The Rise & Fall of Sneaker Reselling: Interview with Ping Proxies
Timur Gok, CEO of Ping Proxies, talks about his experience in the niche.
Sneaker reselling began as a way for sneakerheads to earn some extra cash. By 2020, it had formed a lucrative ecosystem of bots, proxies, cook groups, and other services, which analysts estimated to be worth over $2 billion. Teenagers with programming skills could make thousands of dollars per month, and many found reselling more lucrative than their day jobs.
However, by the end of 2022, the stream had become a trickle, and it looked like the gold rush was over. What happened? Timur Gok from Ping Proxies, a successful sneaker proxy provider, agreed to recount his journey: the rise and fall of sneaker reselling, and how the members of this ecosystem had to adapt to survive the changing times.
You’re operating a proxy provider that used to specialize in the sneaker reselling niche. Tell us a bit about your company and how it started.
“My first interaction with the proxy industry was in 2017; I had been reselling sneakers and limited edition items for around a year or so while in high school and that operation began to scale in size and complexity. In order to continue to grow that business, I could no longer rely on manual purchasing and that led me into the world of sneaker botting at its infancy. These software products could be used to automate sneaker purchasing at scale but required proxies in order to avoid rate-limiting from sites like Nike or Adidas.
The concept of proxies caught on in no time and I decided to have a pop at running my proxy business targeted at the sneaker-botting market as I had some foundational understanding of computer science. This first business was aptly named sneakerproxies.co.uk and it was very rudimentary, effectively just finding proxies which worked on different sneaker sites from existing general-purpose proxy providers and then marketing/reselling them to a sneaker audience.
This business grew very quickly and within a year or two it had become more profitable than my original sneaker reselling operation all while its complexity and my understanding of the market had increased a lot. It was a very interesting time with a lot of innovation in the market – datacenter proxies were rapidly becoming redundant as sneaker websites began wide-scale ASN banning and ISP proxies had just hit the scene.
I decided it was time to make proxies my main focus and with the help of University of Leeds’ Enterprise Scholarship Scheme and their Spark business initiative, I incorporated Ping Technology Labs LTD (Ping Proxies) in 2020.
During our first two years of business, we exclusively sold to the sneaker audience and we were growing month-on-month substantially into the peak of the sneaker market in early 2022. The business grew in complexity and size – we had served over 15,000 customers and our in-house datacenter and ISP operations were very competitive, working with carriers such as Lumen, AT&T, Charter and Telia. This also gained us a B2B business selling services and infrastructure downstream to several other sneaker proxy companies.
Since then, the sneaker-reselling industry has contracted substantially and for a time, so did our business. We had to refocus quickly, broaden our customer-base and invest in technology; all of which we are doing successfully and we have lots of exciting things coming in the near future!”
The sneaker reselling niche reached its high point in 2022, and then it began going downhill. What happened?
“During covid, things really started to heat up in the sneaker market and there was an influx of new resellers wanting to become part-time entrepreneurs. Sneaker-reselling was getting a lot of publicity and for many sitting on the sidelines, it was the easiest side hustle to understand.
Everyone took advantage of this with brands like Adidas and Nike increasing the number of releases dramatically and encouraging hype-culture. An industry quickly sprouted of sneaker “Cook Groups”. These were subscriptions to a Slack or Discord server where those with (supposed) knowledge and experience in the sneaker resell market would teach new resellers the ropes.
This new wave of market participants created excess demand in the derivative sneaker proxy market and it was an amazing opportunity for our business. We were growing every month and our supply couldn’t keep up with demand meaning for every major release we were out of stock.
In mid-to-late 2022, the bubble burst…The sneaker reselling market hit hard times for several reasons which can include:
- General economic slowdown / contraction in luxury goods markets
- Profits being competed away by excess market participants
- Sharp decrease in bot-able sneaker releases
The first two reasons mentioned were part of a natural market cycle and were manageable but the sharp decrease in releases had a similarly sharp impact on the sneaker reselling market and by derivative, our proxy business. Footlocker and Nike had moved to a raffle system and this made botting very difficult and cost-prohibitive since you also required website accounts which could be quickly banned.
This wasn’t too much of an issue for the market as resellers moved to Adidas Yeezy releases which were coming thick and fast, This model was easy to buy at scale, highly liquid and profitable but in October 2022 they stopped releasing after Kanye West’s series of controversial and anti-Semitic remarks led Adidas to suspend the relationship leaving a sea of sneaker-resellers which no sneakers to resell; crashing the market.”
