While its main competitor in France, Kikikickz, went bankrupt at the end of 2023, the Wethenew platform, which was built around the resale of exceptional trainer models, is taking over its assets including its website and social networks, but also database. It’s a strategic investment for the young company, which passed the €100 million mark in 2022, but faces a major challenge: turning its model around and becoming profitable. Read on.
In the golden age of streetwear, in the mid-2010s, the sneaker giants multiplied exclusive products, collaborations, iterations and innovations to market these rare pairs of sneakers. On the secondary market, the prices of these models soared, creating a real parallel economy… and sparking entrepreneurial vocations. Specialists in the resale of exceptional new products, such as Stock X and GOAT in the United States, rushed into this nascent market, with pairs being resold at several times their purchase price. European platforms soon followed. In France, Wethenew and Kikikickz, launched in 2018 and 2020, have emerged as the sector leaders, achieving sales in the tens of millions in just a couple of years.
But raffles and drops are clearly no longer in vogue. The post-Covid-19 situation, followed by inflation and changes in consumer priorities, have altered this ‘grey’ resale market, upsetting the market. So much so that Kikikickz, whose business had soared during lockdowns, recently faced the collapse of its business model. By the end of its financial year ending March 2022, the company was making a loss of €5 million. After looking for a buyer, the company went into receivership at the end of 2023. However, according to websites specialising in the world of sneakers, the Dutch website Restocks, which was set up in 2019, is said to have taken over the French platform for several million euros… before being placed into liquidation by the Rotterdam court in mid-November.
When Kikikickz was looking for a buyer in mid-2023, the founders of its French rival Wethenew, Michael Holzmann and David Benhaim, obviously looked at the file.
“At the time, we passed on the idea because we didn’t think the money was right for us. When the file came back after the liquidation, we chose to take over the intangible assets, the website, the social networks and the data,” explains Michael Holzmann. A good move, given the increasingly high acquisition costs involved in gaining new customers online? “Only time will tell. There’s potential, that’s for sure, because Kikikickz generated nearly 20 million euros in business at its peak, so if we offer our quality, competitively priced range to a base of people who are already interested in the world of streetwear, there’s potential. But it’s too early to assess it.”
Although we don’t know how much it will cost, the deal, in which Wethenew does not take over Kikikickz’s debts or teams, looks very interesting. Where Wethenew boasts a community of over 2 million people, its former rival had 1.5 million contacts. “As far as sneaker retailers are concerned, we now have more than 13,000 players registered on the platform and know almost all their partners. But when it comes to communities, there is very little cross-referencing,” analyses David Benhaïm. It’s a potential clientele for sure, but they are above all people who will be interested in our content on streetwear culture and our curation proposal, which is our trademark. Now all we have to do is get them to join our community.”
Wethenew is establishing itself as a key player in its segment in France, and the bad fortune of its European competitor Restocks could open up new opportunities, with the French company also considering a takeover of some of its assets. “We knew them well,” says Michael Holzmann, “the French market accounted for barely 10% of their business, and they were obviously present in the Netherlands and very strong in Germany, but also in Italy and Spain. Today, with our local expertise, we have the capacity to become the European leader in this segment in the face of the Americans Stock X and GOAT.”
But how is this young French company holding its own where its competitors have collapsed? The online reselling market has been largely destabilised by the return of physical offerings in 2022, then by a rationalisation of the offer by leading brands in recent years (reissuing the most successful models and reducing the number of editions and collaborations) and finally by consumers whose budgets may have been affected by inflation in many markets. Although Wethenew has seen its sales shrink to around €80 million, it was able to raise an impressive €20 million last year.
Seeking profitability
The company has allocated these resources to investing in technological capabilities to improve the valuation of models for resale by automating the process, optimising its supply chain and, above all, initiating a pivot in its business less than nine months ago.
“We continue to work with amateur, semi-professional and professional retailers and offer them an optimised platform and tools, but we see that there are fewer model editions and collaborations on the market, and that demand is weaker for penurious products. This remains our expertise, as does our passion for streetwear, and it’s a market that could return to its peak in a few years’ time, but we’ve started to work directly with the brands. Our biggest strategic challenge is therefore to ensure that our expertise in limited-edition products coexists with a more traditional offering.”
Collector’s models priced at over €300 are still on offer, and the site highlights the most sought-after pairs, such as the Adidas Samba with its original treatments, but Wethenew is now strengthening its offering with a number of models priced at around €50. At present, consumer products account for two-thirds of its offering, and could rapidly rise to 20%. In addition, although 90% of its business is in sneakers, it is developing classic shoes as well as ready-to-wear, with more brands such as Salomon, UGG, Birkenstock and Dickies joining its range.
“One of our challenges is to expand across Europe. By being competitive in the consumer market, we can approach new customers. And we bring credibility by associating the models with local brands,” explains David Benhaïm. “We’re looking for Italian and German brands to give us credibility and curation”. It’s a fine line, but at a time when the reselling model has broken down, the Wethenew team, with its hundred or so employees, has to carve out a place for itself among the traditional players in the sneaker market, by asserting its expertise. More than just growth, which could be sluggish this year, this is an asset that should enable it to achieve profitability as quickly as possible.
Copyright © 2024 FashionNetwork.com All rights reserved.