How do you fetch a multibillion-dollar valuation as a sneaker resale marketplace? Start by differentiating your company from every other e-commerce brand in the world.
That's according to Scott Cutler, CEO of StockX, an online marketplace that sells everything from limited-edition pairs of Nike LeBrons to hoodies from Fear of God to videogame consoles. The business operates as a middleman between buyers and sellers of apparel and collectible items, which it authenticates before shipping. The company's offerings appeal to a core consumer base of Millennials and Gen Z-ers; three-quarters of its user base is under the age of 35.
One of the fortunate companies to see a surge in demand during the Covid-19 pandemic, StockX recently raised $255 million in a funding round that valued the company at $3.8 billion. During an Inc. Real Talk conversation on Wednesday, Cutler, who took the reins of StockX in 2019, shared some insights on the future of e-commerce, as he sees it.
Consumers have more price-setting power
The rise of live marketplaces like eBay and StubHub has left consumers accustomed to controlling the value of products. It's up to them to decide whether $700 is a fair price for a pair of limited-edition Yeezy sneakers, according to Cutler.
"There's a new power in the consumer," said Cutler. He added that there's also a shift in behavior from brands and how they're releasing new products. Brands are increasingly embarking on collaborations and limited releases that increase the value of certain products, while consumers are treating collectibles like sneakers or trading cards as investments.
"They're looking at this as an asset class that they can not only consume but that they can trade and that will increase in value over time, which creates this flywheel opportunity and a real dynamic marketplace experience," Cutler said.
Consumers want a direct relationship with brands
Interaction between customers and brands on social media has increased as a result of the pandemic, according to Cutler, who said he's also seeing significant shifts in the way some of the biggest brands in the world are approaching their customers.
Brands must now think about how to reach customers in new digital formats, and also figure out how to get customers to interact with them multiple times, he said. "It's shifting away from traditional retail channels and into a more dynamic experience where retail is going to continue to be a component, but increasingly digital experiences are replacing the physical world," Cutler said.
Product experience trumps marketing
Rather than put all their energy into marketing, businesses should focus more on their product experience, according to Cutler. "All the marketing in the world doesn't really matter if the product experience isn't differentiated," he said. For StockX, making the product experience great meant adding the ability for consumers to trade and profit from the products.
"At first, it was about access--access to a product you couldn't get in a retail setting," Cutler said. "Now it's, 'Can you provide an opportunity for trading that asset and unlocking the economic opportunity associated with an asset class that can be traded digitally and not physically?' That's certainly a big part of our future as a platform."