2021 JULY
RESALE RETAIL
Written by : Terri Fisher
Resale fashion has grown exponentially! Consumers have embraced secondhand apparel out of an increased awareness of the environmental impact of their purchase behavior. And, to be honest, many people love the thrill of a great deal, a feeling that secondhand apparel shopping can provide.
My first experience with resale retail happened by chance a few months ago when a friend mentioned a new “store” that I needed to see in Naples, Florida. The store was not really new, but I had not heard of it. It was called Audrey’s of Naples and I decided to stop in on a Saturday morning looking for an outfit to wear to a fashion show event I was volunteering at. Well, enter Natalie! Natalie was a gorgeous brunette with an Irish brogue. She asked me a couple of questions and set me up in a fitting room. At this point I still did not realize it was a resale shop! She not only set me up with an awesome outfit for my special night but I walked out of the store with 5 tops, 3 pair of pants, 2 pair of shoes (already broken in!), jewelry and handbags to match each outfit, and I spent less than $800 on the whole lot! Those outfits are now the favorites in my closet. I am in love with this store! Designer brands, huge selection, great service, and “wow” prices. What more could a girl ask for!? It’s not just me. Practically everyone I know is addicted to vintage and resale stores and websites, spending untold hours both looking for things to love and consigning things that they just don’t want anymore. You give them up and someone else swoops them up. It’s circular!
Resale has been growing for the past few years. According to Vogue magazine, in 2019 resale grew “25 times faster than retail – and what is now a $28 billion secondhand apparel market will more than double to an astounding $64 billion by 2024.”
This new movement to recirculate apparel, accessories, and even home décor arrives at the apex of a perfect storm encompassing an increasing focus on sustainability, a growing distaste for fast fashion, brilliant new e-commerce technological innovations, and the realization that you can actually make money selling your old clothes. We are surrounded by all the “stuff” we’ve bought over the years, thinking hard about the value of our wardrobes. What do our clothes really mean to us? The Marie Kondo revolution forces us to ask, “Does each item bring us joy?” If not, get rid of it and the subsequent clutter in your closets and homes. How attached are we to the things we own? This revolution in the way we relate to consumption has transformed almost every aspect of our lives. Think about it: why have a car when you can call an Uber? Why own a bike when many cities allow you to grab one from a street stand? Who needs a beach house or a country home when you can just Airbnb?
Giorgio Belloli, chief commercial and sustainability officer at Farfetch, says that his company is also “tiptoeing into this burgeoning market.” Farfetch’s main business is linking shoppers to thousands of stores all over the world selling current merchandise, but they have recently launched Farfetch Second Life in the U.S., which lets you trade in your designer handbags for credit to be used toward future Farfetch purchases.
Some luxury labels have already been forging partnerships with resale sites, with Stella McCartney a forerunner. In 2017 the designer who was thinking deeply about sustainability and overconsumption long before they were on everyone else’s radar, entered into a partnership with The RealReal, one of the hot resellers, encouraging her clients to recycle and resell their beloved Stellas. This stance was then echoed by Burberry and Gucci among many others. Currently and not surprisingly, on The RealReal site, the most sought-after label is Louis Vuitton.
Who among us is NOT excited by fresh new things? We may be thinking seriously about the environment and we may finally be realizing that less is indeed more, but we still need to cheer ourselves up and brighten our days with products that are beautiful and that charm and delight us, especially as we come out of these tough times. The world may still be a bit crazy, but the thrill of wearing something new endures, even if it is only new to you! Great idea, right?
n May, the Sourcing Journal wrote an article about two other leaders in this space: ThredUp and Poshmark. Poshmark doesn’t even hold inventory, they just match up buyers and sellers online. ThredUp previewed new data from its upcoming 2021 Resale Report, telling us that 80% of U.S. consumers plan to refresh their closets once the pandemic is over. In predicting a “clean out frenzy”, ThredUp says that 46.4% of U.S. consumers plan to get rid of clothes that no longer fit, while 34.4% plan to buy items for events that were paused including work and travel. Another 31.1% of these shoppers plan to buy items to refresh their style. ThredUp CEO James Reinhart revealed in his latest earnings call that “we’re definitely seeing this rotation back to ‘going out’ clothing, and I think that what’s good for us are the categories in which resale really wins…and that should provide some tailwinds.” For ThredUp,” Reinhart said that the company has processed over 100 million items to date, “but to be honest, we aren’t thinking about the next 100 million items, we’re thinking about the next billion items.”
