Sneaker rental platform Kyx World learned a hard lesson in January.
Demand for its shoes dropped, and it had to abruptly cease operations just a month after securing a round of seed funding, Sole Retriever reported at the time.
Maybe sneaker rentals weren’t the way to go.
The company now has retooled its business model for reCommerce. But what happened?
In June 2021, Kyx World co-founders Brian Mupo and Steve Dorfman introduced the rental platform to offer enthusiasts of sneakers a cost-effective option to experience limited-edition footwear,” Footwear News reported. This option would allow them to access such footwear at a more budget-friendly price compared to what is usually available on secondary market platforms.
Upon its initial release, the company provided three tiers of platform access, with subscription fees ranging from $59 to $299 per month. These subscriptions granted users access to a collection of over 300 styles encompassing renowned brands such as Nike, Yeezy and New Balance. The featured styles ranged in resale market value from $100 to $1,500, per the report.
If a subscriber desired to swap their footwear, they could initiate a return process, leading Kyx World to execute an extensive 10-step cleaning regimen, the report said. Following this cleaning process, the refurbished footwear would be reintroduced on the platform, ready for the next individual’s use.
The idea garnered attention from fashion enterprises and athletes, and the company gained investors like RAD Equities by Jeff Staple, Rachel Zoe Ventures, NBA All-Star DeMar DeRozan and Super Bowl champion Emmanuel Sanders, per the report. But the concept fell flat with consumers.
Skipping ahead by a few months, Kyx Sneakers, the current name of the company, is looking to make its return but now as a resale company, a move that seemingly has the potential for better outcomes.
Mupo and Dorfman have parted ways with the company, which now operates under the slogan “Meant to Be Worn,” and the objective is to become a reliable destination for buying preowned sneakers, according to the report.
It’s one of the latest companies to look to reCommerce as a way to reach consumers’ wallets, joining the likes of The RealReal and others.
Jelena Zec, director of venture investing at Citi Ventures, told PYMNTS’ Karen Webster this week that several leading luxury brands are well-prepared to significantly engage in this domain. They are planning to provide consumers with direct options for renting and reselling, aiming to capture a portion of consumer spending as the trend of purchasing secondhand items gains even more popularity.
“There’s a big opportunity for brands to win in this commerce space,” said Zec.
And they have the potential to succeed by implementing a handful of tactics, she explained. They could collaborate with organized online marketplaces, and/or they could use a ReCommerce-as-a-Service (RaaS) strategy, wherein they provide direct options for secondhand sales or rentals.
Resale platforms have engrained themselves into sneaker culture. StockX, for example, said it reached a valuation of $3.8 billion in 2021. It also said it turned down approximately $90 million worth of counterfeit footwear on its platform this year. This decision aligns with the company’s efforts to enhance authentication services and establish authentication centers.
In a legal case involving Nike, the sportswear giant claimed to have procured counterfeit Jordans from the same platform, Highsnobiety reported.
Unlike the high-profile transactions on platforms like StockX, where rare and limited-edition sneakers change hands for exorbitant prices, buying preowned sneakers from everyday people and everyday prices seems to offer a more accessible and down-to-earth approach to sneaker culture. But will it resonate with consumers?
Companies such as Brooks Running, which have integrated sustainability as a core value, may encounter certain hurdles in their endeavors. Last month, Brooks Running initiated its reCommerce initiative in the United States, aimed at reselling gently worn footwear.
Another example is Toms Shoes, which has also embraced the resale trend by unveiling a specialized website section named “(re)Wear Good,” in collaboration with thredUP. The dedicated section seeks to provide customers with a selection of gently used items, along with products categorized as “new with tags.”
The clearest benefit of buying previously owned sneakers that aren’t classified as limited edition or rare is the cost reduction. On platforms such as StockX, opting for these sneakers would save consumers from paying well above the original retail price.
However, a downside involves uncertainties about the true state of the sneaker. Although certain preowned sneakers might be impeccably cared for or appear entirely unused, others could exhibit indications of use. This factor could also raise concerns regarding the level of hygiene maintained within this category of footwear.
So, while luxury-based sneakers have made a mark in resale, do regular, everyday footwear brands stand a chance?
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