Teenagers in the past couple of years have been increasingly making a lot of money from selling trending clothes. The trendiest and most hyped brand: Supreme.
Supreme was founded in 1994 by James Jebbia as a low-key skateboard and clothing brand. Since then, it has grown into a worldwide brand with an obsessive cult following. The obsession over Supreme is what creates a huge resale market for their exclusive pieces. Supreme has so much hype around it that in 2017, it received a cash infusion of $500 million from the Carlyle Group. This put Supreme’s value at $1 billion dollars, putting it in the same tier as companies like Warby Parker and Shazam.
Essentially, the whole market of Supreme runs off of the most basic idea of supply and demand. They release their clothing in two seasons, Fall/Winter and Spring/Summer. Pieces are dropped every week throughout the collection and usually are sold out within seconds online. When dropped in the physical Supreme stores, it is easy to see there is not even remotely enough product for the demand. There are lines that go through multiple city blocks just for small product releases.
Since products sell out so quickly, people who flip them have to be prepared. They research, buy, and sell all season. Many Supreme resellers typically make up to $1,000 a month throughout the season. The most important piece of the puzzle is figuring out which products are the most coveted. Websites like Supreme Community, where users vote on their favorite unreleased product, are used for this.
Once a product is scouted, teens stay on the Supreme website for hours before the drop. They do not want to miss buying a product. The demand is so high that products often sell out online when they are still in the cart before checkout. There has been heavy usage of bots amongst Supreme resellers to make sure the piece they want is purchased. These bots are automated and can be programmed to buy pieces in certain sizes and colors. However, Supreme has recently been cracking down on this by blocking IP addresses and shipping addresses of people they suspect use bots.
Supreme typically prices its products based on the following model: Shirts/Bags/Hats = $30-$100 and Jackets/Hoodies/Pants = $100-$300. Within a couple of hours of the drop, private selling platforms such as Ebay and Grailed are filled with products, all 2-3 times the selling price. Sometimes the hype for a product is miscalculated and the seller loses money. This was the case with the Supreme kayak, which was expected to resell for over $1,000 but ended up dropping below retail. Other very hyped collaborations can go to as much as 10x retail. An example of this is the Supreme x Louis Vuitton Trunk which sold for over $80,000.
At the end of the day, Supreme is a brand based on hype and demand. With Supreme soon going mainstream due to their new access to capital, we will see if their business can actually succeed on a larger scale. Investors are making bets that Supreme will own a large market share of men’s streetwear if it loses some exclusivity. However, skeptics say that the only reason Supreme is so coveted at all is thanks to its exclusivity. The question remains: will Supreme succeed on a commercial scale or will they have to revert to their classic values?