Third-Party Resale Marketplaces Pose a Bigger Threat Than Brands Think
By Samantha Dersarkissian
Fashion’s largest growing sector since 2020 is resale. Online platforms like ThredUp, The RealReal, Depop, and Poshmark have exploded onto the scene in recent years. This trend is causing a dramatic shift in the fashion landscape. The resale apparel market is projected to generate $77 billion in revenue by 2025 — more than doubling in five years!
The success of these third-party marketplaces has inspired some brands to create their own resale programs, while others are hesitant to jump onto the trend. The decision to create your own branded resale channel versus partnering with a resale platform has its own pros and cons to consider.
In this article, we’ll explore why resale has seen such a boom in recent years, and the threats nonbranded marketplaces pose to brands. Finally, we’ll examine how forward-thinking companies are adjusting business models to capture a share of the resale market, maintain brand equity and acquire valuable data about customers.
Why Resale Platforms Are Booming
Perceptions of pre-loved clothing have changed over recent years. More shoppers are open to the idea of buying pre-worn clothes. In 2020, 33 million people made their first-ever purchases of pre-worn items in the United States. More than three-quarters of those plan to increase that spending in the next five years.
This change in behavior is driven largely by a desire to reduce our impact on the environment through sustainable choices. The amount of waste generated by fast fashion is sobering. The average American throws away 80 pounds of clothing every year. Every second, the equivalent of one garbage truck full of textiles is burned or dumped in landfills.
The 2020 COVID-19 pandemic became a catalyst for altering shopping behavior in a couple of ways.
- People who were financially impacted by the economic slowdown ventured into the online resale market to save money.
- As lines blurred between work and free time the rise of sportswear and athleisure caught fire and are expected to grow by two-thirds from 2020-2023. Customers began to discover closets full of perfectly good items, they once wore, that now can be traded in for credit.
Combine these two factors and you’ve got a game-changer. Buyers who shopped at resale stores were happy to find pre-worn, name-brand items that were often in good condition and cheaper than retail prices. They could satisfy their desire to be fashionable while reducing waste and saving money.
3 Major Impacts on Fashion Brands
As more and more people turn to resale marketplaces to buy and sell clothes, legacy fashion brands are feeling the pinch. They’re now competing against their own products from past seasons on these platforms, which are eating into their sales. Businesses are losing access to customers clearly interested in their product line, while unable to manage the valuation of their products and brand image.
These are the three major impacts nonbranded marketplaces have on fashion brands:
- Customers Leave a Brand’s Ecosystem
Marketplaces are often compared to online shopping malls, where customers can browse a variety of products from different brands and sellers. However, because in the secondary market these marketplaces source and sell items to customers, the brand is not involved, has no control, and makes no money on the items they designed, produced, and marketed.
Once a customer is introduced to the resale platform, it’s easy for them to be pulled into the marketplace’s ecosystem. Fashion brands risk losing customers altogether, along with revenue and first-party data about their behaviors and preferences. Without these valuable business insights, it’s more difficult to target audiences and market to them.
- Brands Lose Control of Product Pricing
Shoppers looking for a good deal on branded products often find success in marketplaces. In fact, some peer-to-peer marketplace vendors can list clothing at any price point, discounting items more than other sellers to attract the sale.
Fashion brands have no control over how vendors value items, which can potentially impact their own pricing strategies. The availability of pre-owned products at a lower price than new products can keep customers in the resale market. Brands need to take ownership of their own resale channels to maintain control of shopper price sensitivity.
- Lack of Branded Customer Experience
Customers also have certain expectations when purchasing premium or high-end fashion. They expect quality and craftsmanship. Buying luxury is more than a financial transaction. It’s also about the experience of acquiring a coveted brand product and the VIP treatment that comes along with it.
Luxury brands, and brands that follow the luxury model, rely on their connection with customers to deliver this experience. Customers must feel exclusive, valued, and important. A brand’s interaction with customers can reinforce emotions like happiness and loyalty. This can happen through exclusive events, premium customer service, or personalized digital experiences on a store’s website.
The main goal of a third-party augmented marketplace is to move the product as quickly and efficiently as possible. There is no consistent branding across product images, and customers are not directed back to the brand’s ecosystem.
If brands implement an omnichannel branded resale program, they can control the customer experience. It is possible to create the same feeling of exclusivity, value, and luxury with a branded resale experience.
Win Your Customers Back with Trove
Brands have spent the last five years trying to meet customer demands on delivery and shipping expectations. The logistics of adding a resale channel to that process can seem daunting, but it doesn’t have to be.
Premium brands such as Lululemon, REI, and Levi’s are partnering with Trove to power their own resale channels. Trove is a comprehensive, white-label solution that delivers the technology for brands to offer resale at scale.
Our case studies show how adding a resale program helped brands like Eileen Fisher and Arc’teryx boost sales while promoting sustainability.
Trove can help your brand with everything it needs to win in the resale space. Unlock the growth potential of a branded resale channel, and request a demo with Trove today.