We recently spoke to Ox Street founder and CEO Gijs Verheijke about the platform’s growth strategy and why local players have an advantage in Asia’s sneaker resale market.
Inside Retail: What are Ox Street’s main markets and categories, and what’s your annual transaction volume?
Gijs Verheijke: Our three established markets are Singapore, Malaysia and the Philippines. The markets [we’re targeting for growth] are Taiwan and Australia, for now. We’re also looking at Hong Kong, Korea, Japan, and maybe after that Vietnam and some other regions as well.
We are still 95 per cent sneakers at the moment, but we’re looking at expanding the apparel side of the business. We’re doing about $10 million in sales on an annual basis.
IR: What were your key reasons for entering the Australian market?
GV: We had started to get some orders from Australia without any marketing at all, and it turned out to be Asian expats studying or moving to Australia who saw an opportunity in the sneaker market. It turns out that they could quite profitably buy on Ox Street and sell locally in Australia. The pricing for certain popular models like Air Jordan 1s can be 30-40 per cent higher in Australia due to under supply. That’s why we started getting interested in the market and working with local influencers, and ultimately decided to enter the market.
IR: Sneaker resale is a pretty crowded market. There’s a lot of demand for sneakers, but also a lot of platforms, including some that are pretty well established like StockX. What sets Ox Street apart?
GV: You have to care about every interaction you have with customers. I think that’s lacking with some of the [established] players in the market where you can get stonewalled if you have an issue with your order. The service just isn’t great.
If you look at some of the big streetwear brands like Supreme, they can be very arrogant towards their customers. As a platform, I feel that’s the wrong approach because you’re not selling your own product, you’re actually providing a service. So that’s what we’ve done differently from the start.
We’ve also been acquired by Carousell, and I think that gives us an edge in terms of winning in Asia because Carousell is so ingrained in people’s lives. It is basically the biggest sneaker marketplace in the region, except transactions [currently] happen offline, and people have to meet up to pay by cash or direct transfer.
There’s a long history of American consumer brands or marketplaces, like Uber, for example, who felt they could easily win Asia and haven’t succeeded. And I think there’s a high chance it’s going to be a similar situation with sneakers, where just by being more localised and being on the ground earlier we can create a better product.
IR: What does the acquisition by Carousell mean for Ox Street on a practical level? Will the listings on Ox Street be shown in the Carousell app?
GV: That is actually something we’re launching now, where if you’re selling on Ox Street, you are also listing on Carousell. That enables sellers to reach a broader audience. The next level would be to bring our authentication service to Carousell itself, so if you’re selling or buying on Carousell, you can use Ox Street as an authentication intermediary if you want.
IR: It sounds like the Carousell acquisition is going to be a key growth driver for Ox Street. What other ways do you plan to grow?
GV: Market expansion is one of them. Category expansion is another. As I mentioned, we have some apparel on the site, but we haven’t really focused on it, so we definitely plan to expand the apparel category. We believe that could make up around 25 per cent of the business by the end of this year.
We’re also looking at expanding into used secondhand products. There’s a big part of the market that we’re missing out on, as is StockX, because we’re only dealing with brand-new in-box products. There’s a lot of products that have small manufacturing defects, or a broken box, or have been worn a couple of times, that are also available. That market is happening almost entirely on Carousell, Facebook and Instagram right now, and that’s where we see a big avenue for expansion as well.
IR: What are some of the other major challenges in the sneaker resale market?
GV: I would say logistics. Because we authenticate in person, if we have a seller in Taiwan and a buyer in Australia, the seller can’t ship directly from Taiwan to Australia. It’s possible, but then we’d have to authenticate in Taiwan or in Australia. So you end up having to have quite a big physical presence, or a very complicated hub-and-spoke model of shipping where everything goes through Singapore. This is a very complex part of our business.
The other big one is quality control, and that’s where the expansion into used sneakers comes in. It’s actually quite subjective what constitutes a pair of brand-new deadstock – that’s the industry term, BNDS – sneakers. At a high-level, our rule is: if you can expect to get it from the brand directly, then you can expect to get it from us. For example, it’s OK if it’s been tried on in someone’s house, but it’s not OK if someone has been walking around in it [outside].
In terms of manufacturing defects, [there’s a question about] what is normal and what is not. In the resale market, sometimes sneakers can become quite valuable and transacted for $700, but the shoe actually retails for $159. One challenge we face quite often is that people expect the quality of a $700 shoe, but they get a $159 shoe. Essentially, we have to bet on whether the buyer is going to be OK with it, or if they’re going to make a fuss. The risk is on us, so that’s a constant battle.
IR: Where do you see the sneaker resale market being in terms of its growth trajectory? How much more growth do you see in this space?
GV: I think there are two long-term growth trends that we’re riding. One is the move towards more comfortable clothes, and Covid has definitely accelerated that with a lot more people working from home. Basically, all formal wear and office wear is going casual. Even Goldman Sachs is now allowing jeans and sneakers some days of the week. That’s a massive expansion of the market that’s still quite early. You see people in their 60s wearing Yeezys or Nikes, which was not the case five or 10 years ago.
Second is the trend towards resale in all categories. In women’s fashion you have four massive players in the consignment space — Depop, ThredUp, Vestiaire Collective, The Real Real – and with sneakers, you have two big US players, StockX and GOAT, two in China, and two more in Europe. The capacity for the market to switch to resale is really large, and I think we’re still at the early majority point, where it’s broken through and most people now know about it, but it’s still not anywhere near mainstream.
You can see that in the category definition – it’s still very undefined. What’s StockX? In my mind, they’re a collectibles marketplace. You can also go there for PlayStation 5s. We see ourselves more as a platform for style, which means we don’t necessarily see ourselves being limited to resale only. We’re probably going to move towards more of the primary market in the long run, kind of like the FarFetch model blended with a resale model.
One of the reasons I feel that’s exciting is because brands will probably want to start owning a bit more of the value chain that they don’t now know anything about. There are still a lot of different ways for the market to evolve and develop.