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Recently, 32-year-old Trailblazer guard Damian Lillard (Damian Lillard) took a stake in Hong Kong's trendy e-commerce Kicks Crew, the specific investment amount and shareholding ratio were not disclosed. This is Lillard's first equity investment in the tech sector and his first foray into a Chinese startup.
"Coach Lee" and Kicks Crew go both ways
Kicks Crew was founded in 2008 by Mak Junran and joined in 2021 by co-founder and COO Yip Chi Yong, who previously served as Head of Business Development at GOAT, successfully driving GOAT's international expansion and five years of investment banking experience.
Through a unique B2B2C model (Business to Business to Customer) in cooperation with brand distributors, Kicks Crew aims to provide consumers with reliable source of goods and guarantee of authenticity.
Kicks Crew founder and CEO Mak Junran (left)
Co-founder and COO Yip Chi-yong (right)
As the first athlete to officially announce the cooperation since the establishment of Kicks Crew, Lillard has selected about 20 to 30 sneakers to sell on the platform, and the cooperation between the two sides is not limited to the commercial level: Lillard will serve as the company's "chief cultural officer", bringing experience such as jersey design to Kicks Crew sneaker planning and playing an important role in consumer activities.
In the 2022 NBA highest-paid player list released by Forbes, Lillard ranked 7th with $60.5 million ($42.5 million on the court and $18 million off the court). In the past year, Lillard not only co-founded the sports insole company Move, but also signed endorsement contracts for big brands such as Bose.
According to reports, an investor introduced Lillard to the Kicks Crew team, and the two sides decided to sign a cooperation agreement as early as 2022 to make sneaker culture more accessible to the public.
Lillard said in a statement that the investment in Kicks Crew was due to the platform's unique push for sneaker culture, wanting to introduce the brand to family, friends and fans.
Lillard becomes a shareholder of Kicks Crew
"Li Gui" also entered the Chinese market through Kicks Crew. It is reported that he plans to bring more NBA culture and spirit to China and participate in a series of events held by Kicks Crew in Hong Kong next year. He is also actively preparing to promote basketball culture in Hong Kong and intends to hold basketball training camps in Hong Kong.
For Kicks Crew, the choice to officially sign Lillard in late October is strategic. According to Kicks Crew founder and CEO Mak Junran, the business opportunities of the holiday promotion are very important, with the company's business volume from November to January alone accounting for 40% or 50% of the year's revenue, and the 2021 holiday season business volume increased 4 times year-on-year. Kicks Crew prepares for the peak sales period of the holiday promotion 2 to 3 months in advance, including communicating with logistics companies and payment providers to estimate transaction volume.
In the future, Kicks Crew hopes to expand cooperative sports on the basis of basketball, and intends to promote the cooperation of local Chinese athletes such as Hong Kong.
Quasi-unicorns cut into her economy
Cowen Equity Research expects the sneaker resale market to reach $30 billion by 2030.
Kicks Crew is competing with platforms like StockX, GOAT and eBay for share of the sneaker resale market. In contrast to the resale experience offered by these platforms, Kicks Crew actually provides an end-consumer experience.
Buyers of other sneaker resale platforms may be resellers or resellers. But for KicksCrew, users are consumers of sneakers, so it's a completely different customer base.
More than 50% of Kicks Crew's customers are between the ages of 18-34, the ratio of men to women is 6:4, most of them are social media users, and the company's paid advertising accounts for 50% of the business. Under the epidemic, young consumers are the main customer group that has pushed online payment transaction volume to the peak, and some new customers are elderly consumers who have no online shopping habits in the past.
The conversion rate of female customers on the platform is actually 27% higher than that of men, and female consumers are more likely to repeat their purchases.
In March this year, Kicks Crew completed a series A financing of US$6 million led by Alibaba Entrepreneurs Fund, Gobi Venture Capital and Pacific Stars Development Group under Li Zekai. The goal is to become a unicorn in two or three years.
According to Hong Kong media reports, Li Zekai's Pacific Century Development Group rarely invested in early-stage Hong Kong startups in the past, and in addition to providing funds, Pacific Century Development will also help develop its business. After receiving investment from Alibaba, Kicks Crew began to access Alipay and Cainiao services.
Compared with other sneaker e-commerce platforms, Kicks Crew is more international, with more than eighty percent of its sellers coming from outside the United States, such as Japan, South Korea, Shanghai, Hong Kong and Taiwan. This year, the company is considering increasing its business share in Tokyo, South Korea, and New Jersey, USA.
