For some people, the purpose of sneakers is pretty straightforward, namely, to provide comfortable, somewhat attractive covering for their feet, which they can wear regularly or when engaged in athletic pursuits. But those people are missing out on what the vast universe of sneakerheads know: Sneakers don’t even have to be worn to be awesome.

The term sneakerheads refers to collectors who await the latest edition of high end shoes like a comic book collector anticipates the publication of a new issue of a great title. Sold in limited editions and teased for months ahead of their release, the sneakers generate tremendous buzz and desirability. Thus manufacturers like Nike and adidas can charge extremely high prices, and consumers who feel driven to own such exclusive products will happily pay.

The market is thus limited, both on purpose and by the price levels. Relatively few people can actually afford to pay $2000 for pairs of shoes, over and over again until their closet collection is well stocked. But the many sneakerheads still want some sort of access, prompting a company called Wannaby to come up with a novel app that brings them close.

The Goat app is offers an augmented reality (AR) try-on tool, primarily for designer sneakers. By tilting their phones to take an image of their own feet, users can virtually impose the coolest kicks onto themselves, then take a picture of the image. Without ever going to the store, they can make it look as if they are wearing the Dior edition of Nike’s Air Jordan 1 shoes, for example. Naturally, the next step is to post the image onto their social media accounts, evoking envy and excitement among their friends.

Although different functions in the app also allow consumers to virtually try on other, more common shoes, those functions are not the most popular use. Instead, in some cases, the AR even allows people to imagine themselves wearing shoes that never went into production. For example, many users loved the Fragment Design Air Jordan 3 model, but Nike never manufactured it. The pictures they created with the AR app represented, in a sense, the only means to wear those shoes.

The Goat app includes a purchase link for some products, but in most cases, the available link only offers users the option to “share and save.” That is, the app does not encourage or facilitate purchases for many of the virtual items that users can play with through its functions. In turn, the company earns its revenues mainly by licensing the AR technology it created to support the app, not by receiving a percentage of each sale it prompts.

The aligned attitudes of the various parties in these exchanges thus create value, even without sales. Sneakerheads get to imagine themselves wearing the latest edition and present that image to their friends through social media. The sneaker companies increase the buzz around their products. And the AR developer increases its brand recognition with every new share. So what if no one exchanges money or receives any products that they can use?

Discussion Questions:

1. Could AR offer similar benefits for consumers of other sorts of products? Give some examples.
2. Are there other ways that app providers could earn revenues from AR apps, if they do not necessarily promote purchases?

Source: Jacob Gallagher, “Will AR Sneaker Apps Change the Way You Buy Nikes?” The Wall Street Journal, February 3, 2020