This transcript was generated from the episode audio and may contain minor errors.
[Music]
Hey everybody, what's up? Welcome to Side Hustle School. So, so glad you're here. My name is Chris Guillebeau. This is episode 1,522, 1522, coming to you on the 2nd of March, 2021.
Of course you could be listening at some point in the future and this episode is still relevant. Try to keep 80% of what we do evergreen, helpful to you in your quest to create a new source of income, no matter where you're listening from, no matter at what point in time you're listening and no matter what you're up to. The team and I make this show for busy people who despite being busy still want to invest in themselves so that they have more options for their future. That's what it's all about. Today we're gonna talk about the business of footwear.
Footwear as in sneakers, as in sneaker reselling. When a business student converses with a sneaker head, they form an all-star pair to sell rare footwear. In any case, the business is on track to earn $100,000 in profit this year. That's right, there is gold in those sneakers. It is a global business of $6 billion.
And when I say a global business, I'm not talking about the sneaker business, I'm talking about the sneaker reselling business. I think the actual sneaker business is $100 billion or something, but just the reselling portion, $6 billion. And of course the sneaker companies themselves, footwear brands, they're in an interesting position because if they wanted to, they could control or cut down on more of this aftermarket selling. But in a way they actually encourage it because they benefit from the prestige of certain brands, the exclusivity, they produce really limited numbers of certain lines, which leads to them becoming luxuries or highly desirable products. So those brands, those companies are actually walking kind of a fine line.
And as a consequence, a lot of resellers are doing really well. So we'll look at how this student in Europe working together with his friend makes selling sneakers look easy. All right, that story is coming up after this quick message from our sponsor. [Music]
Sebastian Ringelstetter was studying business at university when he decided to actually start a business. And in a story similar to the founding of Facebook, his first idea was an app that made dating easier for students.
However, when looking for outsourced software developers, he realized the app wouldn't be a short-term project nor a cheap one. In fact, some of the quotes he received estimated timeframes of up to a year. And Sebastian didn't want to wait that long. So while the app was being built in the background, he kept an eye out for another idea. Then as he was hanging out with a friend one day, the perfect concept happened to sneaker up on him.
You see, this friend was a sneaker head. Sneaker head is a collector of vintage and rare sneakers, some of which happened to be worth a lot of money. Not all sneakers are created equal. Companies like Nike and Adidas occasionally sell what they call limited release product lines. That's what I was alluding to in the introduction.
These sneakers are produced in small quantities and often sell out in hours, if not minutes. Sebastian learned that many sneaker heads stay on top of the limited release schedule. They often buy additional pairs to resell to those who weren't able or couldn't be bothered to fight for them. His friend explained that he often made 50 euros or more prepare with this method of reselling. Sebastian asked if he could fund the next pair.
He wanted to explore the possibility of lacing up together. With 150 euros in hand, the two set out the next weekend and bought a pair of new release Jordan Retro sneakers. Within a month, they'd flip them for a tidy profit. Sebastian was hooked. He saw an instant return on investment and stepped up to do it again.
They soon bought more sneakers and also came up with a name for their venture. That name was drip drops, since they would slowly drip the sneakers out to collectors after they dropped. They used the name to create an Instagram account, but that was the only real marketing activity they did. The two friends were committed to running drip drops as a lean operation. They didn't incorporate the business officially for another year.
That's because they didn't wanna get bogged down on the details for something that was likely only going to earn a few extra dollars. But they were happily proven wrong. By the end of the year, it was going so well that they decided to create a website. That's one of those things you do after your business is taken off, apparently. Being savvy and frugal, they built the website themselves using Shopify with a pre-made theme.
From there, the hosting costs would be minimal, just over 40 euros per month. Now, one big problem with the sneaker industry is that there are a lot of fakes. It's not uncommon for somebody to fork out hundreds of dollars for a cheap knockoff pair. And the website took drip drops to another level by adding a level of legitimacy to the operation. It helped alleviate concerns for new buyers who weren't already in their network.
Sebastian and Co. leveraged this new authority well. Soon, they made new contacts in major stores with new clients all over the world. That opened up new opportunities, such as bulk orders. In some cases, they would sell 10 pairs of a rare sneaker in one go, which boosted revenue, allowing them to put more money into even more sneakers.
In fact, Sebastian became the one buying in bulk. It wasn't uncommon for him to walk into a store, be asked what size he was looking for, to which he would respond all the sizes and walk out with 10 to 20 pairs. The higher volume boosted their revenues. And at this point, get this, they're on track to earn over $400,000 in gross income for the year, with $100,000 of that being profit. But Sebastian isn't resting on his laurels.
With those profits, he intends to move into new categories and target other luxury items, such as watches and handbags. He also has the hope of opening up a retail store sometime in 2021, if the pandemic settles down and allows it. All of this has come at the perfect time, as he's just about to graduate from university. He'll soon have plenty more time to put boots on the ground. [Music]
All right, so if you want to become a sneaker reseller or a reseller of any other luxury item or anything that's in demand, doesn't necessarily have to be a luxury item, the model is right here in Sebastian's story.
Start with a couple of things. Start with one thing, even, you know, make sure there is demand, do some research, pay attention to where things are being bought and sold. Start with that first purchase. Maybe start with a couple of items, but don't get stuck with any. And after you do this for a while, first of all, your risk is gonna be very low because hopefully you're gonna profit.
But even if you don't profit, you're not gonna lose all of your investment. Most likely you'll be able to sell it back for the same price or potentially a small loss. After you do this for a while, you're gonna learn, naturally. You're just naturally going to learn. You don't have to have somebody coming and saying like you're the 75 steps to follow, you will figure out, here's what I need to do.
How can I purchase more items? Oh, I had a good success with this thing. I wonder if I can do it again. I wonder if I can buy three or five or 10 the next time around. If I may have worked with this particular item, maybe there's another item I can make it work with.
So the process to doing this, it's very much unlike business school, which is why Sebastian, you know, is going to business school on the side and starting this project, starting his business, you know, full-time. It is something you learn to do by doing it. All right, I will leave you with that today. Inspiration is good, but inspiration with action is so much better. Today's show notes are at sidehustleschool.com/1522.
I'll include links to drip drops, anything else I mentioned in the episode. And of course, a new episode is coming out tomorrow. I'm so grateful for you. Be sure you're subscribed. You can listen wherever you get your podcast.
Whatever's good for you, wherever's convenient. You can listen at a time that is convenient for you as well. All right, until tomorrow. My name is Chris Guillebeau. This is "Side Hustle School." [Music]
- From the Onward Project.
