We are all aware that Nike releases smaller quantities of limited production sneakers that are sold at pretty typical retail prices then resold for big markups. The interesting question is why Nike doesn’t price them higher and take at least some of that retail profit for themselves.
The guy profiled in this article called You See Sneakers, These Guys See Hundreds of Millions in Resale Profit , along with the woman who wrote it, offer a pretty good description of this market and some insight into why Nike manages it the way they do.
When you read the article, you’ll see that even for Nike, there’s a bunch of money being potentially left on the table. They are apparently thinking about how to capture some of it.
With revenues approaching $30 billion, Nike is hardly under distributed. Yet somehow, the brand still has some credibility even in our little corner of the retail world- though perhaps not as much as it did.
I’ve been writing that distribution has become hard- that is, each decision to widen distribution has to be taken individually after some consideration. It’s no longer just a matter of core or noncore like it was those many years ago. I’ve also suggested that perhaps distribution is not as important as it used to be, that merchandising matters more.
At some level, those two ideas might be construed as contradictory. But in this mad, mad, mad, market we’ve got today I’d suggest they are both correct and Nike’s management of its limited distribution sneakers may be an example of that. Perhaps Nike’s strategy of limited distribution for certain products reinforces the brand cache in broader distribution. They must believe that, or they wouldn’t be doing it.
Granted, you probably don’t have contracts with Michael Jordan, Kobe Bryant, Kevin Durant or LeBron James. Still, I wonder if there aren’t some lessons here about where distribution and merchandising intersect. Go read the article.