Sneakerheads are angry at Nike dealer scandal
Sneakerheads like to complain about the one who escaped. About haunting sneaker apps and websites that fail to win sweepstakes or find what they want at semi-affordable prices. About how the system is to be rigged by resellers using bots and internal connections.
Now, a scandal involving a Nike executive and his dealer son is shaking the sneaker world, highlighting the worst suspicions about a booming market in which shoes can be traded like stocks. For serious sneaker collectors, it’s more than a storm in a shoebox.
âThere is a lot of fraud. There’s a lack of transparency, âsaid shoe aficionado Chad Jones, who founded The Dealer Market last year. Another way with his wife, Adena. The duo wanted a place that honors the role of black consumers in popularizing sneakerhead culture while verifying the legitimacy of the seller in addition to the authenticity of the shoes.
The latest controversy arose from a Bloomberg Businessweek Profile of a 19-year-old Oregonian named Joe Hebert, who made $ 20,000 or more a month flipping sneakers online.
The story, which appeared online on February 25, details how Hebert acquired sneakers by using robots to make offers to him, including on Nike Inc.’s SNKRS app where the company is launching new products. Payments were made through an American Express card owned by her mother, Ann Hebert, vice president of Nike and general manager of North American operations, overseeing sales, marketing and merchandising.
Nike initially said Hebert disclosed his son’s affairs as required and did not violate any company rules. Joe Hebert told Bloomberg that his mother was not involved in his business and had not slipped him any discount codes.
But with questions swirling over insider information and tech shenanigans, Ann Hebert quickly quit after more than 25 years with the shoe giant.
Nike CEO John Donahoe assured employees on a video conference on March 8 that the company was taking the controversy seriously.
“There is no more fundamental value to who we are than the trust our consumers place in us, our brand and our products,” Donahoe said, according to the Pop Culture Complex website. “And the point is, this incident has raised questions among some of our consumers as to whether they can trust us, especially with the product launch.”
It wasn’t the first scandal in the market, even not so far this year.
A February collaboration between Nike’s Air Jordan 1 and Trophy Room, a retailer owned by basketball great Michael Jordan’s son Marcus, got off to a particularly messy start, with the shoes appearing on social media ahead of the official filing date. Sneakerheads were screaming favoritism and profit. Marcus Jordan blamed the leaks at the distribution center.
In recent years, sneakers have evolved into an asset class like stocks, bonds, and cryptocurrency, becoming a multi-dollar market globally. They trade on a variety of reseller platforms; The most famous are StockX, GOAT, Flight club and Stadium goods.
Marketplaces like to promote their extensive authentication processes so that buyers know the items they end up with are the real deal.
But such efforts fail to determine how the sellers acquired the shoes, and that’s what excites sneaker fans who don’t think they have a chance to buy newly released products.
âIt makes me want to give up the shoe-buying game,â one commenter said on a YouTube interview with Joe Hebert in his new warehouse, surrounded by enough shoes to stock a few stores. Another said, “This man is the reason you don’t hit your kicks when you want to.”
Longtime sneaker Manny Cruz said the estate has been inundated with big spenders who are only there for the money. The shoe drops from Nike and other retailers have turned into a joke, said Cruz, a 38-year-old Paramount resident who works as a wholesale auto parts distributor.
âYou will not be able to place the shoe in your basket or you will not be able to access the payment screen. You’ll be sitting there, stuck on this screen for an hour. During this time, the product is exhausted. It’s a waste of time, âsaid Cruz.
Controversy is expected in any young, growing and heartbreaking change market. And the sneaker turnaround industry sees a lot of both, reminiscent of the real estate boom before 2008, when speculators helped push prices up.
With home orders in the event of a pandemic, athletic shoe sales fell in March 2020 to the worst monthly results on record, said Matt Powell, senior vice president of sports at the market research firm. NPD Group. But in June, athletic shoe sales rebounded to the best month in history, he said, rising 25% from a year earlier.
That’s because people who didn’t lose their jobs – freed from travel and entertainment expenses – had higher disposable income and, in April, received the first of the coronavirus stimulus checks. Meanwhile, new resellers looking for secondary turmoil have flooded the business, Powell said.
âThey have no brand allegiance. They have no allegiance to the celebrity or the athlete. It’s just a chance to enter this market and it has driven up the price of shoes for the collector and the real fan, âhe said.
To win new products, some resellers have turned to automated solutions, which can cost hundreds to thousands of dollars. This extra cost only increases the likelihood that bot users will strive to get even higher prices on their shoes.
“To come to the fore to buy limited edition sneakers, it’s easy to buy any of the sneaker hypebots or bots available on websites like aiobots.com, hypebots.com or another nikebot.com” , according to the 2020 Bad Bots Report from cybersecurity firm Imperva.
Nike CEO Donahoe, after announcing the management change related to Hebert, acknowledged this when he said, âWe have been working on anti-bot technology for several years. This is part of the solution, but we must redouble our efforts. “
Adena Jones, Managing Director of Another Lane, said she and her husband raised $ 160,000 to launch the market last April to restore an old-fashioned sneakerhead culture where people, not robots, sell shoes to other people, not to other robots.
Another Lane emphasizes the investigation of the people it allows to use the platform as much as the authentication of the shoes sold there.
âWe control our members. So you are not just anonymous. Your name is linked to the product, “said Adena Jones, 35.” What if you sell a fugazi product [fake or damaged], A, you would probably not be on our platform, or B, you would be kicked from our platform. “
Chad Jones, Another Lane COO, 42, with a tinge of contempt in his voice: âYou know how you fight someone who you think buys too many pairs of sneakers and just in them for them. resell as much as possible? You don’t buy from him. It is that simple. And then when he’s stuck with $ 100,000 worth of product and can’t pay off that mom’s credit card bill, then he’s gone. “
Mark Ruszecki, who owns a collection of 500 pairs, has been a sneakerhead since the late 1990s when he used to meet guys he got to know and trust at a local park and buy, sell or trade.
âIt was about who you knew, background and relationships,â said Ruszecki, 42, a personal injury lawyer in Los Angeles and a partner at the law firm Javaherian & Ruszecki.
Ruszecki said he soured on the virtual sneaker drops. âYou set a notification for 7 am. You are trying to get a shoe. You assume there is a master computer there to figure it all out, but I don’t know what they are doing. Then almost immediately you get a pop-up that tells you you’ve lost. It’s frustrating.
âPersonally, I’m not going to play that. I don’t need the hottest, newest shoe. I’m not 17 and I’m not on TikTok. I’m just going to buy the older shoes I’ve always wanted without all the hype. ”
Others say it’s not just a matter of robot abuse of the shoe-release system; it is this lack of transparency in the operation of applications.
âThis is another event in a series of events where the larger sneaker community doesn’t really trust the Nike SNKRS app,â said Robert Mulokwa, founder and owner of KickPredict.co, an international platform where people interested in the sneaker investment market can bet on the rise or fall of the prices of popular sneakers.
âIt’s a big deal in that sense: Nike needs to become more transparent about how it awards who wins and who doesn’t on the SNKRS app,â Mulokwa said. “Nobody knows how it is or what is going on, and it is an ongoing thing.”
Communication with consumers is key, consultant said Margot Bloomstein, author of “Trustworthy: How the Smartest Brands Beat Cynicism and Close the Trust Gap.”
âWe can blame the technology, but beyond just acknowledging a problem, Nike and other brands should explain what’s going on with their raffle and shoe sales apps, giving people a lot more detail. so that they can understand it and be empowered by this information. Bloomstein said. “Then they also have to be responsible and explain exactly what they are going to do so that this does not happen again in the future.”