In terms of the Hong Kong market, the company's current number of merchants in Hong Kong is only in the single digits, and next year it aims to increase the number of cooperative merchants to 20 to 30, not limited to brand size. Kicks Crew opened the Hong Kong APP, and the business volume increased by 5-6 times, indicating that the company has room for development in the Hong Kong market. Founder Mak Junran believes that the company's sales have been affected to a certain extent under the epidemic, and the prices of many products have declined, but sales can still be maintained after the price reduction.
Mak Junran believes that mainland e-commerce competition is fierce, and he does not plan to enter the mainland market within two years, but he intends to help more Chinese brands go global.
The Kicks Crew platform is already available to many Chinese brands
Declare war on fake shoes
Many times, sneaker distributors are able to sell the main product quickly, but leave more styles or products with a more unique color combination. As sneaker brands begin to shift to a direct-to-consumer model, smaller distributors often don't have the negotiating power to return any unsold products to brands. So Kicks Crew took on the role of the sneaker version of "Good Sale".
Kicks Crew's B2B2C model helps reseller partners quickly expand their online customer base while minimizing inventory risk on the platform itself.
Kicks Crew integrates dealerships' in-store inventory into its online system. The distributor ships the item to Kicks Crew for verification and shipment only after it has been sold. Kicks Crew is responsible for returns and any issues related to cross-border trade, such as exchange rate changes or customs duties.
At Kicks Crew, resellers control pricing and the platform facilitates deals. However, the platform did not disclose the specific commission obtained from product sales, only indicating that the commission varies depending on the shoes and style.
Currently, most of the dealers Kicks Crew works with are based in Asia, and each dealer typically has more than a dozen physical stores. The company is looking for potential cooperative distributors who have a strong desire to expand the online market.
The regular sneaker resale market adopts a C2B2C model, mainly working with individual sellers with unproven supply sources, requiring verification of each product that passes through the platform, even with ML and AI-assisted identity verification, the process is still manual and quarter-dependent, which is prone to error.
Just as Lillard once advocated Jeremy Lin to speak up for Asians, the Kicks Crew brand added a 100% authenticity guarantee to declare war on counterfeit sneakers, which undoubtedly received widespread support from consumers.
The platform also conducts background checks before the distributor signs up, and given that the company only works with regular distributors, there is zero chance that it will supply fake or imitation products. The platform currently uses radio frequency identification (RFID) tags, and plans to access order and quality control information for products through QR codes through implementation technology.
Kicks Crew comes with a 100% Authenticity Guarantee
In July, the company chose Forter, a digital commerce trust platform, to reduce the risk of fraud. By assessing customer trustworthiness in an average of 400 milliseconds, Kicks Crew can approve more real transactions and reject fraud, improving the customer experience. With Forter, Kicks Crew increased its order approval rate to over 97%.
Sports and leisure is the trend of the times
Nike's push to deepen its direct-to-consumer (D2C) business at the expense of retailers like Foot Locker has clearly shaken up the sneaker industry, but Kicks Crew doesn't see it as a threat. In Kicks Crew's view, Nike has struck a good balance between direct sales and distribution, but it's not just about Nike, as all other brands are still heavily reliant on wholesale and retail.
After three years of the pandemic, consumer lifestyles have undergone a clear shift, with a surge in interest in sports and casual footwear as fashion accessories. The growing demand for sneakers is linked to the broader trend towards the "casualization" of fashion – the demand for casual, carefree and comfortable clothing and footwear. A good pair of sneakers is almost everywhere – bars, cafes, workplaces, malls and scenic spots. Sneakers aren't just about comfort – they're also a "sign of individuality."
This year, the demand for sports shoes has grown further, which is driving sales of related products, and in view of this, many dealers and sports brands are doubling down on their bets. For example, on Double 11 this year, Luo Yonghao will "reload" the self-operated brand "Make a Friend" on Taobao Live.
It is worth noting that the trend of leisure shopping choices is an irreversible change. Consumers are not satisfied with having a versatile pair of running shoes, but have expanded the range of options, and the share of sneakers in consumer-owned footwear is growing.
It is worth looking forward to the fact that Kicks Crew is working hard to "democratize" sneaker culture, not only to attract more female consumers to its platform, but also to help small dealers and boutiques sell their businesses online to a global audience, bringing more imagination to the industry.
Note: The images used in this article are from the Internet