In 2019, StockX became a unicorn, or a startup company with a valuation of $1 billion or more. (Read the Forbes article here.) Read our review to find out why StockX has done so well!
What is StockX?
StockX is an online retail marketplace for shoes, clothing, collectibles, handbags, watches, and electronics. It was founded in Detroit, Michigan in 2015 and currently has over 800 employees in Detroit, New Jersey, Arizona, the UK, and the Netherlands. The company started as a marketplace for sneakers, but has since expanded into other clothing and accessories, as well as collectibles such as Legos and electronics such as headphones and gaming consoles. StockX brands itself as a “stock market of things” due to the way it breaks away from traditional e-commerce in favor of a more unique transaction model.
How StockX Provides Value to Users
One of the most valuable services StockX provides to its users is that it takes away the clerical work and human error involved in e-commerce by acting as a middleman. On platforms such as eBay and Craigslist, buyers have to worry about sorting through different varieties or styles of the item they’re looking for, doing their best to make sure the items they’re buying aren’t fake, joining in auctions in order to beat out other buyers to win the item, and messaging sellers with questions. Sellers have to take pictures of their products for sale, write descriptions for their items, manage auctions in order to sell for the best price, and be available to answer questions for buyers. StockX takes on this workload in order to save its users time and effort so that they can do more buying and selling instead of worrying about everything else. See the next section to learn about how StockX does all the heavy lifting while maintaining a safe and efficient online marketplace.
StockX provides information to buyers and sellers so that they can make data-driven purchases, much like a stock brokerage would on their platform. When you go to buy or sell an item, you can see when the item was first released (like an inception date or IPO date for a stock), the retail price you would get in stores (like a financial analyst’s valuation), what prices the item has sold at in the past (like a historical price chart), how many units of the item have sold at different times (like a stock’s volume), and even the dates and prices of individual trades of the item in the past. Combining this information with your own beliefs about how the value of the product might change in the future, you can buy “undervalued” products and sell “overvalued” products, just like in the stock market. Or you can just use the platform to get yourself a nice pair of kicks at a great price!
How Transactions Work on StockX
When you want to buy an item on StockX, you first locate the item on the StockX website. Once you find the item, you will have a connection to every single seller on StockX that is currently selling the item. This differs from traditional e-commerce because when you use other websites, you generally have to search for an item and scroll through the hundreds of listings that exist for the product you’re looking for. This may include sifting through different variations or styles of the item, different conditions of the item, and different accessories that may come with the item. With StockX, the search process is made much simpler; each item (or variation of the item) on the website has exactly one listing, and you can be completely confident that the item is in brand-new condition and has never been worn. The simplicity of the StockX search process works for the sellers, too; instead of taking pictures of items, jumping through hoops to verify their authenticity, and writing long descriptions, you simply select the item you want to sell. There are no complicated listing requirements to worry about – as long as you have a real item in brand-new condition, you can list it in seconds.
Once you find the item you’re looking for on the website, you can either buy it instantly from the seller with the lowest asking price, or submit a bid price and wait for one of the sellers of the item to accept it. Again, this makes the StockX experience much simpler than normal e-commerce. Instead of participating in auctions on many different listings while trying to communicate with each individual seller, you simply purchase the item you want or submit a bid for it and wait for a seller to accept it – that’s it. This process makes transactions easier for the seller as well as the buyer; instead of managing auctions and answering questions from all of the interested buyers, you can simply choose to sell your item instantly for the highest current bid that a seller has offered, or post an asking price and wait for a buyer to accept it.
The payment and shipping process on StockX demands timeliness and commitment from both the buyer and the seller. As a buyer, you must submit a payment method before making a purchase or submitting a bid. If your bid is accepted, the payment is automatically taken and held by StockX. This eliminates the frustration of buyers that commit to buying a product but don’t follow up or refuse to pay. As a seller, you are sent an email with a shipping label and packing slip as soon as your item is sold. You have two business days to ship the item to StockX, or you are charged a small fee.
Once the sold item is received by StockX, it is put through the company’s rigorous authentication process discussed below. If it is found to be authentic, the item is shipped on to the buyer and the payment is released to the seller.
The Authentication Process
StockX uses a thorough, multi-step process in order to verify the authenticity of the items being bought and sold on their platform. First, they check that the item is brand new and never worn. As far as verifying whether the item is authentic, they boast a checklist of more than 100 data points that are reviewed to ensure that the item isn’t a fake. They also check for quality packaging and accessories in addition to the item itself, as these features often carry a good portion of the value of the product. StockX uses machine learning as well as real-life quality assurance personnel in the authentication process so that no detail is left unchecked.
How StockX Makes Money
In exchange for brokering the relationships between buyers and sellers as well as working as the authenticator, shipper, and payment handler, StockX takes a flat percentage of the sale price as a payment processing fee as well as a variable percentage of the sale price as a transaction fee. The payment processing fee is 3 percent, while the transaction fee starts at 9.5 percent and becomes lower as you sell more items on the platform, eventually bottoming out at 8 percent. For example, a brand-new seller on StockX would incur the 3 percent payment processing fee as well as the 9.5 percent transaction fee, for a total fee of 12.5 percent. But a seller with 100 sales or $25,000 in total sales would only pay an 8 percent transaction fee, bringing their total fee to 11 percent. This fee model is meant to reward active sellers and keep them engaged on the StockX platform.
If you’ve ever gone through the struggle that comes with buying or selling an item on a traditional e-commerce platform like eBay, you know how much of a hassle it can be to waste so much time doing administrative work rather than making deals. While StockX is not (yet) a place where you can buy your groceries, household goods, or furniture, it is a great place to buy some of the coolest items out there. Whether you’re a shoe junkie, a wrist-wear enthusiast, or a gamer, StockX is a great way to get connected to other buyers and sellers in order to make deals without the hassle.
Want to turn your small business into the next unicorn like StockX? Read our advice on growing your small business here!