‘Big Evolution’ Coming to Fast-Growing Fashion Resale – Sourcing Journal
Bargain hunters will have a lot more to look forward to in 2023 as the resale revolution continues to change the way people shop for clothes, industry experts said.
The year of branded resale that was 2022 was only the beginning, said Noelle Sadler, chief marketing officer at ThredUp. Over the past 12 months, more than 120 brands launched resale programs, or three times as many as in 2021, according to the secondhand e-tailer’s Recommerce 100 index. These included Hot Topic, Tommy Hilfiger and Torrid, each of which tapped ThredUp’s resale-as-a-service platform to seize a slice of what is poised to be a $218 billion market globally by 2026.
Resale is becoming not just part of the mainstream but a must-have, agreed Karin Dillie, vice president of partnerships at Recurate, a resale-as-a-service platform that brokered pre-owned partnerships last year with Steve Madden, Mara Hoffman and Michael Kors in the United States and Zara in the United Kingdom. As brands increasingly seek to appeal to the consciences of younger consumers—without overtrumping their green claims—resale has become a sustainability shorthand of sorts.
“[Take] Mara Hoffman. Of course, they have resale; they’re Mara Hoffman and they care about sustainability,” Dillie said. “This is a core pillar of who they are.”
Brands will only continue to double down on resale in 2023, Sadler said. “As retailers continue to face an inflationary environment with unpredictable consumer spending in 2023, I predict that brands’ investments in resale will accelerate as they look for different ways to engage consumers, attract new customers and ultimately provide more value,” she said.
Venture capital investors, too, are shelling out in a big way. Just last month, The North Face-backed Archive raised $15 million in Series A funding, while secondhand browser extension Beni mustered $4 million in a seed round. Earlier this month, South Korean internet giant Naver closed its $1.2 billion acquisition of Poshmark. Recurate, no slouch, secured $14 million in May, bringing its total funding to more than $17.5 million.
The platforms themselves are growing, though most have struggled to break even. Re-commerce heavyweight TheRealReal raked in $467.7 million in 2021, a 55.9 percent boost from the year before. Poshmark’s revenues grew 24.6 percent to surpass $326 million, while ThredUp’s jumped 35 percent to $251.8 million.
Beyond leaving all this money on the table, brands are also realizing that secondhand can be an inexpensive customer acquisition tool in the face of climbing digital advertising prices, Dillie said. Recurate estimates that roughly half of buyers of used fashion are new to the brands they picked.
“People want to try brands at a lower price point, and rather than using discounts or going to an outlet, this can be the way that people can try brands, see the quality and understand the value,” she added.
The numbers speak for themselves, said Andy Ruben, founder and CEO of Trove, which creates branded resale solutions for nameplates like Eileen Fisher, Lululemon and Patagonia. In a study that it recently conducted with First Insight, 72 percent of the 2,500 customers it polled said they would be interested in shopping with a brand because it had resale. And if a brand offered resale on its own platform, 70 percent of them would head there first.
“That’s a huge opportunity,” he said. “Customers trust that [when] they buy the secondhand product from the brand, it is going to be at the brand’s level of quality.” This is doubly true for luxury brands, which won’t be able to ignore the mounting “threat” of external resellers cashing in on their cachet or the possibility of missing out on the often considerable markups that rare and collectible items can garner.
And if success across retail is indicated by product sell-out levels, then resale is thriving, wrote retail analytics firm Edited in a blog post in November. Most of the products stocked at rarified resale platform Vestiaire Collective, for instance, arrived online within the past three months and only 5 percent of products have remained unpurchased for more than a year. In contrast, between 25 percent and 34 percent of listed products at traditional luxury stockists have been gathering dust online for over 12 months.
With all signs pointing to branded resale becoming “inevitable,” the question executives should then ask themselves isn’t whether they should adopt secondhand but how they can scale it, Ruben said. Plenty of room to grow remains, particularly at multi-brand retailers, per Edited, which found that secondhand goods make up 3 percent of products stocked at Farfetch and 1 percent at Selfridges. The impact at smaller brands, on the other hand, is more visible, with pre-owned products comprising 24 percent and 16 percent of Coach and Diesel’s products available online. Likewise at Trove, some partners have been doubling, even quadrupling, their offloaded offerings, “which is becoming quite meaningful.”
For retailers, understanding that resale is part of their broader business, rather than a separate appendage, has been key to the vibe shift, said Recurate co-founder Wilson Griffin. But with that also comes heightened expectations of how such programs perform.
“They have requirements from a reporting and data perspective, which shows they have given serious thought to this,” Griffin said. “Whereas before, a lot of brands were sort of curious about it. And I think that’s going to be the big evolution, with brands being much more strategic about this.”
There’s no one way to handle resale, experts pointed out. Third-party marketplaces, including ThredUp’s own, still proliferate, of course. And even with branded resale, brands can opt to take the less hands-on peer-to-peer route or go all in with takeback and authentication. This is a good thing, Dillie said.
“I believe that resale will be like retail in that there’s a lot of different ways you can buy new,” she said. “You can go to Nordstrom to buy Steve Madden, you can go online to buy Steve Madden or you can go to a Steve Madden store. Meeting customers where they’re at will be true for secondhand as well.”
Still, Ruben said he foresees more industry consolidation in 2023, with Naver’s purchase of Poshmark just one recent example. Last year, Bleckmann snapped up The Renewal Workshop, which reconditions previously unsellable inventory, while Goat Group agreed to buy streetwear reseller Grailed. There will be a few third-party marketplaces that will be successful on their own in the long term, he said, but more will become part of other enterprises. The B2B space could see some M&A activity as well, but “it’s still early for that.”
One thing Sadler would like to see happen this year is for brands to more tightly integrate their resale programs into their sustainability strategies. Right now, she said, they’re only “scratching the surface.”
“What I’d love to see in 2023 is more brands tying resale to their overall sustainability initiatives and long-term goals,” she said. “Tommy Hilfiger is a great example of a brand that launched a resale program [with the larger] goal [of becoming] a fully circular brand by 2030.”
Wilson supposes that it may not be long before brands start touting public statements about how re-commerce can play into decoupling financial growth from environmental impact—a topic that is gathering steam in conversations about fashion’s outsized footprint. There might also be a more concerted effort to link resale to carbon accounting.
“I think it’s only a matter of time until the industry makes the connection that we need to really understand the environmental improvement of resale,” he said. “We all know it intuitively, but to calculate it in a way that you can use it as a lever to improve those larger sustainability [metrics]…will be incredibly powerful.”