Investing in sneakers in Singapore: How to flip exclusive sneakers to make profits?

Collecting shoes isn't the exclusive domain of Carrie Bradshaw. Thanks to sneakerhead culture and a booming sneaker resale market, limited edition sneakers for both men and women are now raking in lots of cash.

One common practice now is to flip new, unworn shoes-to turn a huge profit that makes that pair of kicks more lucrative than most financial instruments.

CAN YOU REALLY MAKE MONEY BY SELLING SNEAKERS?

When people flip sneakers, what they are really doing is buying exclusive models at retail price, waiting until the supply of the shoes dwindles, and then reselling them, again usually online, at a much higher price.

Or, they have the knowledge to buy shoes with celebrity power and legacy at retail price within the range of hundreds, and re-sell them on sites like eBay in the range of thousands immediately.

Here are some of the top selling sneakers of mid 2018 in terms of returns:

-Nike Air Jordon Retro 1 Off-White: Chicago, UNC, White

-Justin Timberlake Nike Air Jordan 3 Superbowl

-Chuck Taylor Converse x Off-White

-Adidas x Pharrell Human Race "Holi": Black Canvas, Pink Glow, Black

-Nike Air Jordan 1 NRG Metallic Gold

-Adidas NMD Black Leather Sneakers

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WHAT MAKES AN INVESTMENT GRADE PAIR OF SNEAKERS

In order to successfully invest in sneakers, you will need to keep abreast of the latest sneaker trends and keep tabs on release dates so you can grab limited shoes once they're released.

Just as stock investors need to stay updated on business news and current affairs, sneaker investors need to read sneaker news on a daily basis. So get ready to bookmark websites like Hypebeast, SneakerNews, HighSnobiety and KicksOnFire, and keep tabs on sneaker release dates and prices so you can plan ahead of time what shoes to buy.

When it comes time to place your orders, this can normally be done directly at the brands' individual websites.

While you hear the occasional success story of a $200 pair of sneakers being sold for $5,000, the fact is that it is impossible to predict with 100 per cent accuracy whether a sneaker's resale price will soar. A model being limited edition is not enough to guarantee a huge rise in price. A lot will depend on future fashion trends and the individual design of the sneakers.

In addition, fashion is fickle, and a sneaker's resale value might spike for a while, only to crash when it goes out of style.

That being said, the following traits will raise your chances of being able to successfully flip a pair of sneakers:

LIMITED EDITION: You want to look for sneakers whose demand outstrips supply. This is obviously easier to achieve if there is a limited supply of the sneakers being sold in the first place. So look out for limited edition models as well as collaborations with celebrities and designers.

LOTS OF HYPE: Low supply is just one part of the equation. There needs to be high demand, too, in order to push up a sneaker's value. If you follow sneaker blogs and brand websites, you should get a good idea of which sneakers are being hyped and anticipated. Also check out what the influencers are peddling as it indicates which products are being pushed most aggressively by brands.

HIGH RATINGS: Check out websites like SneakerNews and KicksOnFire for shoe ratings. The more highly rated shoes tend to sell well.

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THE ROI OF SNEAKERS

The ROI varies from sneaker to sneaker. There are huge success stories, like the following:

-Nike SB Dunk Low Reese Forbes Denims. The pair jumped from a 65 USD (S$90) retail price in 2002 to over 4,000 USD in 2018.

-Yeezy 2 Red Octobers went from 250 USD retail price in 2014 to 5,655 USD in 2018.

In general, a profit of about 80 to 100 USD per pair is considered normal and decent for a beginner. As you get more experienced at predicting trends, you can aim for higher profits of 3 to 5 times that price.

WHAT ABOUT LUXURY SNEAKERS?

Luxury grands like Gucci and Balenciaga are jumping on the bandwagon, launching sneakers which cost over $1,000.

Designer sneakers can indeed have investment value. For instance, some luxury sneakers commentators predict will have a bright future include the Louis Vuitton Archlight and Balenciaga Triple S.

However, as with all types of investments, you need to do research on the brand and the particular release to predict if the shoe will trend later on.

As luxury sneakers are quite expensive, it's better not to start investing or flipping sneakers by buying shoes in this category. For instance, the Balenciaga Triple S sneakers cost USD$850 and its aftermarket price is estimated at USD$1,058. So it's quite a heavy and risky investment that you may only break even on.

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HOW TO START INVESTING IN SNEAKERS

Before slapping a price tag on your sneakers and deciding if it's the right time to get rid of them, you'll need to do some price research. Check websites sneaker flippers use, including Stadium Goods, StockX and Fight Club, to decide what a reasonable price range would be.

At the same time, you should be keeping up with the latest sneaker news and participating in sneaker communities so you can get tip-offs when good opportunities to sell arise.

When it comes to actually selling the shoes, sure, you could try to sell your sneakers on Carousell, but if you really want to take advantage of high demand, sell them on the international market using eBay, Stadium Goods, StockX, Fight Club and similar websites.

Start small until you are more comfortable and are turning a regular profit before spending larger sums and buying in greater quantities.

Another thing you should learn is to avoid fakes. Read online guides that help you identify fakes for the type of sneaker you're buying. Here's an authenticity guide for the Yeezy sneaker.

You should also learn how to care for the sneakers so they stay in mint condition. Singapore's hot and humid weather can be disastrous for sneakers, so you'll need to invest in dehumidifiers, if you intend to hold sneaker stocks.

This article was first published in MoneySmart.