7 MINS READ
There is no substitute for brands to stay close to their customers by buying back and reselling their items.
Brands need to look after their own long-term interests including protecting their IP. Nobody will protect that other than the brand.
In an article titled, ‘Secondhand Luxury: Opportunity or Threat’ BoF raises the question: what’s the right path for brands? Buyback and then resell their own goods, or route them to resale sites, which give brands a cut of sales?
The growth of resale is all about brands… imagine shopping on The Real Real if none of the items were branded. Customers are shifting their behavior toward resale based on affording brands they otherwise could not access.
This in turn creates both threats and opportunities for brands themselves as BoF points out.
Historically, brands have been concerned about the cannibalization of new sales, a concern that a recent Boston Consulting Group (BCG) study found to be unfounded. BCG data shows that the secondary market actually stimulates sales of new luxury goods. Additionally, the study found 71% of buyers of pre-owned items tended to buy products and brands they could not afford new. This suggests that secondhand products widen the market for high-end brands and can serve as potential gateways for first-time buyers.
As The Sourcing Journal piece, ‘Take-Back Programs Are Gaining Steam. Do They Actually Work?’ pointed out, not all resale programs are based on profitable business models for trade-in. Trade-in models where brands only benefit from gift cards are essentially marketing programs.
There are also risks for brands that solely rely on 3rd party marketplaces to maintain brand standards and authentication. WWD’s this week covered Vestiaire Collective’s offer to work with luxury brands to learn and train authenticators to spot details on the most sought-after items. Bloomberg Law went deeper into the increased risk to brand IP and commented that such partnerships may allow brands to participate in the product authentication process, which helps to prevent brand dilution while still enjoying the benefits of participating in the circular economy.
Brand IP is the ‘key to the castle’ for a brand. Brands should be wary about educating anyone beyond the obvious signs of fake products as they will lose control. As the Bloomberg article rightly points out, we will get to a point where brands will use technology to track and identify fraudulent items but we are 5+ years away. In the meanwhile, brands can be strategic about 3rd party marketplaces while making sure their long-term needs are being met as the secondary market grows.
A good example of this was The Real Real’s partnership with 11 Honoré. @11 Honeré and visionary founder Patrick Herning have been pioneering a path to more inclusive sizing for luxury. The partnership with The Real Real will further this mission by adding some 430 styles of extended-size luxury items to its range of consigned goods and bring awareness to 11 Honeré.
It’s key for brands to realize the importance of their items in the secondary market as the market grows. In the end, there is no substitute for owning your future as a brand, and in this case, that involves engaging in the trade-in and resale of your products.
Until Next Week,
Andy Ruben | Founder and Exec Chair of Trove
Week of November 1st Resources:
Footwear News | How Trove’s New CEO Gayle Tait Is Helping Brands Like Allbirds & On to Resell Used Merchandise
After taking over as CEO of Trove, Gayle Tait is focused on creating ways to make the secondhand marketplace a more profitable business for retailers and brands. As the appetite to make a positive impact on the environment increases with consumers, retailers and brands like Allbirds and On are turning to Trove for a profitable way to scale their recommerce programs.
Apparel brands must note promising resale growth in APAC
GlobalData reported that the apparel market in the Asia Pacific (APAC) region is expected to reach a compound annual growth rate (CAGR) of 9.3% between 2020-2025, with 27% of shoppers intending to purchase clothing via resale in the next 12 months. With consumers in APAC becoming increasingly more aware of the environmental impact of the fashion industry, will their favorite brands and retailers implement sustainable initiatives in time to keep their business?
WWD | It’s a Start: The RealReal Extends it’s Size Offerings With 11 Honore Partnership
From Jimmy Choo to 11 Honore, The RealReal is making sure that it has something for everyone. For its newest partnership with 11 Honore, The RealReal will add 430 styles in inclusive sizes. Shoppers that consign plus size apparel within the next six months will receive 30% off their complete transaction.
Glossy | Brands are pitching resale as an affordable holiday alternative
Brands are seeing the value of resale and adjusting their marketing holiday season campaigns accordingly. For example, Queenly had a viral TikTok that got over 2 million views, where they offered a referral program for every new customer. Recurate’s Peak Design, which sells handbags, said this Black Friday they are putting all of their focus on resale after a very successful Earth Day campaign, where they saw a 600% increase without decline in regular sales.
Vogue Business | Fast Fashion enters the resale game, but don’t call it sustainability
Is launching a resale platform without reducing your overall output truly sustainable? Many would say no. Big fast fashion brands like Shein, Zara, and Pretty Little Thing are eager to enter the resale space, launching pre-loved marketplaces directly on their websites, but critics are saying that if these brands actually wanted to be sustainable, they’d up the quality of their garments.
Vestiaire Collective Talks Trust, Tradesy, and Fighting Fast Fashion
Vestiaire introduced its first ever trust report, highlighting its verification process, counterfeit detection rate and many other impressive achievements. Vestiaire Collective’s mission is to be the most trusted resale platform, and by sharing this report, it is aiming to increase its transparency and brand image within its community.
There’s nothing circular or sustainable about Shein’s new resale platform
Shein released a pre-loved marketplace (Shein Exchange) with the false promise to create a cultural movement of circularity for its community. The marketplace is nothing more than a facade behind an alternative motive to promote more extraction, more production, more waste, and more profit.
How Fashion Brands Can Protect Their IP in the Recommerce Market
As the recommerce market grows increasingly more important to consumers, brands need to adjust their sustainability metrics, while maintaining brand authenticity and avoiding counterfeits. Retailers and brands are turning to recommerce partnerships, blockchain, and negotiated agreements that help protect the brand’s IP.
The Business of Fashion | Secondhand Luxury: Opportunity or Threat
There is a disconnect in the booming secondhand luxury market. Brands such as Balenciaga and Gucci are truly leaning into the secondhand movement with the creation of resale marketplaces. On the other hand, brands including Chanel and Hermès are still discouraged to adopt resale models in fear that this will drive their normal customer base away from in-store shopping.
Sourcing Journal | Take-Back Programs Are Gaining Steam. Do They Actually Work?
As many brands and retailers join the fight against climate change through circular and sustainable programs, the true lift is daunting. The underlying bias around these intiatives is that production and consumption will go down as these new business models arise around the care and circulation of used items. However, that is not the case as it’s unclear if resale and takeback programs, are providing the solution they claim to be.
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