Hype Commerce: It can be Run Fair
The origins of my ‘Hype’
Hype, at its origin, was humble, serving to satisfy the passion of the die-hard fan. When I started collecting NBA cards (NBA Hoops, Skybox, Upperdeck & Ultra fleer) friends and I would flick through the pages of the monthly Beckett to price our collections. I would always look up the price of the Jordan Rookie card (It hovered around 5–7K USD around then). The best card I ever landed was a Shawn Kemp, Christina Lattner face to face. Huaraches, Airmax, 180s. Pegasus, Converse Aero Jams, they were the sneakers I chased.
Games, collectibles, kicks, electronics and music, were hype. Yet back then, if you were a fan, had the funds and tried hard enough, you were in the game.
Hype Products are well and truly a commodity
Nostalgia shines a light on the way it has evolved into Hype today. The game has changed. Instead of only competing against other fans, a circular system of reselling has changed the dynamic. Fans compete against resellers in the hope they can buy at retail prices instead of the inflated secondary market price. With secondary prices going up and up, it’s impossible to ignore that the community vibe and stories behind the products are no longer the focus. It’s all about the value. Resale markets are booming. For True Fans, it is nearly impossible to get the products they love at retail prices.
As you read recent headlines, it’s fair to say hype products are well and truly a commodity:
- Lebron James Rookie card sold for 1.8M at auction
- AJ1’s sell for 560K breaks a new record.
- Sneaker bots win 200+ pairs of Travis Scott’s
Hype Commerce is here
Combine Hype with millennial spending patterns and the surge in eCommerce, and you have yourself a perfect storm. Brands now rely on Hype as a marketing play. Drops have superseded seasonality everywhere; from sneakers to gaming consoles and beauty products to luxury goods — welcome to Hype Commerce.
The Fans & Traders
There used to be two main types of fans; ones that were only interested in buying for themselves and others that might try to get an extra pair to keep on the shelf or resell to fuel their passion. Both loved the product, its story and the community that developed around it.
These fans still exist but have been joined by a new wave of traders. The introduction of traders to the game has made purchasing limited release products at retail prices even rarer. Today, they combine to make the ecosystem go round….for now.
- True Fans — Wearers or users and all-around lovers.
- Side Hustlers — Buy 1 for wearing and 1 for trading.
- Traders — Bot users, bulk buyers, professional resellers.
With this mix of buyers all co-existing, the playing field looks very different. The hype wouldn’t exist without all 3 groups and they all have a role to play in keeping the ecosystem balanced.
Hype Economics — An imperfect Market
We are seeing an insatiable hunger for a restricted supply of popular goods. But what’s different with hype products is that the demand isn’t affecting the retail price. The lucrative secondary market means that traders will do anything they can to get the ‘W’ at retail.
But, If Traders keep dominating the primary market, True Fans and Hustlers are priced out due to sky-high resale prices and then the demand goes away. The only people left buying are the ones reselling. Then, hype collapses in on itself.
We just saw a little crack
Following Yeezy Day, resale prices fell for some of their most popular styles. Yeezy was born scarce, built for drops, and used to be the favourite for all fans. Then what happened? Volumes increased, launches were run in a way that favoured Traders and they swept up large volumes of stock. Now there is a surplus of certain styles on the resale market. Traders hope True Fans will pay inflated prices for them, but they don’t seem to be biting.
Adidas Yeezy Boost 350 V2 Synth (Reflective)
Adidas Yeezy Boost 350 V2 Static Black (Reflective)
Bringing fairness back
Can we bring fairness back into the mix, and balance the scales back in favour of the True Fans? With launches Run Fair, that’s what we intend to do.