Digital sneaker marketplace GOAT on Thursday announced a merger with sneaker consignment retailer Flight Club; following the merger the two will continue to operate as independent brands.
Founded in 2015, GOAT will continue to focus on mobile and web listings and use its platform across the combined companies, while decade-old Flight Club will continue its focus on global retail and e-commerce consignment of rare sneakers, according to a press release.
At the same time, GOAT and Flight Club announced a new funding round of $60 million, led by Index Ventures, and joined by GOAT investors Accel, Matrix Partners, Upfront Ventures and Webb Investment Network. Index Ventures' Danny Rimer and Flight Club's Damany Weir will join GOAT's board of directors, according to the release. That brings GOAT's total funding to $97.6 million, the company said.
GOAT and Flight Club operate in the same rarefied space of sneaker obsession, where "sneakerheads" buy and sell to grow and tweak whole collections of vintage, limited edition or otherwise unusual finds. It's a $2 billion resale industry, according to GOAT CEO and co-founder Eddy Lu.
GOAT provides authentication service and buyer protection through its platform, which the company says is the largest selection of sneakers, ranging from general releases to rare exclusives. Flight Club, meanwhile, says it carries "every brand name on the market," and that it has "evolved from a one-stop sneaker destination, to a cultural hub for sneaker enthusiasts and novices alike." The retailer runs two brick-and-mortar stores, in New York and Los Angeles.
That gives them much in common, although their operations are different enough to remain separate brands. Each has much to contribute to the other, with GOAT providing tech and mobile prowess and Flight Club supplying a retail footprint. "The merger of Flight Club and GOAT, together with $60 million in new funding, will allow us to significantly scale our online and retail operations to meet customer demand both domestically and internationally," Lu said in a statement.
For Flight Club, it's logical, and the tie-up will be greater than the sum of its parts, according to Damany Weir, co-founder and president of Flight Club. "Aligning with GOAT's world-class technology and mobile listings platform is the logical evolution of our business," he said 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."
The "sneakerhead" ethos is a sub-culture of the streetwear style that is looming ever larger in sports footwear sales. On the performance side, running shoe sales fell 7%, and training sales declined 15%, while leisure styles grew 17% and captured $9.6 billion in sales in 2017, according to a report emailed to Retail Dive from NPD Group. Overall, performance sales declined 10% to $7.4 billion, a rate that has accelerated for the last two years, according to NPD.
"I often get asked whether the bubble around leisure will burst anytime soon, and the answer is no," Matt Powell, NPD Group senior industry advisor in sports, said in the report. "There is not a single performance shoe in the top ten list for 2017, which illustrates the sportswear fashion cycle we are in. Athleisure rules the runway, and the line between what is an athletic shoe and a casual shoe continues to blur. Brands and retailers must continue to feed this trend."
That's leading several retailers and brands to jump in. Zappos, for example, unveiled a retail concept last year, "The_ONES," highlighting classic sneakers, with a dedicated website landing page and pop-ups in New York. Also last year, Lululemon launched three sneaker styles with Athletic Propulsion Labs. Meanwhile, Adidas has reclaimed the number two spot among the three big players in part thanks to its focus on urban aesthetics and streetwear.