StockX Business Model | How Does StockX Make Money?

StockX is an online marketplace that lets users buy high-demand, limited-edition products such as sneakers and collectibles via auction.

StockX was founded in 2015 by Josh Luber, Greg Schwartz, Chris Kaufman, and Dan Gilbert and processes over 7.5 million trades per year with a GMV of over $1.8 billion.

StockX offers buyers the option of bidding on a product or purchasing it immediately.

StockX Business Model is based on charging commission to the sellers of the platform.

StockX will validate the item after the seller sends it. StockX will then ship the item to the customer.

StockX competes with online markets for limited edition or highly sought-after goods such as GOAT, Grailed, and Stadium Goods.

What Is StockX?

StockX is an online marketplace where you can buy and sell rare clothing and collectibles.

It manages its high-end products’ authentication and shipping processes because it deals with such high-end products.

The StockX business model is based on charging merchants a percentage of each sale made on the platform.

StockX Business Model

The fee varies from 11 to 12.5 percent, depending on how much was sold previously.

The company was founded in 2015 by Cleveland Cavaliers owner and Quicken Loans co-founder Dan Gilbert.

By the end of 2019, StockX had sold $1 billion worth of items. The company now employs more than 800 people in five locations worldwide.

Company NameStockX
Company TypePrivate
FoundersDan Gilbert, Josh Luber, Greg Schwartz, Chris Kaufman
ProductOnline Marketplace
Founded DateMarch 2015
HeadquarterDetroit, Michigan, U.S.
WebsiteVisit Website

How Does StockX Work?

StockX is an online marketplace that promotes the sale of unworn streetwear products, such as shoes and other collectibles, via web and mobile apps.

The company attributes its name to this reason since its basic purchasing and selling processes are similar to stock markets.

The phrase “Asks” is used by sellers to set a price for a particular item.

On the other hand, the customers submit bids that tell how much they are willing to pay for a specific item.

When both parties agree on a price, the transaction can be completed. This is because both parties must agree on a price before the transaction can be completed.

You may also purchase products directly from the seller if posted a “Selling Now” bid.

StockX’s historical price charts are a great resource for both buyers and sellers to compare their pricing against one another.

StockX is handling authentication and shipments on the platform due to the platform’s focus on high-ticket items (some selling for millions). There’s no need to worry about purchasing a counterfeit item.

Poshmark and Chrono24 are two other marketplaces that have taken a similar strategy in the past.

eBay has been plagued by counterfeit goods and broken shipments, which has resulted in customers turning to niche platforms that can guarantee quality and authenticity.

How Did StockX Start?

Dan Gilbert (former CEO, now a board member), Josh Luber (former CEO, now a board member), and Greg Schwartz founded StockX in 2015. The owner of the Cleveland Cavaliers and former co-founder of Quicken Loans.

Zuber founded Campless, an online Kelley Blue Book for shoes that tracked eBay resale prices, before founding StockX.

The Campless website lets sneakerheads upload and track the current retail prices of different models.

While shopping for sneakers on eBay, Gilbert noticed that his children spent a lot of time on the site. 

They were frequently unsure of their purchases since eBay does not validate shoes. The consignment shoe market idea came from Gilbert approaching Schwartz, the CEO of the calendar company Gilbert had invested in.

The two concluded that Luber needed a sneakerhead to manage the company after attending a Cavs game for business purposes two months earlier, and they bought Campless two months later.

StockX became operational in February 2016. StockX launched with over 20,000 sneakers available for purchase. 

The company was a huge success right out of the gate. StockX had processed more than $100 million in items by the end of 2017.

Previously a senior vice president at eBay, Scott Cutler was named StockX’s CEO after raising $110 million in its Series C funding in June of 2019. Scott Luber will serve as StockX’s ambassador.

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As an entrepreneur, I’m far more comfortable and efficient at the beginning stage than at the end.” Luber said in an interview with Inc.com. “I’m the CEO of a startup.”

Currently, StockX employs over 800 people and has offices in five countries worldwide. The company handled transactions worth more than $1 billion in the first quarter alone.

How Does StockX Make Money?

An online marketplace like StockX makes money by charging a commission from every transaction it facilitates on its platform.

StockX earns money as an online marketplace by taking a portion of each successful transaction.

The authentication process and subsequent distribution of items are handled by StockX and established platforms, such as eBay. There are many reasons why this is the case, including the high cost of items.

StockX Business Model

There is a 3% payment processing fee added to every successful sale. A transaction fee of 8–9.5 percent is also charged.

The transaction charge is based on the volume of prior sales made on the platform, and the higher the level, the lower the fee.

The company handled more than $1 billion in gross merchandise volume (GMV) for its merchants in 2019.

What Is The Funding and Valuation of StockX?

A Crunchbase report shows that StockX has raised about $160 million in five fundraising rounds. Of that total, they raised $110 million in their most recent Series C fundraising round.

StockX was officially declared a unicorn after that round, with a $1 billion valuation.

Salesforce CEO Marc Benioff is one of the notable investors in the company, along with GGV Capital, General Atlantic, and DST Global.

What Is The Revenue Of StockX?

StockX, like many other fast-growing (and possibly loss-making) startups, does not release its income data.

StockX revenue has doubled from 2018 to 2019 based on its most recent investment round.

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Additionally, StockX’s total monthly product sales hit $100 million per month, translating to about $10 million commission income.

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