George Kamel - This Trend Will Cost Someone Millions

Episode Date: April 26, 2024

💵 Sign up for EveryDollar today. Create a free budget!  Fun fact: The sneaker resale market is estimated to be worth billions. In today’s video, find out how some people use sneakers to make money, and how some sneakerheads could be missing out on millions of dollars. Next Steps  📗 Order George Kamel’s new book, Breaking Free From Broke.  Side Hustle Quiz    Offers From Today's Sponsors  This episode is sponsored by DeleteMe. 🔒 Remove your personal information from the web at JoinDeleteMe.com/George and use code GEORGE for 20% off. 🙌    🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💼 The Ken Coleman Show  📈 The EntreLeadership Podcast     Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Sneakers are having their moment, and they have been for a while now. Sneakerheads, as they call themselves, are spending a ton of money filling their closets with limited release kicks, and shoe companies keep on churning out popular new versions of the old classics. Even Trump is getting into the shoe game with these gilded atrocities. Don't be rude. But for a lot of people, it's become less about buying sneakers you like and more about reselling them to make money. In fact, StockX, a popular online marketplace for sneakers, estimated the secondary, resell sneaker market to be worth $10 billion in 2021 and to reach nearly $30 billion by 2030.

So are those Nike SB Dunk low 7-Elevens a good investment? And if you're looking for a side hustle, is reselling sneakers really a good way to make money? Well, in today's video, we'll take a look behind the curtain on the second-hand sneaker market so you can see how some people have figured out how to use this trend to make money, and on the flip side, how it's costing others millions of dollars. But before we jump in, hit those like and subscribe buttons and and shared this video with your friend who's going to Comic-Con, because I think I found the perfect shoe for his C-3PO costume. I don't like the look at this. Okay, so it may seem like the whole sneaker fad is a new trend, but sneaker collecting has been around since the 1970s, before Swedish supergroup Abba first assembled their palindrome.

And it really started to gain traction in the 1980s, the decade I was born. Coincidence? I think so. No connection there. Well, that was anticlimactic. And there were really two big things that led to the rise of sneaker culture in the 80s, basketball and hip-hop. And I happen to know a lot about that because I've seen Space Jam. The OG Space Jam, not this Space Jam too crap they try to pedal on us.

Al-G rhythm? Get out of here, Cheatel. Not buying that crap. Who dare to stir the great and powerful algae? Now we started seeing signature basketball shoes like Air Jordans hit the market and capture the hearts of wannabe ballers all across the country. And soon enough, hip-hop artists started sporting these kicks, transforming the go-to gym shoe into street cred and status symbols. And fast forward to today, as sneaker collecting is a $10 billion industry. And a lot of sneakerheads out there think they're just getting in on the action. But are they really making money investing in this trend?

Or are they losing money in a really flashy way? Well, the answer depends on what kind of sneaker head you are. There's two main types of sneakerheads. And even though they both love shoes, they're in the sneaker game for different reasons. So first, let's take a look. at the resellers. These are the people who buy sneakers at retail price and then resell them at a higher price in the secondary market on sites like Stockex, Goat, or eBay. Now, for some resellers, it's a volume game. They sell relatively normal shoes at a modest markup. So if they want to make a lot

of money, they got to sell a whole lot of Nike monarchs to a lot of suburban dads who want to look fresh while they stand behind the grill. But for others, it's about snagging a hype shoe as soon as it drops and trying to sell it for a big profit. Now, one of the ways resellers do this is by using bots designed to purchase limited edition or highly sought-after shoes online at the very moment they release. And some people will even camp out at retail stores to get their hands on these coveted kicks. For a lot of resellers, it's a fun side hustle. But for others, it's become a full-time job, and their bedroom now looks more like the backroom of a foot locker, minus Randy vaping in the corner. Listen, Randy, women love a man in uniform, but not when that uniform smells like chemical

cotton candy. Style it back. But does reselling sneakers actually make any money? The The answer is, it depends. You can make money flipping almost anything, furniture, houses, pancakes. But it's going to take a lot of time and effort, and reselling sneakers involves way more risk than most other side hustles. First of all, to be a successful sneaker reseller these days, you pretty much need a plug. Nope, that's a pug. I said plug. Still not what I'm talking about.

I don't know what you want for me. In this case, a plug is sneakerhead for someone who can get you any pair of shoes whenever they want. Maybe they own an athletic apparel store. Maybe they have a connection with Nike or Adidas. Or maybe they're a C-less celebrity who's just famous enough to get their hands on a pair of Jordan Jumpman Jacks or the Jit-J-J-J-J-Jown by Adidas Samba. Whatever the case, having a hookup like this is almost a necessity. Because if you want to sell a pair of sneakers for a lot more than you paid for them,

you have to figure out how to get your hands on a limited release at retail price, which is pretty hard to do without an inside connection. So everyone else who doesn't know a guy will likely be going up against a but-ton of bots designed specifically to buy up shoes as fast as possible. And just how many bots is a butt ton of bots? I'm so glad you asked. Well, Nike has revealed that every month they stop as many as 12 billion bots

trying to game launches on its sneakers app. And to put that into perspective, there's only 8.1 billion people in the world. And if you're doing the math, we are screwed. That's 1.5 bots for every human on Earth, and that's just in the fight for some Jordans. We are screwed. And while I can't help you fight the bots,

I can tell you how I fight back against online scammers. I use a service called Delete Me, who was the sponsor of today's video. Delete Me finds and removes data about you from hundreds of data broker websites, and they send you an easy-to-read online report outlining what they did. I've got my report right here, and I can see I've saved about 13 hours of work that it would have taken me to find and remove that data on my own. And that's 13 hours I could spend developing my own shoe, Camel Lights. Gotta reclaim it from Big Tobacco, okay?

