StockX CEO Scott Cutler Talks Growth, Layoffs and Nike Lawsuit – Sourcing Journal
Despite challenges facing some resale companies in recent months, StockX is coming off a record year during which its international business expanded and customer base continued to grow.
According to chief executive officer Scott Cutler, StockX maintained the growth it experienced at the beginning of the pandemic into 2022, when the company recorded 40 million trades, 12 million buyers (up 25 percent since 2021) and 1.5 million sellers on the platform.
“Marketplaces have become such an important part of the consumer experience of buying because the consumer wants products that they see out there,” Cutler said during a Zoom interview. “They generally want the highest and in-demand product and they can’t find it in any other place than in the resale market, so I think the value proposition for the resale marketplace is generally that you can access products that you can’t access anywhere else.”
Cutler credited StockX’s 2022 growth to two factors: an increase in the company’s international customer base and a heightened interest in footwear outside of traditional sneakers. According to Cutler, 50 percent of StockX’s trades in 2022 came from international sellers, doubling from the previous year.
StockX has been meeting this increase in international trades by opening more drop-off authentication centers globally to connect international customers with local sellers. In January, StockX opened an authentication center in Mexico City. Over the last two years, the company has also opened locations in Tokyo; Berlin; Melbourne, Australia; and Seoul, among others.
The company has also seen a growing interest in its footwear category beyond traditional sneakers, which have always been one of the most popular categories for StockX. Cutler explained the company is seeing customers gravitate toward brands like Crocs and Birkenstocks, as well as sneaker brands that weren’t typically in the “hype sneaker” category, such as Hoka or Salomon.
Despite its reported growth, StockX conducted multiple rounds of layoffs last year. One round took place in July and was reported to have impacted 8 percent of the total workforce, and another round came in November and was said to have impacted fewer than 80 employees.
“For us to be competitive, to effectively serve this global customer base in this macro-economic environment which is really challenging for consumers, as a business we have to be nimble, responsive and adaptable, and sometimes that results in us making some tough decisions,” Cutler said. “I have a lot of confidence in our strategy and in our people and doing everything that’s required to deliver on the service.”
In early 2022, it was reported that StockX was preparing for an initial public offering; however, Cutler explained that is no longer the company’s priority.
“Everyone who follows the capital markets knows that the IPO window has effectively been closed for all companies,” he explained. “Just a couple of years ago, particularly with the technology industry, there was a maniacal focus only on growth, whereas today for investors — and certainly this is reflected in the public markets — there needs to be a demonstrated path to profitability and those are the companies that are being rewarded today.”
StockX was last valued at $3.8 billion in 2021 following a $195 million secondary tender offering and $60 million in Series E-1 primary shares. Cutler declined to comment on the company’s current valuation, but stated that StockX is a “well-capitalized business.”
StockX was also sued by Nike last year, with the sports giant alleging trademark infringement over StockX’s launch into non-fungible tokens. Nike has also accused StockX of selling counterfeit styles on its platform.
“Verification and our process around verification for every product that’s sold on the platform is at the center of our StockX value proposition and it has been since the very beginning,” Cutler said, noting he can’t discuss ongoing litigation. “We also believe that we engage in the most rigorous verification process in the business and among marketplaces, so we’re going to continue to defend the important role that we play in the market and for consumers in this market.”
This year, Cutler explained the company is planning to sustain its growth by continuing to focus on its international business and category expansions.
“I’m very bullish on the resale market overall because I think for the industry it provides a unique experience, access to unique product, unique services and filling a void that brands and retail are not able to fill in terms of a customer expectation,” he said. “I would expect that the resale market would continue to be strong because of those unique value propositions for customers.”