LVMH LUXURY VENTURES BACKS STADIUM GOODS

©Stadium Goods

Venture capitalists continue to eye the growing streetwear market. After taking stakes in cult labels such as Supreme, Highsnobiety and Huf, this week investors targeted the sneaker resale marketplace Stadium Goods.

LVMH Luxury Ventures acquired a stake in sneaker and apparel resale marketplace for an undisclosed sum. "As we continue to scale the business, there are specific areas that require additional capital to nurture this growth. In particular, growing our proprietary tech offering, brick-and-mortar expansion, marketing efforts and staffing," said Jed Stiller, co-founder and managing partner of Stadium Goods. The company operates a brick-and-mortar store in New York's Soho as well as its own e-commerce site and has extended its reach through Amazon, Ebay, Zalando and Alibaba. The company projects gross merchandise volume to reach $350 million to $400 million in 2018.

Stadium Goods holds inventory, which is another facet that distinguishes the business from its competitors. Stiller said this builds trust with consumers because the product is authenticated prior to being listed, and it allows them to deliver product in as little as one business day, which is similar to the success of luxury reselling site Yogi's Closet. However, this approach also comes with operational challenges. "In the case of premium sneakers, it's essential to guarantee authenticity. There is some friction in the models of GOAT, Stadium Goods or even Farfetch as the marketplaces end up touching the product to ensure it is authentic. This is reflected in the margin structure as they take higher commission and add considerable operational complexity," explained Frederic Court, managing partner at Felix Capital. "Still, they will be much more capital efficient than retailers [and] their share of the retail market is only going to grow as they add more choice and convenience to consumers."