For a smaller scale local example, I’d like to introduce you to Marissa Collections, a family-owned 46-year-old business. It competes against the likes of Saks Fifth Avenue and Net-a-Porter. It has evolved from a small boutique into an intelligently curated, designer store and luxury online shopping destination. It’s not surprising that e-commerce sales grew 110% year over year in 2020. “The possibilities are endless online,” CEO Jay Hartington says. “In two years, it could grow to over 50% of Marissa’s revenue.” Recently the team launched ReVision , a sustainable luxury consignment shop available only online. Through it, they buy gently used designer clothing, shoes and handbags from clients in exchange for a Marissa’s gift card. This debut reflects the increased interest in sustainable ways of living, including how we shop and dress. “We want to be responsible community leaders,” Hartington says. “It makes good business sense too – it continues our stylist-client relationships, it gives gently used products a second life and it connects the dots back to Marissa’s.” My purpose for including a small neighborhood resale retailer with gigantic publicly-traded resale retailers it to show you where it starts and how everyone can get a piece of this amazing new retail phenomenon.
A GlobalData Market Survey cited by ThredUp put demand for secondhand apparel, footwear, and accessories at $36 billion by 2024. (Note that this number is much lower than Vogue’s estimate of $64 billion by 2024, but is still impressive!) ThredUp sends “Clean Out Bags” to users, who empty their closets of unwanted looks and send them back to the site for packaging and consignment. The company estimates that 16.9 billion pounds of apparel is thrown out in the U.S. each year.
The resale companies all have a strong environmental component, but their business models differ in important ways. ThredUp collects fashion from users and processes it before selling it on consignment. (Consignment means that the owner of the goods pays a third party a portion of the sale for facilitating the sale. The ownership of the goods remains with the seller/sender until it is sold at which time they get paid an agreed upon % of the sale). Poshmark operates as a platform and never touches inventory, and luxury specialist The RealReal sells on consignment and also owns inventory.
I will next give you a brief intro into the top 3:
ThredUp was founded in 2009. 2020 revenue was $186 million, up 14%. They have 1.24 million active buyers and 428,000 active sellers. They had a recent $168 million IPO, confirming all their optimistic predictions.
Poshmark was founded in 2011. Annual revenue: $247.5 million for the 12 months ending Sept 30, 2020. They have 6.2 million active buyers and 4.5 million active sellers. They have 31.7 active users.
The RealReal was founded in 2011. 2020 revenue was $298.3 million. Active buyers 648,856.
Of the three, only Poshmark had an annual net profit. (in 2020, $6.2 million). This info was found on each companies’ website.
Andy Ruben, CEO of Trove, a technology provider that helps brands and retailers like Nordstrom build out their own resale platforms, recently advised retailers to “get in on the secondhand wave or risk becoming obsolete.”
Retailers of all types and sizes, and locations around the world are seeking ways to prepare for a secondhand and vintage apparel boom – even U.K. supermarket chain Asda. According to the Sourcing Journal, the retailer announced a “new partnership between its clothing brand George at Asda and vintage fashion wholesaler Preloved Vintage Wholesale (PVW) that will introduce secondhand fashion in 50 of its stores.” Mel Wilson at Asda said “in a world where we are becoming more environmentally conscious this partnership will help bring sustainable fashion to the mainstream which is something as a business we strive for in everything we do. The more people that buy into the circular economy and shop vintage and retro resale, the bigger impact we will have on climate change.”
There is so much more to say about this whole RESALE phenomenon. There is the authentication process. There is the $1 billion that Goodwill is now generating in revenue on their e-commerce site. There are all the Gen Z sites selling resale/vintage such as Depop, and Vinted. There is the whole enormous topic of rental apps like Rent the Runway, Hurr and ByRotation.
I’d like to tackle some of these topics in a future article. iApparel Journal is dedicated to making sure you know everything that is going on in the world of apparel, retail, and general business. I hope you found this article inspiring as well as interesting.
Warm regards,
