Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Reggie Wade discuss the evolving sneaker and apparel resale market with GOAT Group Co-Founder and CEO, Eddy Lu.
BRIAN SOZZI: OK, the COVID-19 pandemic apparently wasn't enough to completely take down the sneaker resale market. Online sneaker retailer GOAT is on a hot streak. The company just closed a Series E funding round of $100 million, bringing its total investments to $300 million. Joining us now to discuss is GOAT co-founder and CO Eddy Lu and Yahoo Finance's sneaker expert Reggie Wade. Good to see you both.
Eddy, let me start with you here. I don't see a lot of retail platforms raising this type of money during a pandemic. What was the pitch to investors, and why'd they cut that check?
EDDY LU: Hey Brian, good to see you. And for, us we are already seeing a secular shift towards e-commerce pre-COVID. Post-COVID, this trend has only turbocharged as shopping in stores is no longer an option for most consumers. And for GOAT, it was really providing a great experience with our operational rigor to allow consumers to really buy-- purchase product on our site even though, you know-- this is stuff that they covet, so it's things that they want to purchase online, and GOAT's a platform to allow them to purchase even during this pandemic.
What we've seen, though, is the fact that shopping on GOAT is actually a superior experience to shopping in retail stores. If you can imagine, on go we have over 100,000 unique styles and skews. Compare that to going into a retail store that has about 200 skews on any given day, and it's stuff that's only this year's styles, this year's products, and they might not even have your size.
So I think what we've seen is that, even though the pandemic has happened, people have been able to shop on GOAT. And we give them the breadth and depth of selection that they covet.
REGGIE WADE: Eddy, Reggie Wade here. We know that the backbone of GOAT Group is verifying these sneakers because sneakerheads all over the world want to make sure that they have an authentic pair. How has the pandemic affected the verification processing centers?
EDDY LU: Of course when March happened, there was no business in the world that wasn't affected by COVID. But it goes back to our operational rigor. I mean, we focused on operational rigor from day one. We weren't a growth at all costs type of company that cut corners operationally. So when we created our operation centers, we have them spread out throughout the world. We have them in Hong Kong, the UK, the Netherlands, and many centers in the US. So when COVID happened and we had to shut down different facilities, we were able to shift our-- the sales from sellers to other facilities to authenticate and quality control before we sent it off to our buyers.
ALEXIS CHRISTOFOROUS: Eddy, I'm curious what's been happening with prices of sneakers on your site during the pandemic, because depending on the sector you're in, you know, there's a little price inflation. We've certainly seen it in the food industry. Yet retailers who are struggling to stay alive are squeezing their margins ever more as they cut prices to the consumers. So what have sneaker prices been like during this time for you?
EDDY LU: It's been really interesting. There has been a flight to quality on the sought after, limited edition sneaker side. And things like "The Last Dance", the Michael Jordan documentary, really skyrocketed Jordan sales. In particular when, in terms of sales pre-"The Last Dance" to post-"Last Dance", sales of Jordan's skyrocketed about 76% week over week.
And so we see that with the pandemic. There are high quality shoes that are great in terms of resale value and they hold their value over time. So especially the Jordan ones, iconic Yeezys, these products have increased in value whereas some of the more mainstream products have decreased. But it really allows any type of consumer to purchase sneakers because it's something you covet. You buy the expensive stuff-- products.
And then, of course, we have 100,000 skews. 40% of our sales are actually under retail price. And what we've seen is that people are able to capture on these opportunities as well.
REGGIE WADE: Cool. Eddy, have you seen during this pandemic that non-sneakerheads have been flocking to the site? Because I've been hearing from a lot of people who are plugged in and saying, you know what? We're seeing older folks who weren't necessarily into sneakers but now that they're inside said, hey, let me check this out and scratch that curiosity itch. Have you been seeing it on your end?
EDDY LU: For sure. I mean, GOAT's mission is to be a global platform that brings together the greatest products from the past, present, and future. And what we've seen from our consumers is that, you might have-- you're not exactly a sneaker enthusiast but you're nostalgic about this pair of Nikes that you had a couple of years ago. And you can't find that in retail stores today because they only sell present day items. So we've been seeing the casual fan that's nostalgic about something come to GOAT to purchase sought after sneakers that they loved previously.
BRIAN SOZZI: Eddy, you got the IPO question a lot, I'm sure. But do you look at the IPO of a company like a RealReal? Debuted last year, stocks down 20%, about 25%, since the IPO. Really, a disappointing IPO. And do you look at that and say, why bother even going public?
EDDY LU: Well, Brian, I mean for us, we focused on-- I was mentioning operational rigor and fiscal discipline from day one, and we've been fortunate to be able to really grow and raise money in the private markets. But for us, I mean, the journey has just started. We just launched our newest verticals with apparel and accessories that really complete the story of making someone look and feel good.
So for me it's about focusing, scaling, and expanding our verticals and expanding in our geographies. I mean we ship to 170 countries, we have facilities worldwide. And for us, it's first, getting more scale before-- before we think about a potential IPO.
BRIAN SOZZI: And Eddy, what about Foot Locker? You recently-- you're not too far removed from that $100 million investment by Foot Locker. Now when I was on the latest Foot Locker earnings called, Dick Johnson, the CEO, said, the partnership will continue to evolve. When will I be able to walk into one of Foot Locker's 3,000 stores and see a bigger presence by GOAT?
EDDY LU: Yeah, that's something that we've been very excited to partner with, with footlocker. Because we are the online sneaker market. They are the kings in the offline market, and I think that combination of online-offline will only persist as we move in a post-pandemic world where high quality retail will always be there, but it's that online-offline experience that will really help cement our legacy. So we're excited to continue. And you're going to start seeing it in 2021 and beyond.
BRIAN SOZZI: All right, well I look forward to following your journey. GOAT co-founder and CO Eddy Lu and Yahoo Finance's Reggie Wade. Reggie, happy belated birthday.
REGGIE WADE: [LAUGHS] Thank you, Brian.
EDDY LU: Thanks, Brian. Thanks, Reggie.
REGGIE WADE: Eddy, thanks for being on with us.
BRIAN SOZZI: We'll talk to you soon.
EDDY LU: All right, see ya.