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In the current era of commerce, brands are exercising more control over how their products are sold, and delivered.
As they run their own stores both online and offline, brands have ownership of the relationship with the customer, the shopping experience they provide and the process that delivers goods to their doors.
Increasingly, this ownership is also extending to resale.
While secondhand sales were long the province of marketplaces and consignment stores, brands are increasingly choosing to bring resale under their own roof. With infrastructure provided by software platforms, more brands are setting up their own recommerce programs that offer trade-ins, and selling pre-loved items through a channel that operates alongside ecommerce and brick-and-mortar.
Trove CEO Andy Ruben saw an opportunity to grow this area of resale after running sustainability, private label and ecommerce at Walmart.
The question he sought to bring from the whiteboard to the real-world was: “How would a different model work where brands could continue to grow, but their growth would not directly connect to new production?”
“So brands like Patagonia would make money the first time they made a Nano Puff, but then make money the second and third time they would sell that same jacket. And over time, more and more of the growth would come from the secondary sale as they have more products in the world,” Ruben said.
This resale model arrives as a generation of brands – Think: Patagonia, On, REI, Lululemon – are building strong affinity among customers, and creating highly sought-after products that make consumers want to seek them out. This increases the value of resale, as consumers can still participate in the experience with a brand and own an item, while doing so at a lower cost barrier to entry than buying new.
As this fast-growing segment of the $100 billion resale market continues to see more brands join in, Trove sees a set of best practices for brand resale emerging. Working with OSF Digital, the recommerce software company is codifying these and highlighting leaders in the space in a new report out on Tuesday.
The Brand Resale Index, which evaluated 40 brands across four verticals and was agnostic of tech platform, identified four key areas where brands can stand out:
- Brand positioning: In marketing, how are brands talking about both the global advantages of resale through sustainability and the tactical benefits such as saving money? Do they elevate resale within their marketing channels?
- Commerce: What is the resale shopping experience, and does it extend across online and offline? Are all of the elements of modern ecommerce, from web features to a variety of payment methods, available?
- Trade-In: How easy is the trade-in process, which provides the supply? Is listing online and offline frictionless, and are the rewards, such as gift cards, clear?
- Business model: How does resale contribute to sustainability? Is the organizational support in place to grow this into a profitable channel, or does it appear to be more of a marketing stunt?
To make resale sustainable for brands, growth and profitability will be necessary. Ruben said software is a key tool to undergird all of these elements.
“If you don't have that technology backbone, it's going to be very hard as a brand to make money and scale this program,” Ruben said.
When it comes to the leaders in resale, the report broke down top performers by category:
- Overall: REI
- Outdoor: Arc’teryx
- Fashion/Apparel: Amour Vert
- Footwear: On
- Luxury: Philip Lim
The leaders tend to stand out by tying each best practice listed above together. For instance, REI makes resale part of its membership program, so there is an inherent connection between the experience of buying a resale item and the experience of participating in the brand’s community.
“Brands have the ability to offer you things that no one else can,” Ruben said. “By trading items in, they can give you exclusivity and access to the core of the brand in a way that a third party marketplace or an Amazon never could.”
Looking ahead, the Index identified a key opportunity for luxury brands to expand their own recommerce channel. The category has a long history in resale, but the leading brands do not for the most part own their resale experiences. Rather, it is consignment shops and second hand boutiques that make up most of the upscale secondhand market.
“Luxury has all of the elements that make that category a winner in this space,” Ruben said. That includes items that are coveted by consumers, a deep narrative and heritage around those items, as well as a pricepoint where products hold their value.
Here are a few more key findings from the report:
- Branding resale: 63% of companies created specific resale branding to communicate the program’s role in carrying forward brand mission and values.
- Social opportunity: Only 35% of brands promote resale on social media. Many brands promote the launch of the program, but do not follow up with posts about specific items.
- Cross-channel: 13% of brands integrate new and used items within search results on their main ecommerce site, while only 25% allow customers to integrate purchases.
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Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”