GOAT Group: 7 Things You Need to Know About its Strategy & Growth

Picture of a person wearing Jordans
 

By Tricia McKinnon

If you are a sneakerhead and even if you aren’t then you have probably heard of Goat, the sneaker resale site. GOAT Group which was founded in 2015 is also the home of Fight Club, a chain of consignment stores for rare shoes, as well as Grailed a streetwear resale site. “When they launched Goat, they really hit the right market segment. They went in and addressed a problem that the industry was having, which was fake products and authenticity, the things that made potential customers very leery of buying online,” said George Belch, chairman of the marketing department at San Deigo State University.

Since 2015 GOAT Group has gone quickly, garnering a valuation in the billions. If you are curious about what is fuelling GOAT Group’s growth then consider these seven elements of its strategy.

1. An acquisition to expand more into apparel. Last month GOAT Group agreed to acquire streetwear reseller Grailed for an undisclosed amount. On Grailed you can shop for hard to find clothing from the likes of Raf Simons, Gucci, Saint Laurent, Balenciaga and other luxury brands. The deal allows GOAT Group to go deeper into the apparel market.

“We’ve been continuing to see growth across our businesses, especially in apparel and accessories, which have doubled the past 12 months,” said Eddy Lu, CEO of GOAT Group. “When you’re looking to accelerate growth even further, that’s when consolidation makes sense.” “I mean, it's just so complementary,” says Lu. “That’s why we're seeing such quick growth because apparel completes the whole look. We don't just sell apparel. We sell accessories as well. So we're selling sneakers and we know what sneakers you buy, so it's like, ‘Hey, this is the apparel that will look amazing with the sneaker that you buy.’”

Grailed operates using a peer-to-peer model similar to StockX where buyers and sellers sell merchandise directly to one another using Grailed’s website to facilitate the transaction. Goat, on the other hand, acts as an intermediary that authenticates a seller’s goods before they are sent to the buyer. 80% of GOAT Group’s customers are millennials or Gen Z.

2. The resale market experiences contiuned growth The sneaker resale market is expected to grow from $10 billion in 2021to $30 billion by 2030. The size and growth of the market has attracted many investors including Foot Locker which invested $100 million in GOAT Group in 2019.

3. Nike continues to be popular. The best-selling sneaker on Goat is the Nike Dunk which sold more than Jordan 1s this year. Nike Dunks represent nearly 50% of Nike sales at Goat and Fight Club. Nike, Jordan, Adidas and Yeezy are the top four selling brands on Goat, with New Balance coming in fifth. New Balance continues to grow in popularity with sales on Goat up 92% in 2022. The top selling sneakers on Goat this year are the: Dunk Low 'Black White' (Panda), Yeezy Slides 'Onyx' and the Yeezy Foam Runner 'Onyx'.

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4. International expansion to drive growth. GOAT Group is also expanding outside of its core market in the United States and into Europe and the Middle East to fuel growth. “We’re just getting started, we’re excited about all the potential opportunities we have. Our core market right now is the U.S. domestic sneaker market, but we see so much growth in international markets such as the Middle East, for example. Expanding internationally is a big growth driver for us,” said Lu.

5. Not everything sells at a markup. While you may have paid ten times the retail price for a rare pair of Jordans, not everything sold on Goat is at large markup to the retail price. 30% to 40% of the items sold on Goat are sold at a discount to the retail price.

6. An authentication process that works. Goat’s rigorous authentication process isn’t in name only in 2019 Goat caught $72 million in fake shoes an increase from $34 million in fakes it caught in 2018. “As our marketplace grows and our gross merchandise value grows, there’s bound to be more fraud that enters the system,” said Lu.

7. A multi-billion dollar valuation. GOAT Group has over 40 million members across 170 countries and over 100,000 skus on its site. A funding round that took place in June valued GOAT Group at $3.7 billion. StockX, another popular sneaker resale site was valued at $3.8 billion last year. Last year GOAT Group reported it had achieved $2 billion in gross merchandise value.

Tricia McKinnonStrategy & GrowthComment