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
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.
"Resale is a relatively easy way to ease that guilt [about our part of the climate crisis] because it doesn't really require a huge shift in your own behaviour ."
Zoe Rowswell, Tern Eco
“There is a very genuine and pressing concern [amongst Gen Z] about 'what are the steps that I can take to make an impact?' and by engaging in fashion resale, it's something very tangible. It's there in their wardrobe."
Harriet Scriven, Re-Style
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.
“There is a desire to own products that retain value. It is quite new for consumers to think first about whether they can resell an item before even buying it."
Felix Winckler, Reflaunt
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?
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.
“While most retailers recognise [resale] is the direction of travel, I think there is a common perception that the perceived level of change required just seems too hard – and a distraction from the day job.”
Zoe Rowswell, Tern ECO
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.
"The traditional fulfilment model is to have stock on pallets, neatly stored, and single SKUs that are sent out of the warehouse to your customers. Here the flow is much more complex."
Felix Winckler, Reflaunt
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.
"Because the market is so fragmented, it's pretty labour-intensive to try and pull insights together as to what is going on and where pricing is at. Plus the condition of individual second-hand items makes pricing even harder."
Zoe Rowswell, Tern Eco
"The whole ball game is to play arbitrage and figure out the right value for each item. It's a fine balance between being competitive and getting the largest return on an item."
Felix Winckler, Reflaunt
"There is no set way of measuring how [luxury pieces'] value has changed over time. Chanel for example goes up in value, the older the pieces. Remember you see people buying luxury as an investment - so then how do they release that investment? You have to resell it."
Harriet Scriven, Re-style
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.
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.
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?