Why Web2 Sneaker Platforms Can't Scale: The Case for Meta[Z]
As the sneaker resale market has grown, current web2 platforms are facing significant scalability challenges. These web2 platforms see costs spiral as they onboard more buyers, sellers, and inventory.
It's no surprise during a period of stagnation for the resale space, costs remain stubbornly high. The relentless influx of users, coupled with the need to manage an ever-moving physical inventory, has strained the resources of Web2 platforms.
The consequences of this scalability challenge are far-reaching. Regional sneaker resale platforms like the Netherlands-based Restocks and French company Kikikickz shuttered late last year. In Korea, resale platform SoldOUT has let go of 30% of its workforce, and StockX suspended services in the region. These developments underscore the urgent need for innovation in the sneaker resale market.
Lack of Economies of Scale
Economies of scale refer to the cost advantages that arise when the production or transaction volume of a good or service increases. In other words, as the scale of production or operation grows larger, the average cost per unit decreases. This phenomenon occurs because fixed costs are spread out over a greater number of units, leading to efficiencies in production, distribution, and operation.
A detailed look into current platforms clearly outlines the struggle to achieve economies of scale due to various factors:
- Higher Marginal Costs: With each new user added to the platform, traditional Web2 platforms encounter higher marginal costs. These costs include expenses related to onboarding new users, maintaining and servicing their needs, as well as scaling up infrastructure to support increased demand.
- Linear Scaling of Costs: Authentication, logistics, and shipping costs tend to scale linearly with transaction volume on traditional Web2 platforms. As the user base grows, the costs associated with verifying authenticity, managing logistics, and shipping products increase proportionally.
- Need for Expanded Physical Footprint: The exponential growth of Web2 platforms necessitates a corresponding increase in physical infrastructure, including warehouses, distribution centres, and storage facilities.
Without achieving economies of scale, the platforms' average costs per user or transaction may remain high, limiting profitability.
Meta[Z] Fees VS Current Sneaker Resale Platforms
Does that mean the current platforms are losing profitability for the benefit of their users? Quite the opposite!
Taking a look at the fee structure for each of the leading platforms today (2nd quarter of 2024), there's a big problem appearing: platforms are fronting the costs to the users. Within 4 years, StockX processing fees (buyer side) have climbed from 3% to 10%. KREAM, Korea's leading platform increased its seller's fee to 6%.
Note: these fees do not take into account, shipping, VAT, or custom fees!
How is Meta[Z] able to sustain only a 3% seller's fee while other platforms struggle and are constantly hiking their rates, much to the chagrin of their users?
Meta[Z] CAN Sustainably Scale
Meta[Z] is disrupting the resale market by tokenizing Real-World Assets (RWAs) like sneakers on-chain. This eliminates physical handling, reducing risks for platforms and users.
With fixed 3% transaction fees regardless of volume, Meta[Z] ensures affordability and predictability, unlike traditional platforms. Blockchain enables borderless trading, optimal price discovery, and programmable asset capabilities, maximizing the value of sneaker collections.
This means no more hassles with physical handling, reducing risks for both platforms and users alike. With this streamlined process, Meta[Z] creates an efficient marketplace where sneaker enthusiasts can seamlessly trade, invest, and unlock the full potential value of their collections.
Overview of RWA Tokenization Model
On the Meta[Z]'s platform, physical sneakers are securely stored in custody vaults, ensuring their security and integrity. These physical assets are then tokenized into digital NFT versions, representing ownership rights on the blockchain. This tokenization process unlocks a myriad of benefits for users, ranging from increased liquidity to programmable asset capabilities.
Key Benefits:
A. Ultra-Low & Fixed Transaction Fees
Meta[Z] boasts ultra-low and fixed transaction fees, ensuring affordability and predictability for users. Unlike traditional Web2 platforms, Meta[Z]'s transaction fees remain fixed at 3%, regardless of transaction volume. This eliminates the burden of escalating costs as the platform grows, providing a cost-effective solution for traders.
Additionally, only pay shipping fees when you redeem your sneaker for the real pair! No VAT or Custom fees to worry about when trading on our platform!
B. Borderless Global Participation
Meta[Z] removes the barriers imposed by traditional shipping and logistics constraints. Users can participate in sneaker trading from anywhere in the world, accessing maximum global liquidity. This borderless approach not only expands market reach but also fosters a more inclusive and diverse trading environment.
C. Optimal Price Discovery
Meta[Z] facilitates optimal price discovery through transparent orderbooks that reflect true supply and demand dynamics. Sneakers trade at their equilibrium global value, eliminating the inefficiencies and price distortions inherent in traditional regional-based marketplaces.
D. Programmable Asset Capabilities
Meta[Z]'s NFT-based ecosystem enables programmable asset capabilities, unlocking a world of liquidity possibilities for users. These digital assets can be seamlessly integrated with Sneaker Finance (Sneakerfi) products within the MetaZ platform, allowing for applications such as lending, staking, and more! This interoperability with DeFi maximizes capital efficiency and expands the utility of sneaker assets beyond traditional trading.
Conclusion
Meta[Z] presents a transformative solution for the sneaker resale market, addressing scalability challenges and reducing operational costs. With Meta[Z] already operational, users can custody their sneakers for free, maximizing their value.
To maximize the value of your sneaker collection, visit MetaZ and request sneaker custody at metaz.io/custody.