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What Nike's crackdown on sneaker resellers means for sneakerheads

AYESHA RASCOE, HOST:

If you love having a fresh set of sneakers, chances are you've used Nike's SNKRS app. It lets sneakerheads join drawings to buy the company's latest designs. But recently, customers have had complaints - resellers. They deploy bots, or fake automated accounts, to scoop up all the shoes, forcing many customers to pay double or triple the retail price. But all that could be about to change. To tell us more about it, we turn to Mike Sykes II. He writes "The Kicks You Wear" newsletter and is a staff writer for USA Today. Thank you for joining us.

MIKE SYKES II: Thanks so much for having me.

RASCOE: So Nike has made an announcement about these bots. Like, why is this such a big deal for people who love sneakers?

SYKES: All right. So what's going on is Nike has updated their terms of sale agreement with the consumers to include these anti-bot regulations. So they're allowing themselves to cancel orders, charge restock fees, limit purchase quantities of all of these different sneakers that you see on, like, the SNKRS app or even on nike.com or the Nike app, sometimes, so that the consumers who actually just want to wear the shoes and not resell them have a better chance of getting them while, you know, the resellers are doing what they do.

RASCOE: Can you explain how these drawings work, like, and why they can be so frustrating for the average customer?

SYKES: So the SNKRS app is something that sneakerheads use pretty much every weekend and even throughout the week, to go after these limited releases that Nike will release. They all come in limited quantities, and so you have to enter into these drawings to literally have a chance to purchase the shoes. So you know, like, with a normal raffle, maybe you would have a chance to, you know, win the shoe for free, but in the sneakers world, you get a chance to actually buy it and spend your money, which is kind of weird, but that's how it works.

RASCOE: (Laughter) OK. And so do you have personal experience of, like, really wanting a pair of sneakers and not being able to get them?

SYKES: Oh, do I?

RASCOE: (Laughter).

SYKES: I mean, pretty much every single weekend. I mean, this is kind of how it goes.

RASCOE: Are you buying sneakers every weekend? 'Cause some people might - now, look. My sister is a sneakerhead. She used to, you know, wait in line all night at Foot Locker, etc., to get sneakers.

SYKES: Yeah.

RASCOE: But are you buying sneakers every weekend?

SYKES: Ayesha, I'm buying sneakers constantly, or I'm trying to. And that's the thing, right? It's like - there are times when you'll get them, but more often than not, you're not actually buying these sneakers. You're just trying to do it. It's almost like a game.

RASCOE: Yeah. And these resellers - when they get the shoes, they mark up the price. So if you try to get them from the reseller and not from the Nike app, you're paying - how much more are you paying?

SYKES: So there are times when, you know, you can go to these resale apps like StockX or eBay or GOAT or whatever. And generally speaking, you're going to find at least 2 to 3 times more.

RASCOE: So how will this bot crackdown work, like, behind the scenes?

SYKES: So I'm guessing that Nike probably has some proprietary technology that they're using to go through these orders and cancel the ones that have these automated purchases. And that's something that other retailers have done before. It's something that we see a lot with, particularly, these boutiques that use Shopify. But for Nike, it should be relatively easy, which is why a lot of people have been frustrated that it took them so long to actually do something like this.

RASCOE: So why is Nike choosing to act now?

SYKES: I'm a cynic at heart, right? Now, I think that this is sort of self-serving to Nike. Now, Nike is claiming that, you know, they just want to get the shoes into the hands of the end consumer - the consumer that wants to wear these shoes, which is great. Like, that's what people have been asking for for years. But Nike's also in this situation now where they're sitting on a bunch of unpurchased inventory right now. And some of that inventory is coming from these returns that these resellers are making because the resale market has cooled off. They want people to actually buy the shoes and keep them so that that inventory number goes down, and I think this is a big part of that.

RASCOE: That's Mike Sykes II, author of "The Kicks You Wear" newsletter. Thank you for joining us.

SYKES: Thanks so much. Transcript provided by NPR, Copyright NPR.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.