Shoe retailer Foot Locker Inc. invested $3 million in NTWRK, an ecommerce startup that provides limited numbers of products in drawings and drops. The investment is the seventh for Foot Locker this year. Foot Locker is No. 60 in the Internet Retailer 2019 Top 1000.
NTWRK offers limited edition products, including sneakers, streetwear and figurines, in an “episodic” format, releasing items for sale alongside unique videos that hype up the product, including the celebrity creators behind the products. These products are available in drops, in which buyers can purchase until the items are sold out, or via drawings, allowing shoppers to join the running for a unique item with hopes of getting it at a steep discount.
NTWRK’s main channel is an app, which allows the company to experiment with video production and shopping options. And since users must input shipping and credit card information before even viewing the drops and drawings, the app reduces the friction that can slow down limited-time sales. The company also operates a website and plans to add pop-up shops in the future.
“NTWRK’s innovating and engaging content platform is pioneering the way brands tell their stories and the way youth culture shops,” said Foot Locker CEO Richard Johnson in a statement. “At Foot Locker, we are focused on continuing to elevate the customer experience and investing for growth, and our partnership with NTWRK reflects our commitment to driving our business in new and exciting ways.”
Foot Locker led the investment round alongside entertainment giant Live Nation, with NTWRK raising a total of $10 million for this Series A round.
Foot Locker has been doing plenty of other investing this year: Foot Locker invested $100 million in footwear marketplace GOAT in February, its largest funding round to date. It also invested $12.5 million in direct-to-consumer children’s apparel brand Rockets of Awesome, No. 1966 in the Internet Retailer 2019 Next 1000, as well as another $10 million in performance fashion retailer Carbon38 (No. 1428) and a $3 million seed round for kids footwear brand Super Heroic.
Foot Locker’s pattern of investments reflects the variety of ways shoes are being sold online, from one-off sales of high-value sneakers on marketplaces, to retailers focused on more vertical niches in the market that serve consumers’ full lifestyle, such as Carbon38.
Foot Locker’s web sales grew 12.8% in 2018, according to Internet Retailer estimates, and is the third-largest in the footwear category of the Top 1000 after manufacturers Nike Inc. (No. 33) and Adidas AG (No. 36). However, Foot Locker’s growth is below the total category growth of 22.6%. Startups like Allbirds and Rothy’s, which both make their own shoes, led growth in the footwear category.
Marketplaces for shoes are also on the rise. In the Internet Retailer Online Marketplaces ranking, GOAT is No. 59, behind only StockX at No. 31 in footwear marketplaces. However, Flight Club (No. 68), Stadium Goods (No. 71) and Kixify (No. 76) also round out the footwear rankings, with growth across the category hitting 30.9%.