Re-Commerce Industry: Breaking The Norms With Preloved Fashion

by Noyanika Dixit

26-November-2019  |  11 mins read

Re Commerce Industry

The fashion and apparel world has been clamouring for the past two years about the increasing pace with which it is going out of business. This is one of the worst times to be working or selling fashion, as even the biggest names in fashion grapple to stay afloat and bankruptcies become inevitable.

However, there’s an aspect of clothing retail that has managed to grow at unprecedented rates despite the so-called ‘retail apocalypse’- re-commerce. A relatively new term to the otherwise known as resale industry, re-commerce is not restricted to apparel and has found immense growth in the electronics (especially smartphone) sector.

Both Millennials and Generation Z are embracing the concept of purchasing secondhand goods. They are twice as likely to engage with re-commerce than older consumers, according to GlobalData, an independent retail analytics firm that performed research for the ‘2019 Annual Resale Report’ for re-commerce apparel merchant thredUP.

Re-commerce retailers are growing 20 times faster than the conventional retail market and 5 times faster than discount retailers, according to Coresight Research. The company forecasts that the total US apparel re-commerce market will grow at a CAGR of 13 per cent, reaching US $ 33 billion in 2021. Clothing, shoes and accessories currently make up almost 49 per cent of the total re-commerce market in the US and according to estimates by GlobalData, the total worldwide apparel market (resale and donation) will climb to US $ 51 billion in 2023.

Major players

While talking about the budding industry, it is imperative to have a look at the eminent players responsible for making it a popular movement.

thredUP

Thred Up

One of the largest fashion resale marketplaces, thredUP retails over 35,000 brands, from Gap to Gucci, at unbelievably low rates. Launched in 2009 as a men’s shirt swapping company, it is now a haven for individuals who wish to empty their closets of unwanted garbs. thredUp’s service works as follows: customers can order a bag or a ‘Clean Out Kit’ for free to send back to thredUp all the clothes they no longer require. The company then selects the items suitable for resale which makes up only about 40 per cent of the products they receive. Post this, they are photographed and enlisted on the website. thredUP adds upto 40,000 articles on their portal each day. Once any of them is sold, the customer receives a percentage of the sale in cash or shopping credit. Alternatively, thredUP will donate US $ 5 to one of its charity partners, and the donor will get a tax receipt.

TheRealReal

TheRealReal

What was started by an enthusiastic entrepreneur, Julie Wainwright, out of her kitchen as an authenticated luxury consignment, has now transformed into a dynamic, global movement that is synonymous with not only quality and craftsmanship, but also sustainability and community. The company has come a long way from its inception in 2011, with millions of shoppers and consignors, three retail stores in NYC and LA and 11 Luxury Consignment Offices across the country.

Just like thredUP, the company is highly particular about counterfeits and has a rigorous process to eliminate any scope of error on their part. Focusing on luxury clothing, jewellery, art and home décor, they provide sellers with a sizeable percentage of the revenue made off their offerings. Products that haven’t sold in a year can be sent back to sellers, at their cost. Otherwise, unsold inventory is donated to charity.

A notable champion of their cause is Stella McCartney, a designer known for her strong stance on bringing sustainability to the fashion industry; she became an official partner of TheRealReal last year.

The company has expanded its reach to bricks-and-mortar stores in Los Angeles and New York. In 2018, TheRealReal processed 1.6 million orders for second-hand items, a meteoric 42 per cent rise over 2017, according to the company. The site’s gross merchandise value in 2018 was US $ 710.8 million, 44 percent more than 2017, with total revenue of US $ 207.3 million, a rise of 55 percent, according to Forbes.

Poshmark

Posh mark

This California-headquartered company is a thriving social commerce platform that lets users buy, sell and share their personal style. With over two million ‘Seller Stylists’ and millions of shoppers, Poshmark brings together one of the largest consumer bases to express themselves and share their love of fashion.

The company is not built on the consignment model like the other players on this list. The users of the platform are also the sellers and they must manage their own listings, which includes photos, descriptions and pricing. They ship the sold goods to buyers using a prepaid shipping label provided by Poshmark. In this process, sellers keep more of the sales proceeds than they would through a traditional consignment shop. For products with a sale price lower than US $ 15, Poshmark charges a flat fee of US $ 2.95. The higher priced items garner a 20 per cent commission by the company.

Additionally, Poshmark offers services like Posh Parties, which are virtual buying and selling events within the application. Individuals can browse, buy and list together with friends.

Other players include Yerdle that lets consumers return goods bought from popular apparel brands like Eileen Fisher, Patagonia, REI and Taylor Stitch for store credit. When the company receives the goods, it repairs and refurbishes them so that the apparel companies can resell them as refurbished under their own brands with warranties. Another player, Paris-based retailer Vestiaire Collective allows consumers to enlist preloved luxury products themselves or use the company’s consignment service.

Environmental impact

The devastating impact of the apparel industry is far and wide known and has pushed us into an era where sustainability in every form is the need of the hour. According to The Ellen MacArthur Foundation, a UK-based charity that promotes circular economy, the equivalent of one garbage truck of apparel and textiles ends up in landfill or gets incinerated every second. Alarming figures like these make consumers, especially younger ones, want the brands they buy to be conscious of the environmental impact of their practices. thredUP, for example, claims to have helped upcycle 65 million articles in the past five years, out of which 21 million were done in 2018 alone, saving their fate from landfills.

A recent report by British NGO Fashion Revolution revealed that one in three European consumers take sustainability into account when shopping for clothes, while in the US, 34 percent of consumers claim to be concerned about how the clothes they wear affect the environment, according to a survey by the Changing Markets Foundation and the Clean Clothes Campaign.

It is not only sustainable brands that are bearing the onus of reducing the ill impact of the industry but well-established names are also being pulled up to correct their ignorant methods. In 2018, British luxury fashion brand Burberry received widespread backlash criticism for burning about US $ 38 million worth of unsold merchandise in an endeavour to retain its exclusivity, so that none of it could reach the grey market. The company was forced to abandon the practice following the criticism.

Burberry is not unique; many brands destroy ‘deadstock’ in the same way. Partnerships with re-commerce merchants allow such brands to showcase their sensitivity to the environment and increase customer loyalty.

Scope in India and abroad

Even though the concept has just taken the shape of a market in India, re-commerce or ‘thrifting’ has always been a popular notion. Secondhand goods or hand-me-downs are commonplace in Indian households and have now found commercial viability with companies like ThisForThat and Coutloot.

ThisForThat, started by Nancy Bhasin, stemmed completely from the idea of promoting the sharing economy and getting rid of unwanted items that lie forgotten in our closets all the while bartering for something another user on the platform might be offering. Coutloot, also a social platform for preloved fashion, has quickly drawn the attention of many and secured US $ 1 million last year in pre-series A round of funding.

This is an indication of a large gap in the market waiting to be filled with these companies gaining traction fast. Internationally too, apart from the companies solely dedicated to this industry, the lucrativeness has attracted other players who are looking to dip their toes in re-commerce. Neiman Marcus acquired a minority stake in Fashionphile, a resale venture for luxury handbags, accessories and jewellery, while Farfetch acquired sneaker resale platform Stadium Goods before launching its very own resale platform for designer bags.

Another popular retailer entering this industry is Zalando. The European fashion marketplace opened a pop-up store in Berlin earlier this year to sell used fashion items purchased from customers of Zalando Wardrobe. Similarly, H&M has announced an e-commerce trial of secondhand sales for its brand & Other Stories.

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