area. As a result, counterfeiters coming from the area started copying branded sneakers such as Nike, Adidas and so on.

Limited-edition sneakers trading market, in which the average price per transaction exceeds hundreds of dollars, would be very covetable for counterfeit manufacturers.

Over the long period time — almost 40 years — distribution and production of counterfeit sneakers have gradually increased, as the counterfeit manufacturers have stacked their own technology of cloning products. In sneakers industry, the counterfeit and cloning technology has become so sophisticated that it’s impossible to distinguish fake products from genuine ones unless you are experts.

In Korea, the major methods of payment in the secondary market , especially limited-edition sneakers resale market, was ‘cash’ until 2018. Cash was almost always given up-front, which was also the arrangement in the transactions between sellers and buyers. Trading in cash, it was almost impossible to help buyers from the damage caused by fraud. Therefore, there had increased a need among investors or buyers to trade on a reliable platform. Especially, the resellers 􂝃professional sellers who sell goods in large quantities wanted a stable platform to sell a lot of products at once.

To fulfill needs from target audience consisted of sellers and buyers, we, HINTER Inc. (founder&CEO, Hayun Chung), released a platform service named ‘frog’ 􂝃an application which provides a trading system of limited edition sneakers on 2nd December, 2018.

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