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You may have recently heard that Kanye West and Gap signed a 10 year deal to create a line of apparel called Yeezy Gap starting in 2021. In fact, Kanye once said during an interview that he wanted to be the “Steve Jobs of Gap” and he actually worked at Gap in Chicago as a teenager. Incredible, right?
Having said that, yes, today we’re talking about one of the most well-known modern fashion brands as of the past few years: Yeezy.
What is Yeezy?
Yeezy is a fashion brand owned entirely by Kanye West. Kanye launched Yeezy in 2009 when he partnered with Nike to launch his Yeezy sneakers. Since then, though, he’s branched out into other types of clothing like jackets and track pants, but, to date, his sneakers remain his bestsellers.
Also of note is that in 2019, Bank of America valued Yeezy at $3 billion.
How Did He Do It?
It’s pretty unheard of for a non-athlete to partner with a company like Nike (or any other similar brand). However, Kanye is not just any celebrity; According to Forbes, he’s currently the highest paid musician in the world. Not to mention he is an artistic genius and incredibly devoted to his craft.
For example, in 2009, right before he launched Yeezy he interned with Fendi to learn more about the fashion industry ahead of starting out on his own. Hey, if you’re going to launch a business, regardless of which market, you might as well learn how to do it, no matter who you are!
Now, if you’re familiar with Yeezy, you might be thinking, “Wait, Nike? Yeezy was with Nike?” Yes! However, in 2013, Kanye left Nike to partner with Adidas. He told Forbes that he left Nike because they would not give him royalties on the sale of his shoes. Apparently they wanted to pay a percentage of his sales to a charity of his choice instead. Although one could argue that donating sales to charity is commendable, it doesn’t exactly help Kanye pay his bills. So, off to Adidas he went.
How Much Money Does Yeezy Make?
His Adidas deal is rumored to include a 15% royalty on wholesale and a marketing fee. In comparison, sports star Michael Jordan only earns 5% on the sales of his Jordan shoes by Nike. Going off of that, in 2019, Forbes estimates that Jordan earned $130 million in royalties. In comparison, in 2019 Yeezy was expected to do over $1.5 billion in sales. That means he made roughly $225 million in royalties in 2019. (15% of $1.5 billion).
Kanye is able to make so much because he is essentially licensing the Yeezy name to Adidas who uses it to sell Adidas Yeezy Boosts. Kanye oversees the designs of any of the Adidas Yeezy products while Adidas produces and fulfills them. Presumably, marketing responsibilities are shared among Adidas and Kanye; While Adidas likely oversees and pays for the global marketing of Adidas Yeezy products, Kanye, through his fan base and the Kardashian family, can market the products without spending a dime.
The terms of Kanye’s deal with Gap is unreported, but it is safe to say that Kanye doesn’t agree to a deal where he doesn’t get his way. Although, I imagine the deal is structured similarly to the Adidas deal. In fact, after news of the partnership was released, Gap’s stock soared nearly 40%! So there is no doubt that he will make a significant amount of money from Yeezy Gap.
How Has Yeezy Managed to Be So Successful?
There are many reasons why Yeezy has been successful since it’s launch in 2009:
First, it is important to note that Kanye is incredibly creative and detail-oriented. I mean, the guy is a marketing genius. Everything he touches seems to turn to gold. In this case, Kanye was able to create buzz and demand for Yeezy because he would only offer limited product drops – where his shoes would sell out in minutes. This would result in even increased demand for his shoes.
Kanye also comes with a massive fan base. He has millions of die-hard fans. Of course, Kanye believes in himself and is truly his biggest fan. Add that with the Kardashian effect. If they wear their shoes, the paparazzi gives Yeezy free publicity. His family would also post photos of themselves in Yeezys on Instagram. Let’s point out that Kyle Jenner is estimated to receive over a million dollars per sponsored instagram post. It’s safe to say that Kanye saved a lot of money by relying on his family to help market Yeezy.
Conclusion
As you can see, Kanye has leveraged his celebrity and talent into a multi-billion dollar brand. What’s next in store? Who knows. We can only guess that Kanye and Yeezy’s success will continue to grow in years to come.
Thanks for reading,
Deepak Devjani