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The resale market is famous in retail for three things:
- Its size – GlobalData estimated the apparel resale market at $186bn last year.
- Its predicted growth – ThredUp expects the market to roughly double to $350bn by 2027
- The difficulty of making it work financially (See ThredUp and The RealReal’s 2023 share price performance…)
As odd as it sounds, resale just doesn’t seem to be sustainable.
We spoke to three resale experts to discover some of the reasons behind resale’s growth potential – and what needs to be solved to give it the best chance of success
Our experts
- Zoe Rowswell, Tern Eco
- Harriet Scriven, Re-Style
- Felix Winckler, Reflaunt
The Pros
Resale is not new. It's well-established, and it’s recently gained even greater prominence.
eBay has been around for nearly 20 years. Vestiaire launched in 2009, and The RealReal and Depop came only two years later.
But resale has undeniably increased in popularity recently. Consumers – especially Gen Z – care more about the impact of their consumption footprint on the planet, the source of the things they buy, and are more likely to let these factors influence where and even whether they shop.
But this has taken a further step recently: shoppers now even take an item’s resale value into account when considering a purchase – especially in the luxury market.
This is a key stage in resale’s maturity. It is now mainstream - not just in volume and value of sales, but in consumers’ psyche, who will at times even anticipate using the resale market.
And yet, resale’s commercial success remains in question. Why?
The Cons
Resale is indeed the new ecommerce.
Not just in its commercial potential, level of investment, or how today’s buyers are voting with their feet — but unfortunately also in how difficult it is perceived to be.
Resale brings new difficulties to logistics
Surprises are almost always unwelcome in logistics. But in the resale model, supply chains are irregular in timing, nature, quality and volume.
A resale retailer will typically receive single SKUs directly from consumers - not the deliveries of hundreds or thousands of pre-planned items they are used to. Incoming items may be pristine or unsellable. They might be perfect for the season, or months out of date. They might need refurbishment, or be beyond repair.
Managing the resources to process, store, market and sell these items, when almost nothing about them can be predicted, is something that traditional retailers are rarely prepared for. And for start-up resale-centric platforms, the upfront costs involved to smooth out volatile cashflows will often be the reason why they struggle, even fail.
Pricing
Resale items are notoriously difficult to price.
Pricing new items is formulaic. But when an item is pre-loved, pricing benchmarks simply do not exist. Once an item is second-hand, how much cheaper should you expect it to be than its new equivalent? How much should be taken off for any damage? In some cases, pre-loved items are even more expensive than when they were new!
Because there are no widely-accepted benchmarks, how does a pre-loved retailer price their items accurately, and predict the best price that a customer will accept? The win-win scenario is almost impossible to find.
The Solutions
All is not lost! Yes, there are obstacles to resale’s growth. But there is also a sophisticated, experienced and growing community of tech providers dedicated to solving these problems.
Solving the Pricing problem: Nibble
Nibble's AI negotiation chatbot has been tremendously successful in the resale arena, finding win-win price points in markets where traditional pricing methods simply don't work. Consumers can negotiate the price and discount they deem fair, while resale retailers are able to clear stock faster and control their margins.
See our case study with Thrift+, where we cleared slow-moving stock in record time while offering only half as much discount.
Or read about RESPONSIBLE, for whom we added £10 to every basket – equating to 6.4% additional margin.
Solving the "Buyback is too hard" problem: Tern
Tern helps retailers build brand owned circular programmes that meet sustainability goals and business objectives – through software designed specifically for retailers to systematically recover product for resale or reuse.
Integrating within a brand’s own website, the Tern service is available globally, works for (nearly) any product, and is priced to be both affordable and accessible for retailers of any size.
Solving the logistics and marketing problems: Reflaunt
Reflaunt is a technology company that brings Resale-as-a-Service to fashion brands and multi-brand retailers. With Reflaunt’s leading technology solutions, fashion retailers can empower their own customers to resell or recycle their past purchases in a click, directly on their e-commerce platform.
Reflaunt equips brands and retailers with resale e-commerce and tailor-made branded marketplace technology and operations solutions, as well as access to its largest global network of more than 30 resale marketplace partners and more than 100 million second-hand customers.
Solving the resale repairs problem: Re-STYLE
RE-STYLE is a marketplace working with expert tailors to provide clothing alterations and repairs. Their white-label service enables retailers to easily manage customer demand for alterations and repairs, through outsourcing the expertise.
They also work with retailers to reduce customer returns via directly referring customers to RE-STYLE’s marketplace as a sustainable and cost-effective alternative to sending back their order.
Interested in Nibble?
