Sneaker marketplace GOAT is merging with Flight Club, essentially the first name in after market sneaker retail. It’s also raising a $60M series C led by Danny Rimer at Index with previous investors Accel, Matrix, Upfront and Webb Investment Network participating.
The raise is significant, putting the total just shy of $98M raised, but it’s the merger with Flight Club that will cause this news to go racing around the hype factory press today. For 12 years, Flight Club’s retail and online businesses have been essentially synonymous with the aftermarket sneaker scene. They have the hottest shoes, they charge a stiff but not outrageous price for them and you’re guaranteed to get legit goods.
GOAT has been busy carving out a similar space focused on the app and online portals rather than retail. Now, they’ll be mashed together, creating a hopefully symbiotic relationship that pairs retail and online.
Rimer and Flight Club founder Damany Weir will also join GOAT’s board as part of the deal. Flight Club has never taken outside money.
“Aligning with GOAT’s world-class technology and mobile listings platform is the logical evolution of our business,” said Weir in a statement. “The complementary strengths of the two companies puts us in the best position to go after the entire market rather than compete for pieces of it.”
I spoke to GOAT co-founder and CEO Eddy Lu about the deal yesterday, and he says that one of the biggest drivers is the international side of the business. GOAT operates stateside and nowhere else. Flight Club, on the other hand, does big international business and Index (and Rimer) are known for their experience investing in international retail businesses.
Anecdotally, I can tell you that I have Canadian friends who are constantly frustrated that GOAT doesn’t yet support America’s Hat. And I’m in sneaker groups largely populated by French and German sneakerheads that use drop shipping and proxy local addresses to do business on the platform. The demand is there and one of the two big players, GOAT, has yet to let the rest of the world in. StockX currently has 15% of sales coming from International. There are currently dozens of local marketplaces for all of the big hubs of activity, but none of them have critical mass. And then, god forbid, there’s eBay, which is littered with fakes and scammers.
So there is opportunity.
The blend, Lu tells me, will result in the GOAT and Flight Club brands existing concurrently. Neither is going away, though GOAT’s tech stack will be used to facilitate Flight Club’s online sales business. Flight Club’s warehousing and international expertise will be leveraged on the retail side of the business. Lu says that the overall goal isn’t just to create a reseller supergroup of sorts but to plan out the complete metamorphose of the way that people buy shoes.
Under retail sales, for instance, now comprise 20% of sales on GOAT. This points to a hunger for people to buy what a sneaker head would consider ‘regular’ shoes. Not that rare, but still high quality and stylish and purchased from a seller that is built for shoes from the ground up. That, says Lu, is how GOAT will play its hand vs. Amazon and the other big shoe stores like Foot Locker.
When you go to Foot Locker, there are 300 SKUs on the wall and most sneakerheads don’t want any of them, he points out. Instead they want something specific and desired. Between GOAT and Flight Club, they can carry thousands of SKUs with data behind them that prove out desire. GOAT, Lu says, is not interested in selling ‘crap’. Instead, they want to pair the two parts of the sneaker sale picture to change what a retail experience is.
This move also swerves GOAT in a different direction than StockX, which has plunged into horizontal diversification of product to watches, handbags and clothing.
The sneaker and streetwear retail sector is exciting as hell right now, to be honest. There are a bunch of young entrepreneurs really taking stabs at figuring out what boutique retail looks like when it’s nomadic and digitally driven. StockX, GOAT, Flight Club, Stadium Goods, Kith, Grailed. Not all of them will figure it out completely but it’s fun to watch.
Update: Added international sales figures from StockX.