4 MINS READ
Brand-owned resale channels have economic advantages over marketplaces if they are set up to leverage existing brands’ assets–therefore we will continue to see more brands owning their resale programs.
There are reasons for brands to start resale in partnership with a marketplace, but over the long run, successful brands will own these programs and their customers.
Vestiaire Collective banned fast fashion from its platform–removing roughly 5% of listings, as reported in BoF. Customers will no longer be able to list items from ultra-fast fashion players such as Boohoo, Pretty Little Thing, and Asos. This is a smart move for Vestiaire as a way to tout its sustainability credentials as we have seen ThredUP do in the past. It’s also smart for longer-term profitability. As we saw with The Real Real (TRR) last week moving upmarket, there is simply more margin in higher priced items with more demand for additional wear as everyone looks to make resale profitable.
Sourcing Journal this week wrote an in-depth piece comparing brand-owned resale models to “resale stalwarts” such as Thredup, TRR. It can be a confusing landscape with ThredUP as a stand-alone marketplace supporting resale for brands and TRR which partners with brands and sells merchandise directly from brands on their platform.
Let’s start with the economics of the business models. Brand-owned resale models have an advantage as they are built on top of the existing brand infrastructure rather than needing to build the infrastructure ground up (eg, brand awareness, customer trust, store base, item catalog, and existing online storefronts to name a few.) Brands can also find value in other profit pools such as new customer acquisition thereby allowing them better resale economics. Hence brand-owned models have considerable advantages over pure marketplaces such as Thredup and TRR.
So why would a Thredup or TRR work directly with brands? These marketplaces are building their businesses and these direct brand relationships provide customer traffic and supply of high-quality items. But ultimately, the incentives and customer ownership will never align.
I have heard brands compare working with a marketplace to a wholesale relationship–which is not accurate and could be a dangerous way of seeing these relationships. In the wholesale model, the retailer depends on the brand to sell them products and hence has shared brand protection and monetary incentives. In the resale space, the supply is coming from customers and being sold to customers–hence no need for the brand.
From a brand standpoint, it’s not wrong to start with a marketplace. There is learning to be had and given the guardrails such as pricing, merchandising, item content is mostly set by the marketplace, it’s easier to get started. But over the long run, brands should stay close to their customers.
It’s for this reason we continue to see more brands jump into the branded resale space. This week Nobis launched Next powered by Recurate and Alaïa launched an in-store resale program powered by Resee Partners. The number of brands with brand-owned resale programs continues to grow. The next phase will be about how these programs are structured and grow into a significant business and which ones go by the wayside.
Finally this week, BoF published a study with eBay based on a survey of 1,000 luxury customers. The customers cited they are using eBay to arbitrage luxury goods. While I fully agree this is a segment of buyers the largest share will be those who want access to a brand they cannot afford today. If they can sell it for more that will be a bonus.
Until Next Week,
Have a Wonderful Thanksgiving!
Andy Ruben | Founder & Exec Chair of Trove
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Week of November 22nd
How Are Brands Taking On the Resale Stalwarts?
The re-commerce revolution has been underway for some time. But the dominance of resale and rental platforms might be shifting. Back-end retail technology and logistics companies have been working behind the scenes to help brands take on third-party marketplaces and curated rental platforms, bolstering their ability to provide these services themselves. The result is that more labels are offering consumers the ability to buy pre-owned items or lease their latest looks.The Sourcing Journal
The Rise of Resale: Luxury as Currency
Many shoppers regard their luxury accessory purchases as assets that could appreciate in value, opening new opportunities for the luxury resale market and emphasizing the importance of authentication, according to new research from BoF Insights, conducted in partnership with eBay.BoF
Nobis Launches Next By Nobis, The First Canadian Outerwear Brand Peer-To-Peer Resale Program
Canadian luxury outerwear brand Nobis launches NEXT by Nobis, a new peer-to-peer resale program that will offer North American shoppers the ability to resell their Nobis products through an authenticated process to extend the life of their jackets and consciously decrease their environmental impact.Yahoo
7 Notable Furniture Resale Trends, According to Recent Marketplace Reports
GlobalData estimates that the resale home furnishings market will hit $16 billion annually by the end of 2022, a 33% increase from a $12 billion market in 2019. And with 97% of shoppers saying there’s no longer a stigma associated with buying secondhand, the category could grow to $22 billion in annual sales in 2027.Ad Pro
Luxury Resale Site Resee Partners With Alaïa on Sales of Vintage Designs
Paris, France-based luxury resale site Resee is partnering with Alaïa to sell some of the French fashion house’s most sought-after vintage creations, including items sourced from the archives by creative director Pieter Mulier. The selection is available exclusively at Alaïa’s Petite Boutique on Rue de Moussy and on Resee.com. It will be updated periodically, and clients can bring their pre-owned Alaïa pieces to the store to be included in the vintage assortment being offered there and online.WWD
Can Fast Fashion Compete With Entry-level Luxury Brands?
The gap between ultra-fast fashion and fast fashion has become more evident than ever, and as brands like Zara, Mango, Massimo Dutti, and &Other Stories try to elevate their image, they’re elevating prices as well. The term “ultra-fast fashion” was first used during the pandemic, and describes brands such as Chinese online retailer Shein, which produces enormous amounts of clothing in a short period span. Each day, Shein introduces almost 6,000 designs to the website, and the business can take as little as three days for a clothing item to be planned, produced, and marketed, according to a McKinsey & Co. report.WWD
Zalando’s resale platform Zircle to be discontinued
The German online fashion company Zalando has announced that it will be discontinuing its second-hand fashion platform, Zircle. The decision comes after careful consideration from the retailer, who has decided to focus on the pre-owned category on the main Zalando website and app instead. All 23 employees at Zircle have accepted alternative positions at Zalando.Apparel Resources
He Helps the RealReal Keep It Real
All items sent to the company are ranked one to five for how likely a piece is to be counterfeit. At the lower end of the scale, Mr. Halás said, would be a pair of contemporary designer jeans, because the resale value wouldn’t be more than the cost of producing a fake pair. At the higher end: bags with labels that say Chanel, Gucci, or Louis Vuitton, which are often counterfeited. With bags, authenticators receive help from a proprietary patent-pending software called Vision, which catalogs photos of authentic styles that can be used for reference. “This is how we scale the Dominik’s of the world,” Ms. Viasman said.New York Times
Vestiaire Collective Bans Fast Fashion
Over the last 12 months, roughly five percent of the items posted on the resale platform Vestiaire Collective came from fast-fashion brands like Boohoo, Pretty Little Thing, and Asos, the company said. This week, those listings have disappeared. The Paris-based company is moving to ban fast fashion, bolstering its position at the upper end of an increasingly competitive market and distancing its business from negative associations with wasteful overconsumption.BoF