U.S. Markets closed

A teenager explains how to make money trading sneakers

Rick Newman
Senior Columnist

First, get a bot. Then, study up on the most popular celebrity-backed brands. And get on the notification list for the latest limited-edition releases from Nike, Adidas and the like.

This is how to start trading sneakers, if you’re into that kind of thing. And a lot of people—well, teenagers—are. “You can definitely build a business out of this,” 17-year-old Robert Newman (who happens to be my son) tells me in the video above. “You can make hundreds of dollars in a few days.”

Bots—automated software applications that can place online sneaker orders the moment they go on sale—are important because certain sneaker releases have become highly orchestrated events meant to maximize viral hype and turn shoes into collectibles owned only by a lucky few. Manufacturers often produce limited quantities of sneakers bearing names like Jordan, Kobe or Yeezy (Kanye West’s tie-in with Adidas). Deliberate scarcity essentially creates a secondary market for sneaker traders, since many people who want a desired pair can’t buy them retail.

Releases occur online at a precise time, and the most popular brands are literally gone within seconds. Ordinary people manually going through the online checkout process find the shoes are sold out by the time they’ve entered all their information. Bots, which can be purchased online for upward of $300, place your order at computer speed once you’ve pre-entered your credit card number, sneaker model and other details. A purchase isn’t guaranteed, but the odds are much higher.

Once you’ve snagged the pair you’re after — and survived the enmity of purists who hate bots – you’re ready to resell them, provided you can part with your gorgeous new kicks. Resellers used to rely mostly on eBay, but there are now sites devoted strictly to clothing or sneakers, such as Grailed and Flight Club, along with a smartphone app called Goat. Sneakerheads can also trade and sell shoes at events such as Sneakercon, a touring trade show that hits several major cities each year. Resale markup can hit 400% or more. “The Adidas Yeezys, those would retail for around $250 and in one day they’d be selling for $1,000,” Robert says.

One concern: knockoffs. Counterfeiters have discovered there's good money in designer sneaks, making it worth the trouble to create and sell lookalikes. And there’s always a risk the sneaker fad will fade, or an economic downturn could reduce the portion of people willing to spend more for sneakers than an iPhone costs. But if that were to happen, there’d be one upside: A lot of cool shoes in the closet. And perhaps a valuable business experience.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.