Motor city has more than cars - Detroit is home to the world's first 'stock exchange' for running shoes
The US Midwest city of Detroit remains synonymous with cars, but “Motor City” is also home to a virtual marketplace for a much smaller consumer item – sneakers.
Located on the 10th floor of an ultra-modern building in downtown Detroit and backed by investors that include rapper Eminem and actor Mark Wahlberg, StockX is an exchange to buy and sell athletic shoes, including limited-editions or collector's items.
As with other trading floors, prices on the world’s first sneaker exchange fluctuate based on consumer perceptions, and can sell for hundreds or thousands of dollars.
Instead of poring over the utterances of central bankers, participants on StockX – which has expanded into handbags, watches and streetwear – monitor Instagram to see what Hermes bag Kim Kardashian is carrying or what’s on Kanye West’s feet.
The market’s main floor has a display of Air Jordans and shoes by Nike, Adidas and other brands in a variety of colours. All have been verified by the exchange for authenticity.
A couple of metres away, young women inspect handbags by Chanel, Louis Vuitton and Hermes.
“StockX is a stock market of things,” says founder-chief executive Josh Luber.
“We just connect buyers and sellers but the method by how we connect buyers and sellers is exactly the same way that the world’s stock markets connect buyers and sellers.”
Not unlike Nasdaq, the electronic exchange located at Times Square in Manhattan, StockX has a scrolling display that updates prices with each new transaction.
Eminem also has conducted business on the exchange, selling a re-release of the limited-edition Air Jordan 4 Encore. The offering was part of a fundraising drive for Detroit communities.
Although most participants are in the US, the virtual exchange, which opened two years ago, also has a solid clientele in China.
StockX tracks different “sectorals”, such as the “Jordan Index”, the “Nike Index” and the “Adidas Index”, which aggregate prices for various items.
Just off the main room, a group of “analysts” glued to their screens collect and number-crunch the latest transactions and manage the catalogue.
Someone who wants to sell a pair of Air Jordans, for example, would need to open a StockX account, and then “literally all you have to do is click one button, ‘sell’ and just accept that highest offer”, says Luber, a former consultant for IBM.
Once a bid is accepted, the seller must send the item to the exchange headquarters in Detroit or to the company’s other authenticators in Phoenix, Arizona, who verify that the product is not a copy.
“Every time I get a pair of shoes, I smell them because that glue is so particular,” says sneaker authenticator Aaron Fields.
“You know, Jordans and Nikes and Adidas all have different smells and you just have to know them. Fake shoes smell a little bit different.”
The telltale signs of a knockoff vary by item.
“This one has a lot of uneven stitching, double stitching, wrong type of thread,” says Michelle Winkfield, a handbag authenticator, examining a Louis Vuitton fake.
“The hardware feels really cheap and the logo stamped on it is incorrect.”
StockX penalises sellers of fake goods, charging them 15 per cent of the transaction price, and possibly banning them from the exchange. But fewer than 2 per cent of the transactions have been cancelled for this reason, Luber says.
The exchange on trades in new sneakers, while watches and handbags must be in “excellent” condition.
The exchange charges a 9.5-per-cent commission on each sneaker transaction, which made up about three-quarters of revenues last year. It charges 11.9 per cent for watches and 14.5 per cent for handbags.
Started with just a workforce of five, including the founder, the growing exchange now has 115 employees.
The future may mean expansion into new items, like Star Wars paraphernalia, musical instruments, rare wine, collectible cars and artwork.
There are no immediate plans to raise funds from additional investors, beyond the current group that includes Quicken Loans founder Dan Gilbert, who also owns the Cleveland Cavaliers basketball team.