How to Buy Dominantly on StockX
https://www.fashionbeans.com/article/stockx-sneaker-reselling-guide/
Bobby Palmer writes in his article of the StockX’s initiation, where it stands currently, how it has transformed the markets, and also tips for buying and selling through the site. In 2015, the founder of the company, Josh Luber found the resale sneaker industry to be frustrating as platforms for second-hands goods allowed scammers to easily manipulate the system. After a successful launch, StockX became the dominant place for authentic, rare products, where anyone that could pay the triple, or even more than retail price could easily purchase. Even famous sports stars, such as Lebron James, have released items through StockX in what is called an IPO, which stands for Initial Product Offerings. Similar to that of an Initial Public Offering of a startup, sneaker IPO allows for customers to bid, which ends up setting the price of the product. Now, StockX is a company worth more than a billion, looking to expand even more.
In class, we talked about different types of auctions, such as first and second price auction. We also discussed the dominant strategies for each of the auctions we discussed. In a first price auction, it is a dominant strategy to bid lower than one’s true value, whereas in a second price auction, it is a dominant strategy to bid one’s true value. This is because in a first price auction, the winner pays what they bid, whereas in a second price auction, the winner pays the second highest bid.
Ever since we learned about auctions in class, every time I use StockX, I am constantly thinking about what my dominant strategy would be to buy a product through StockX. There are two main types of auctions used by StockX. The first is for the IPO mentioned above. IPOs use the second-price auction as the lowest paying bid becomes the clearing price. Thus, as mentioned above, the dominant strategy for buyers of an IPO is to bid their true values. On the other hand, StockX uses a first price auction to buy/sell products that have been released. In other words, StockX uses a first price auction for non-IPO products. However, this comes with a couple other factors, such as knowing the lowest ask. If you bid exceeds the lowest ask, you win right away, and you pay your bid. StockX also offers suggested bids to make. One last factor to consider is that many sellers are entering, and the highest bidders are leaving the auction. In other words, the auction is not open for a certain amount of time, it is open infinitely, or until all items are sold, which is often not the case because prices will rise if so. The best strategy here is to bid lower than your true value because if you bid your value and win, your payoff would be 0.
StockX has revolutionized the market and has become the dominating platform for rare product reselling. It is interesting to note that big firms like Amazon have not become its competitor and exciting to think about StockX’s future growth.