As far as buying and selling sneakers online goes, GOAT is definitely one of the leaders. It was originally built by sneakerheads who wanted to get just their favorite pairs of kicks but soon grew into a legitimate marketplace where people could actually sell shoes they no longer needed.
GOAT is one of the fastest growing sneaker platforms in the world, now worth $3.7 billion dollars. For every pair of shoes purchased through the platform, the team checks them for their authenticity before shipping them to the customer, giving it an edge over other sneaker platforms.
It would seem that making shoes isn’t as lucrative as some other business ventures, but GOAT makes a ton of money.
As a company called GOAT (a marketplace for purchasing and reselling authentic sneakers), we charge a 9.5% fee on every sale facilitated through our platform.
We’ll look at their revenue model in detail and find out how they make money.
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What Is GOAT and How Does It Work?
GOAT is an eCommerce platform connecting sneaker resellers and consumers through the internet and mobile apps. It verifies the authenticity of shoes sold by third parties.
They offer an extensive range of products at affordable prices, including some items that haven’t been released yet. Their “Ship-To-Verification” model ensures buyers get what they order.
They allow anyone to buy exactly the shoes they want at a reasonable cost.
They believe their best strategy is to pair the right shoe with the right buyer. If they can match up the perfect shoe with the right person, then everyone wins.
How Does GOAT Make Money?
GOAT is an online platform where people can purchase and sell authentic shoes. They take a small commission from every transaction.
The basic idea behind Goat is simple: Goats make money by charging sellers for each successful sale. There are neither listing fees nor subscription costs. They don’t hold any inventories.
It’s known as the revenue share model because Goats for Good don’t own any inventory.
The seller fee is always the same no matter how much you list your items for. After subtracting the seller fee, GOAT takes 9.5 percent of your final sales price. For example, let’s say you list an item for $100. You get paid $95 after paying the seller fee. So when you actually receive payment, you’ll end up with $94.05. If you sell an item for just one dollar, you’d end up with just $0.99 after paying the seller fee and taking 9.5 percent off the top.
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If a customer cancels after placing an order, they lose 10 points from their rating; if a customer successfully completes an order, they gain 2 points.
Even though a seller’s rating drop, GOAT may charge sellers 9.5% if their items are authentic.
The goat doesn’t sell any personal information or advertising.
Depending on where you live and which shipping option you choose, the fees may be different.
From Fake Air Jordans to A Trusted Reseller
College friends Eddy and Daisuke Lu, a programmer and designer, were serial entrepreneurs who had quit their corporate jobs to chase after their dreams. They developed high-priced, low-quality apps before the iPhone was released and failed several times.
When Sugano bought a pair of fake Air Jordans from eBay, he realized there was a lucrative market for secondary sneakers.
The increase in counterfeits available has led to serious issues for brands, which Lu and Sugano could address by creating GOAT.
After two years, in 2015, they launched GOAT to build a trustworthy marketplace for authentic shoes.
GOAT, the Saving Grace for Sneaker Enthusiasts And Brands
Lu added that the reason why people collect shoes is that they’re nostalgic for their childhood.
Sneakers collectors worldwide are always looking for rare sneakers at high prices. However, they’re afraid of counterfeits.
For years, brands like Nike have battled against fakes.
The goat became a trusted brand by removing fears and replacing them with trust.
The GOAT Group
GOAT Group is an online marketplace where consumers can buy authentic sneakers, apparel, shoes, and accessories from three major brands – GOAT, Flight Club, and alias.
It has operations in over 164 countries with more than 30 million active users and employs more than 750 people. Its headquarters is in Los Angeles, California with two other offices in New York City and Shanghai, China.
The facilities operate from multiple locations across the United States, including Ohio, New Jersey, and Fontana.
Flight Club, which began the sneaker consignment business, runs its operations out of three physical stores in Los Angeles, New York City, and Miami.
GOAT Funding and Valuation
Initially, the company was funded by Y Combinator, Upfront Ventures, Andréessen Horowitz, and Reddit, among others.
After merging with GOAT, Flight Club continued operating separately from GOAT. It captured its own channel in the market.
Google’s acquisition of Waze was a major blow for Uber, which had been trying to compete with Lyft by building an app similar to Waze.
The GOAT group was able to raise $60 million in funding from VCs like Index Ventures, Webb Investments Network, Matrix Partners, and Upfront Ventures.
GOAT has been backed by large investments since its inception in 2014. In 2019, Foot Locker made an unprecedented $100 million dollar commitment to GOAT.
