Flight Club Miami

CULVER CITY, Calif. — More people in China are tuning into NBA games than there are people living in the U.S. and Goat chief executive officer Eddy Lu likes the sound of that statistic.

That’s because Lu oversees the sneaker reselling platform Goat, which merged with Flight Club in February. The deal merged digital and brick-and-mortar businesses, now giving the combined entity the muscle to use its size to test new endeavors such as augmented reality, women’s, brick-and-mortar and international expansion.

The business, backed by $97.6 million raised to date, started in 2015 by Lu and Daishin Sugano and was born out of the founders’ own frustration as sneaker buyers who had encountered their fair share of challenges in buying authenticated product. Goat has aimed to change that process. The company authenticates shoes coming in for resale and then ships them out in Goat-branded packaging. Flight Club added a long-standing name in the industry and the additional expertise in physical retail and a concession business model.

The merged entity has gone from 100 to 500 employees over the past year and now counts more than 10 million registered users on Goat. That compares with 2 million users around the same time last year, which Lu attributed to the continued momentum around sneaker buying and selling.

Now, Goat’s testing a few concepts.

During Black Friday, the company offered an augmented reality app that served as its foray into the technology. Consumers were encouraged to visit various sneaker spots that represented different memorable moments within sneaker culture history around the world, launch the app and unlock different AR experiences or be entered to win various prizes.

The program was offered at 125 locations across 15 countries, with some 1.85 million participants. It was an important time to test, with the current quarter accounting for around 40 percent of the company’s sales. The hope is there will be further payoff of the program throughout the rest of the holiday selling period as more of those who downloaded the app for Black Friday convert and stick with Goat.

“That’s the initial test with AR,” Lu said. “There are practical applications for us in the future. You want to see what the shoes look like with the pants that you’re wearing. ‘Do I look good in these shoes?’ and so AR will play a component in the future and this was our first test.”

Goat Black Friday

Goat saw 1.85 million participants with its augmented reality test for Black Friday.  Courtesy Photo

Other tests include women’s where the company’s monitoring responses to features online that automatically convert a woman’s size into men’s or children’s for a particular shoe in an effort to make the buying process easier.

There’s also a storage program in beta and set for an official launch in January. The program allows for buyers to opt to have their sneakers stored in one of Goat’s warehouses or the facilities of its third-party logistics providers. The service is aimed specifically at those buyers who purchase off Goat with the intent to turn around and a few months later resell on the platform once supply drops and prices rise.

The company’s also taken pages out of Flight Club’s consignment playbook, employing an instant shipping program that reduces the amount of time a consumer waits to receive a pair of sneakers from Goat. A Goat seller will ship the sneakers to the company once a sale is made. The shoes are authenticated and then shipped out. The new program allows for shoes to ship out to the customer instantly, for an additional fee.

The potential with Flight Club remains wide open, particularly on the retail front. A Miami pop-up — totaling 1,800 square feet — allows for the company to take more strategic steps in merchandising product in collections aimed at women or perhaps fans of Pharrell Williams — and his neighboring restaurant in Miami. The company’s also working on making it easier for sellers to drop merchandise off at the physical location — all tactics that, if successful, will be employed in more doors moving forward. They’ve also introduced higher-priced apparel — hoodies for around $80 to $90 or T-shirts for $50 — to gauge customer response.

“It’ll be a great test for us going forward,” Lu said. “It’s going to help us identify how we expand both domestically and internationally because we know Flight Club can be successful in multiple parts of the world.”

And that can be in any format — whether long- or short-term real estate deals — the ceo said.

“There’s always going to be both,” he said of permanent and short-term retail. “I think in the markets we have conviction over, we are going to definitely have permanent stores that run. But flexibility is always great. Right now, because it’s the first door that we’ve done post-merger, it’s a great learning experience and something that we’re printing our playbook on now so we can expand quickly in the next few years.”

Texas and Chicago appear attractive markets to the company for growth as are London, Hong Kong, Japan, Southeast Asia and Australia. The company is looking to expand in English-speaking countries. But next year comes a much bigger push to establish warehouses overseas in addition to localizing for language and currency on the Goat platform, which Lu said would prove “a big unlock for people” as it continues to capitalize on momentum around sneakers.

“You can wear sneakers to work. You can wear them to the club,” Lu said. “The business has gone with the growth of the market.”