"Harms Consumer Benefits" Nike's 'No Resale' Policy... Can It Stop Reselling?

Resale Craze Among MZ Generation
Surge in Resellers for 'Resale Purposes'... General Consumers Also Suffer
Nike Introduces 'Resale Ban' Clause but Faces 'Effectiveness Concerns'

Nike announced a ban on reselling, but there are concerns that it will be ineffective due to the difficulty of preventing private transactions among consumers. The photo is not related to the specific content of the article.

[Asia Economy Reporter Yoon Seul-gi] Nike has declared a 'resale ban,' judging that general consumers are being harmed by buyers purchasing for the purpose of reselling. However, there are also criticisms that the effectiveness is limited since it is practically impossible to control private transactions among consumers.

Nike Korea will add a 'purchase not allowed for resale' clause to its terms of use starting this October. 'Purchase for resale' means 'buying a product with the intention to resell it to someone else or for resale purposes.'

Nike emphasized that it is a platform solely intended to sell products to end consumers and strictly prohibits purchasing products for resale purposes. If Nike determines there is evidence of purchase for resale, consumers may face account restrictions, order cancellations, or account suspension/closure.

Resale refers to buying scarce products and selling them at a premium. Since COVID-19, the resale market has gained great popularity as an investment destination for the MZ generation (Millennials + Generation Z). It is considered advantageous because it requires relatively low investment costs, offers high returns, and has lower risks compared to the return rate.

The investment method is also simple. In Nike's case, eligibility to purchase limited-edition sneakers is granted through a random draw called a 'lucky draw.' Consumers apply online through Nike's website and winners are selected.

The domestic resale market is estimated to be about 600 billion KRW, and since sneakers account for a large portion of traded items, Nike products hold a significant share in the resale market.

As the resale-tech (resale + financial technology) craze continues, platforms supporting resale transactions have emerged. Cream, which accounts for most of the domestic resale market transactions, provides sellers and buyers with product purchase and sale price information, consignment sales, and warehouse storage purchase services. When winning a Nike shoe lottery, consumers can set the delivery address to Cream and immediately send the product, simplifying the resale process.

Nike announced that it will prohibit purchases for resale starting this October. Photo by Nike website

As resale-tech gained popularity, side effects also appeared. With an increase in buyers purchasing for resale, general consumers who actually want to use the shoes have suffered, and there have been criticisms that resellers harm consumer benefits by excessively marking up prices. Additionally, some professional resellers have been found using macros (automated repetitive task programs) to secure large quantities.

To address this, Nike has taken action to 'ban resale.' From October, if Nike judges that a buyer is a reseller or intends to resell the product, it can refuse or cancel orders.

However, there are voices questioning the effectiveness. It is practically impossible to monitor private transactions among consumers, and it is also inappropriate for companies to oversee products already sold.

Even in the case of concert tickets for famous singers, where resale issues have frequently arisen, there is still no proper solution. According to Article 3 of the Minor Offenses Act, scalping tickets at venues can result in fines up to 200,000 KRW, detention, or penalty, but there is no law to regulate online ticket resale.

Experts also expressed doubts about whether related regulations will be effective in the market. Professor Lee Eun-hee of Inha University’s Department of Consumer Studies pointed out, "Nike’s resale measures came quite late, and the measures introduced are weak because resellers can respond by changing delivery addresses or buyer names."

Professor Lee explained, "Resale is naturally possible among consumers when they do not like the product or the size does not fit. However, currently, the scale of profits enjoyed by resellers is considerably large, incomparable even to premium ticket prices." She added, "I don’t know how Nike will regulate resale, but for now, there are concerns about the effectiveness of the proposed measures."

This content was produced with the assistance of AI translation services.