A strategic investment aimed at creating a seamless, frictionless customer buying and selling experience. GOAT used its funds to expand its operations and meet growing global demands. Foot Locker leveraged GOAT‘s technology to improve the shoe buying and selling experiences.
The goat just raised another $195 million, which valued them at $3.7B.
How Does GOAT Verify Authenticity?
As per GOAT’s guide, sellers must submit photos of their shoes from various angles. Once GOAT has approved these images, they’re posted online for buyers to bid.
If they have a buyer, Goats ask the seller to ship the goods.
They use several different types of technologies for their initial round of background checks.
The second round is a physical inspection by the seller, who checks the product physically before shipping it to the buyer.
Technology Usage
GOAT is an eCommerce platform connecting sneakers enthusiasts with sneakers, allowing them to buy and trade authentic sneakers online.
GOAT’S technology enables shoe retailers to list their products online and receive accurate price quotes in real-time without having to leave the app.
Digital Authentication
To determine whether a seller has uploaded authentic shoes, GOAT uses a variety of methods including image recognition, machine-learned analysis, and digital authentication.
Once the order has been verified by our customer service team, we ship the products directly to the warehouse for further inspection.
Augmented Reality
They use an augmented reality feature called Try-on to let users virtually wear their sneakers to check out how they look on their feet.
Branch
Using GOAT, you get an email and social share tracking through Branch.
When the recipient clicks on the GoToAssist button, GOAT directs them directly to the specific web page they want to visit.
Mutual Benefit Through Risk Minimization
GOAT’S business model is designed to provide mutual benefits for all three participants: sellers, buyers, and GOAT.
GOOGLE’S MARKETPLACE is based on the “trust” mechanism in which the company has developed a proprietary algorithm that determines the legitimateness of each listing on its website.
Rare collectibles can be expensive, so they’re often subject to damage, loss, etc. However, Goat provides safeguards against these risks.
- Because Goat doesn’t store inventory, there is no chance of theft. Once an order is verified by both parties, Goats are sent directly to the customer. There is zero chance of loss due to theft.
- The seller doesn’t receive payment until the product has been verified by an independent third party. It ensures buyers and sellers that the item they’re buying is authentic and not fake.
- Buyer protection ensures that consumers feel safe buying sneakers online without worrying about fraudulent activity.
What Makes GOAT Different?
Goats’ business model is different than most competitors in the space in several important respects.
- Instant Ship: With an instant ship, you can deliver your product within 24 hours for a small fee.
- Low commission rates: Goat differentiates itself from other resellers by offering buyers protections for orders over $300, and if they end up receiving a fake product, they get a full refund.
- GOAT launched its second-hance sneakers, which were previously used but professionally cleaned by GOAT. These can be traded in for store credit. Selling second-hance sneakers is affordable and comes with the same guarantees of authenticity that GOAT offers to its new sneakers.
- Try-on: GOAT was the world’s first brand to use augmented reality technology to allow its consumers to virtually try on its products.
Social Media Marketing
The business started its sales by offering premium sneakers for sale at discounted prices during Black Friday.
Due to its high volume, the application was crashing frequently, which left customers frustrated. After that, there were few to no purchases.
They used their social network accounts on Instagram to promote the hashtag, which gave away $1,000 in gift cards.
The GOAT DIY competition was created with the aim of connecting the community and inviting people to explore their creative side for a chance at winning some cash.
Expansion
With a huge market size come pitfalls: fakes and frauds.
GOAT has created a platform where people can sell their sneakers and purchase them from other community participants.
Geographical
GOAT started as an American company selling authentic, verified sneakers. They later branched out into clothing and accessories from some of the biggest names in fashion.
They opened a new facility in Hong Kong to capitalize on the Asian Pacific markets.
As part of its strategy to expand into new markets, GOAT is launching a mobile application in China.
Product
The recent expansion from used goods to high-end fashion and streetwear has come from the company s vision. To be the one-stop place where everyone wants to buy everything they need to look good.
Conclusion: How Does GOAT Make Money?
After reading through the article, we think that you’ve learned something new about their business models, their technologies, and their marketing strategies for turning their sales into profits.
Despite being just a startup in the sneakers business, GOAT has already won many loyal customers.
The company started out by focusing on just one region and one type of product but soon realized that its success was growing so rapidly that it needed to focus on expanding its reach into new territories and types of products.
It will be interesting for us to watch how GOAT continues to grow as they expand and market themselves further.
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