Reselling Supreme and Network Effects
“Reselling is a large part of streetwear and sneaker culture whether we like it or not and Supreme merch generates arguably the largest resell value in the market” (Hypebeast.com). Resellers take their chances in being able to purchase clothing at face value and then flip it to sell for much more. Not all clothing or brands are created equal. Brands such as Supreme are higher in demand, leading to higher profit when reselling.
In this instance, you could say that the reservation price of a potential consumer is at least the face value price. Some people might want to pay more for the jacket. In addition, the network benefit would be that other people that are also looking at the same product would also benefit from getting the product or the people that do have the product are benefiting.
If more people are interested in the product or want to buy it, the resell price will be higher and there will be more profit for the seller.
Not every product has the same return. According to the article, items with the Supreme box logo, collaborations, and clothes (over objects) usually have higher resell profit and are in more demand. Collaborations add to the exclusivity and branding of the piece. A collaboration with Louis Vuitton, for example, makes the piece worth a lot more. It will also attract customers of the Louis Vuitton brand, increasing the population of the consumers.
In addition, if a well known celebrity wears the item, their fans will often follow suit. The fans want to wear similar clothing items as their idols. For example, BTS’s Jungkook just wore a Supreme jacket. Within a minutes, fans were able to find the exact style of the jacket. Within a day, the jacket (retail price of $399), was sold out in many resale sites for $1000! If fans see their favorite celebrity wear a specific item of clothing and then see other fans wearing the same, they will follow suit and try to buy it, often for more than the price the item initially costs.
Source: https://hypebeast.com/2017/6/supreme-resell-economics-million-dollars