Bargain hunters will have a lot more to look forward to in 2023. as the resale revolution continues to change the way people buy clothes, industry experts said.
The year of reselling brands, which was 2022, was just the beginning, said Noelle Sadler, director of marketing at ThredUp. Over the past 12 months, more than 120 brands have launched resale programs, or three times as many as in 2021, according to the used retailer’s Recommerce 100 index. Among them were Hot Topic, Tommy Hilfiger and Torrid, each of whom used ThredUp’s resale-as-a-service platform to capture a piece of what would be a $218 billion global market by 2026.
Reselling is becoming not just mainstream, but mandatory, agreed Karin Dillie, vice president of partnerships at Recurate, a resale-as-a-service platform that last year brokered used vehicle partnerships with Steve Madden, Mara Hoffman and Michael Kors in the United States and Zara in Great Britain. As brands increasingly seek to appeal to the conscience of younger consumers—without exaggerating their environmental claims—reselling has become something of a shorthand for sustainability.
“[Take] Mara Hoffman. Of course, they have resale; they are Mara Hoffman and they care about sustainability,” said Dillie. “This is a key pillar of who they are.”
Brands will only continue to double resale in 2023, Sadler said. “As retailers continue to face an inflationary environment with unpredictable consumer spending in 2023, I predict brands’ investments in resale will accelerate as they look for different ways to engage consumers, attract new customers and ultimately deliver greater value,” she said. .
Venture capitalists also issue heavily. Just last month, The North Face-backed Archive raised $15 million in Series A funding, while used browser extension Beni raised $4 million in a seed round. Earlier this month, South Korean internet giant Naver closed its $1.2 billion acquisition of Poshmark. Recurate secured $14 million in May, bringing its total funding to more than $17.5 million.
In addition to capturing potential profits from third-party marketplaces, brands are also realizing that pre-owned can be a low-cost customer acquisition tool in the face of rising digital advertising costs, Dillie said. Recurate estimates that about half of second-hand fashion buyers are new to their chosen brand.
“People want to try brands at a lower price, and instead of using a discount or going to a point of sale, this can be a way for people to 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 tile resale solutions with names like Eileen Fisher, Lululemon and Patagonia. In a recent study with First Insight, 72 percent of the 2,500 shoppers it surveyed said they would be interested in shopping with a brand because it had resale value. And if the brand offered resale on its own platform, 70 percent of them would go there first.
“It’s a big opportunity,” he said. “Customers believe in it [when] buy a used product from the brand, it will be at the brand’s quality level.” This is doubly true for luxury brands, who will not be able to ignore the growing “threat” of external resellers cashing in on their money, or the possibility of missing out on the often significant margins that rare and collectible items can command.
And if retail success is indicated by product sell-out levels, then reselling is thriving, retail analytics firm Edited wrote in a November blog post. Most of the products in the stock of the rarified resale platform Vestiaire Collective, for example, arrived online in the last three months, and only 5 percent of the products remained unsold for more than a year. In contrast, between 25 percent and 34 percent of listed products in traditional luxury stores have been gathering dust online for more than 12 months.
With all signs pointing to brand reselling becoming “inevitable,” the question executives should be asking themselves then isn’t whether they should adopt second-hand, but how they can grow it, Ruben said. There remains plenty of room for growth, particularly with multi-brand retailers, according to Edited, which found second-hand goods made up 3 per cent of stock at Farfetch and 1 per cent at Selfridges. The impact on smaller brands, on the other hand, is more visible, with used products making up 24 percent and 16 percent of Coach and Diesel products available online. Similarly at Trove, some partners have doubled, even quadrupled, their unencumbered offers, “which is becoming quite significant.”
For retailers, understanding that reselling is part of their broader business and not a separate add-on has been key to changing the vibe, said Recurate co-founder Wilson Griffin. But with that comes heightened expectations about how such programs will work.
“They have requirements from a reporting and data perspective, which shows they’ve given it serious thought,” Griffin said. “Whereas before many brands were kind of curious about it. And I think that’s going to be a big evolution, with brands being a lot more strategic about it.”
There is not just one way to deal with resale, experts point out. Third-party marketplaces, including ThredUp’s, of course, continue to expand. Even with reselling brands, brands can opt for the less convenient peer-to-peer route or go all-in with returns and authentication. This is a good thing, said Dillie.
“I believe resale will be like retail because there are 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 are will be true for used items 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 renews previously unsaleable stock, while Goat Group agreed to buy streetwear retailer Grailed. There will be a few third-party marketplaces that will be successful on their own in the long run, he said, but more will become part of other businesses. The B2B space could also see some M&A activity, but “it’s too early for that.”
One thing Sadler would like to see this year is for brands to more tightly integrate their resale programs into their sustainability strategies. Right now, she said, they’re just “scratching the surface.”
“What I’d like to see in 2023 is more brands linking resale to their overall sustainability initiatives and long-term goals,” she said. “Tommy Hilfiger is a great example of a brand that has started a resale program [with the larger] goal [of becoming] fully circular brand by 2030.”
Wilson surmises that it may not be long before brands start making public statements about how resale can affect the decoupling of financial growth from environmental impact—a topic that’s increasingly heated in conversations about fashion’s massive footprint. There could also be a more concerted effort to link resale to carbon accounting.
“I think it’s only a matter of time before the industry realizes that we need to really understand the environmental improvement of resale,” he said. “We all know that intuitively, but calculating it in a way that you can use it as a lever to improve that greater sustainability [metrics]…will be incredibly powerful.”