What’s the current demand for sneakers? It’s obviously lower than before. Has the market simply disappeared, or did it move on to something else? I remember the hype around NFTs and consoles back in 2021, but it wasn’t really sustainable.
“The demand for sneakers is still very subdued and that is a function of the profit potential in the market. There still aren’t many profitable events with Nike slowing down their exclusive model releases and Adidas/Kanye remaining in a state of flux.
Though profitable sneaker releases have disappeared, those entrepreneurs that want a side-hustle haven’t and there have been several quick fads of reselling other items such as consoles, NFTs and graphics cards but these haven’t had the longevity or scalability that sneakers once did.”
We’ve noticed that some sneaker proxy providers were bought out by the major players like NetNut or Bright Data, others pivoted to general-purpose use cases, and many simply closed. What were the main adaptation strategies, and how did they turn out?
“It took some time but eventually large providers such as Netnut, Bright Data and Oxylabs realized the revenue potential from the sneaker proxy market and decided to get involved each in their own ways. We saw several acquisitions and each company began pushing reselling programs and had their sales outreach teams set on trying to partner with proxy companies like ourselves.
Most of these acquisitions were pre-market crash and as a result, I think those that sold their businesses picked the perfect time and the acquirers likely didn’t do too great off these deals, though if the sneaker market comes back they’ll be very well positioned to serve it.
For those that didn’t get acquired, such as ourselves, it was a very tough market to compete in and it was a case of evolve or die. Most chose the latter.
The easiest way to compete was on price and companies began to dramatically decrease rates in an attempt to win over any remaining business left in the market. This squeezed all providers, particularly those that didn’t have their own infrastructure, and many decided to shut up shop leaving only those companies which had low enough costs able to absorb the drop in per unit revenue. Out of these, some still decided to close down, likely due future expectations of a subdued market and others simply deciding it was the end of the road. Millions of dollars were made by many companies over the preceding two years and some business owners were happy to leave with their heads held high and refocus on different projects.
Those that wanted to continue had to attract different customer bases and we saw the remaining companies try to appeal to wider audiences such as web-scraping and SEO. Each company’s success in this respect has varied, and we haven’t seen any business achieve the same level of dominance or recognition they once had in the sneaker market though we hope we are the ones to change that soon.”
You’re obviously still in business and growing. How did you adapt to the changing circumstances? Was it hard?
“The contraction in the market was very difficult for us and it came at the worst time. We had just taken on several full-time staff and moved into our office in Manchester, UK.
As a business owner, it was a scary time but after some consideration, I decided to double down. We could operate in the more competitive market as we are vertically integrated and have our own infrastructure. This helped us survive and we’d built up substantial reserves which allowed us to continue investing in business.
After around three months, we had stabilized the business and were back to profitability even with all the additional employee and business costs we had taken on. We now had our sights set on the future and we were committed to investing in technology and infrastructure with a vision to become a large multi-use-case proxy provider in a few years or so.”
What are your plans for the future? Are there any particular strengths your expertise in the sneaker niche has given you that you can apply going forward?
“We are extremely excited about the future. Over the past year and a half, everyone at the company has had their head down, working really hard to develop new software and technologies which we are very close to releasing and are extremely excited about. We think these will give us a huge leg up and put us in the mix to compete with the larger proxy providers with headcounts 100x of our company.
These include a new website experience, new dashboard, accompanying software tools, a new API and an innovative observability framework. We’ve also been heavily investing in the low-level proxy software which makes all our services tick and by the end of the year we’ll be going for our first patent on an idea that we’ll have to keep secret for now.
Alongside this we’ll also be launching our low/no-code web-scraping platform called Bloxed (Bloxed.com) by Q1 2025 which should help reduce the barriers to entry for web data-extraction while being very price competitive when compared to current options on the market.
The understanding and knowledge that has fueled this work is all underpinned by everything myself and my colleagues learned while serving the sneaker niche, and we’re incredibly grateful for the opportunity to have been a part of that market for so long. It will always hold a special place in our hearts as it laid the foundation for our expertise and passion. As we look to expand and grow the business, we remain committed to serving the needs of that audience for as long as they’re around.”