Not on my watch. that I'm not wearing. With my coat from Delete Me, you can get a one-year plan for less than $9 a month to help keep your personal info off the web. Go to join DeleteMe.com slash George today to get the discount or just click the link in the description. Back to shoes. On top of the bot problem, there's another thing making it hard for resellers.

There are signs the second-hand shoe market is declining faster than the quality of food at Panera. Don't come at me, okay? It is overpriced hospital cafeteria food at best. and why are those apples so tiny? Where do they even find these tiny apples? Tiny trees? Do they have tiny trees? Look how small that thing is.

It's an actual quarter. According to an article from Business Insider, it's a terrible time to be a sneaker reseller, and consumers have lost confidence in reselling. Plus, reselling sneakers is super risky. Remember, shoes are only worth what someone is willing to pay for them. So if you're buying to resell, you're just banking on someone being willing to pay more than you did.

And there's always a chance you won't find the person who thinks your 7-Eleven kicks are worth $711. And if the shoes are attached to a person, it's even riskier. Because if that person gets caught up in some kind of scandal or controversy, it's not so good for the value of your shoes. And have we not learned anything from history? Who could forget the controversy around the John Wilkes' boots? Didn't go well.

Too soon! And in more recent history, take a look at this Nike-Travice-Scott collab. This chart shows the value of the shoe over time. And look at those huge swings. One day, it's almost $4,000. Three days later, it's down to $1,300. And here's the main idea you need to take away when it comes to risk. Buying a new hype shoe at retail price is like buying a single stock.

You simply have zero idea if you'll be able to sell it for more. In fact, that's why they call the popular sneaker reselling site, Stock X. You're treating shoes like stocks, and the website reflects that. Just take a look. You've got a portfolio and tools to analyze your, quote, investments. There's purchase date, purchase price, market value, gain, and loss. looks a whole lot like a brokerage account to me.

And just like a brokerage account, there are fees you have to consider. For example, when you sell a shoe on Stockex, they take 10%, which can really eat into your profits if your margin is already slimmer than Null Fielding's jeans. Those are slim. So yes, you might be able to make some money reselling shoes, but there's a lot of risk involved and it's not going to be easy money. So if you're not really into sneakers, you're better off picking up a side hustle that's less speculative and less risky, like freelance work, mowing lawns,

or teaching dogs to surf. That's a real thing. I think I finally found my calling. All right, now it's time to look at the second kind of sneaker head, the collector. These are the people who are obsessed with shoes and buy them because they want to wear them or add them to their sneaker collection in one of those little clear boxes. What are those called? Are they like shoe terrariums?

Shoe cubes? Is it shubes? Now, collectors do not like resellers because resellers in their armies of bots make it harder and more expensive for the true collectors to get the kicks they want. want. And for the most part, collectors aren't buying shoes to make money. It's just something they're into that cost them a lot of money. Oh my God, shoes. And it might be costing them even more than they realize. One survey found that the average sneakerhead spends 10% of their income on shoes. So let's say a sneakerhead earns the median personal income of just over $41,000,

and they spend 10% of that on shoes. That means they spend around $4,100 bucks on shoes every year, which comes out to around $341 a month on this price. habit. That won't even get you a pair of size 10 New Balance 990 v6 action Bronson Baclavas. And before you ask, no, it's not that kind of Baclavah. And yes, I was just as disappointed as you. Two thumbs down. Well, let's take a look at what the collector is missing out on financially. Now, I did the math using the Ramsey investment calculator. That's totally free. I'll drop a link below to find out what they'd make if they started investing that money instead of spending it on sneakers. So let's say you're a sneakerhead with zero dollars in investments and you start contributing

that $341 of sneaker money to an investment account every month instead. Assuming a 10% rate of return, 35 years into that habit, you'd have a whopping $1.3 million in that investment account. So if you're a self-proclaimed sneakerhead spending a few hundred bucks on shoes every month, take note. Those baklava's could be buying you a whole lot of, you know, actual baklaba. Listen, I'm not anti-sneker. If you're just someone who loves fresh kicks, you do you.

Just don't do you so much that Future You hates present you for robbing Future You of a million bucks. Decide how much you can spend on shoes without sacrificing your financial goals and stick to that number. But if you're just buying sneakers as a flex to look wealthy, you might want to rethink that strategy. Because if you invested that money instead, you could actually be wealthy in the long run. And that's a real flex. Bottom line here, reselling sneakers might make you a little cash on the side, but it's going to take a whole lot of work to get there. And in general, I don't recommend buying depreciating assets like shoes as an investment. It's just too risky.

So if you're looking for a side hustle, don't be deceived by people telling you this is easy. There's a lot that goes into this, and that goes for any side hustle that seems too good to be true. So if you're looking for a side hustle that's less risky than reselling shoes, check out a free tool I created to help you figure out the best side hustle for you based on your time and skills. You can take this side hustle quiz and thank me later. I'll drop a link below, or you can go to georgecamble.com slash side hustle quiz. Thanks for watching. We'll see you next time.