StockX raises $275 million in series E, for a $2.8 billion valuation

Selling second-hand shoes and wearables on a large scale has never been more profitable. Here’s the success story and latest news from StockX, the marketplace for your collectible items.

What is the business model of StockX?

The company brings its clients three main value proposition: complete anonymity, the connection with your potential seller/buyer with complete price transparency as well as the certification that the items delivered to your door will be the ones you asked for, and that its condition will be pristine.

As they put it, StockX is the world's first stock market for things. The way it works is very similar to that of a financial marketplace. There are different objects on the market to be sold. Buyers and sellers respectively place bid and ask prices on the platform. When a bid and ask price meet, the transaction happens automatically. The company mainly focuses on sneakers, streetwear, collectibles, handbags and watches.

StockX also noticed that one element that stopped some people from buying valuable items online is the worry of authenticity. It is really a big potential pain to buy a very expensive pair of rare sneakers on Ebay, only to realize that they are fake. StockX took care of this issue by becoming the middlemen of the transactions, not only to connect buyers and sellers and help them reach a price agreement, but also ensuring that the item is genuine and in mint condition. They have big authenticity centers where employees unpack the thousands of packages being sent, examine the sold object to send back anything that's either not authentic or damaged.

 

StockX Business Model

 

New funding for StockX

On Wednesday, StockX announced that they haveraised $275 million in their series E funding led by Tiger Global, bringing the post-money valuation of the company to a whopping $2.8 billion.

Among the participants, we also see the names of Altimeter Capital, Sands Capital, and Whale Rock Capital Management. Such an amount makes this funding round the largest in Michigan history.

StockX plans to use this money to not only accelerate their global expansion– selling more of the things to more people – and on diversifying their product categories. Rumours of a potential IPO in 2021 are circulating around, but nothing was confirmed yet. In total, the company has raised $490 million.

"The quality of investors joining us is a clear signal that the market recognizes that there is incredible opportunity in e-commerce for current culture products and StockX is best positioned to meet consumer demand for those products," said StockX CEO Scott Cutler. "I'm thrilled to welcome our new partners to the team — their collective expertise will be invaluable as we continue to build on the momentum from the last year, and drive the growth to cement StockX's position as the global marketplace leader."

 

StockX CEO Scott Cutler

StockX's CEO, Scott Cutler (source: Shutterstock)

 

The tremendous growth of StockX

Since its launch in 2016, the company can be proud to have permitted 13 million transactions in 200 countries, 50% of which happened in 2020. Again, this is yet another company that was boosted by the surge in e-commerce activity we have seen this year. The company’s website sees great traffic, with an average of 25 million visitors per months.

On the money side, they're doing great too. In June, they have surpassed the $2.5 billion mark in gross merchandise value. International sales are also surging, with a 260% increase over the last year for Q3.

 

The tremendous growth of StockX

 

Covid-19 was not a good news to most, but a gift to StockX

Even before the lockdown happened, Cutler said that the virus was looking great for its company. He was convinced that having facilities in different regions would help them navigate the pandemic.

Although this was a little optimistic – after all, they did have to lay off 100 employees in April –, the company managed to put itself in a position to profit the most from the pandemic and started its ascension.

Indeed, on a worldwide perspective, according to Statista, e-commerce sales grew from $3'535 billion in 2019 to an estimated $4'206 billion in 2020, a trend that is not expected to slow down in the coming years.

 

Global Ecommer Sales Growth

E-commerce growth (Source: E-marketer, Oberlo)

 

Last month, the company opened authentication facilities in Toronto and Hong Kong, in their effort to expand globally.

The next step for their growth is the Asia-Pacific Continent. As mentioned, they are now active in Hong Kong, but they also have operations in Tokyo. These operations are also seeing a fast-pace growth, with a 500% increase year over year for the Asian markets, with regions seeing growth as high as 1'000%, like Hong Kong.

 

Retail Ecommerce Sales 2020

E-commerce growth by region (source: eMarketer)

 

The market for resale sneakers and streetwear is also in expansion. According to Cowen, the resale market is expected to reach $6 billion by 2025. Indeed, sneakers specifically are more and more being searched for and collected, as owner see them as an asset with a long-term value.

 

What is to become of StockX?

StockX used to be a company that sold sneakers. Then they expanded to streetwear. Then they expanded to collectibles, handbags, and watches. Is the story of a company selling one category of products online really well and expanding to new areas reminding you of something?

You got it: Amazon. Therefore, it would be very interesting to see how far this company can go, both in terms of volume and product diversification. When we think about it, StockX is in fact an interesting mix between Amazon and Ebay: from Amazon, they take the certitude of the quality and authenticity of the product the company is selling, while from Ebay, they take the sometimes-cheaper price and other times rarity of an object that you cannot get in the store. From both, the wide variety of choice.

One thing is certain: this is really bad news for scammer that made a living of selling counterfeits online.

shutterstock_1506841922

Sources:

Retail e-commerce sales worldwide from 2014 to 2023, in Statista

StockX raises $275M Series E, valuing the retailer at $2.8B, in TechCrunch

Sneakerheads Are Helping StockX Pursue A $2.5 Billion Valuation, in Forbes

https://www.forbes.com/sites/korihale/2020/12/15/sneakerheads-are-helping-stockx-pursue-a-25-billion-valuation/?sh=6bdd9f1a2255

https://stockx.com

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