SYNTHESIZING RESEARCH ON THE SUPREME RESELL MARKET

http://galfrats.com/2016/02/16/supremes-springsummer-2016-lookbook/

The economic principle I researched was people gain when they trade voluntarily and because of scarcity, people choose. My research question was why do prices skyrocket in the Supreme resell market? I found that prices go up because of scarcity and high demand for a product. 

The first thing I wanted to know when I started to research the Supreme resell market was how it all worked and why people were investing time into a risky market. I came across an article from GQ titled “Can Selling Supreme Make You a Millionaire”, it showed that a company named Wealthsimple is recruiting young customers to buy Supreme for them and then they will show them how to make a profit on items. It all follows a simple formula that the company came up with “Cop.Flip.Invest.” Wealthsimple uses this motto to get young people to buy products and resell them, while they inform the “buyers” on what to buy. Wealthsimple notes that “any product with a box logo is automatically worth more and that selling items fast—while the hype is hot and the folks who missed out are still licking their wounds—is key if you want to lock in the most profit.”

 Next I wanted to know why people are willing to pay two or three times what the item originally sold for. I figured that it had to be because of scarcity, there is such a limited amount of products that people are willing to pay more for them. In an article published in The Harvard Business Review titled “Customers Will Pay More for Less”, I found out that people subconsciously associate values with items. The author, Alexander Chernev states that this is due to “An underlying process that we call categorical reasoning. People naturally tend to classify products as either expensive or inexpensive, and this categorization influences how they judge products.” You can go to Walmart and buy the same material t-shirt, but people want the clout, they want the rarity, they want Supreme. In the article “Law Of Supply and Demand.” from Investopedia I found why Supreme resellers were able to make so much money. The article states that “Generally, low supply and high demand increase price.” Supreme has a very low supply and a very high demand, this is because they have a limited amount of stores and have had praise from mainstream artist promoting the brand to the public.