Retail Channels

Resale enters the era of specialization

With a focus on sustainability, ecommerce brands and marketplaces are standing up resale channels in more discrete categories.

person holding cardboard box on table

With Queenly, a dress purchased for a special occasion doesn’t have to be worn just once.

The dresses purchased for events like weddings or proms are often immortalized in pictures, but rarely makes another appearance outside the closet. Through the online marketplace Queenly, people can make sure they are worn again by reselling the dresses to others. It started in 2019, when cofounders Trisha Bantigue and Kathy Zhou recognized that there was room in the resale market to curate one-of-a-kind dresses that only had one outing.

“The wear and tear to the dress once a person wants to sell it is so low that the resale value holds well,” said Lacey Nakashima, Queenly’s head of growth. For Queenly's team, the job is to build up inventory that’s available and “match the right buyers and sellers,” Nakashima said. It has added partnerships with boutiques, new items and expanded categories from formalwear. But it was the embrace of pre-loved items and a marketplace model that allowed the business to build a base that combined sustainability, savings and high fashion.

Now, it has 100,000 dresses available, and an aim to become a "one stop shop for all formalwear," Nakashima said.

Queenly is among an emerging wave of resale marketplaces that are taking a focused approach to the market for secondhand goods. Whether working in specific categories or standing up inside of existing brands and marketplaces, these marketplaces see resale as a way to bolster sustainability in their offerings, solve operational challenges associated with ecommerce and build community around their brand.

“The market opportunity in resale is exponential to say the least,” said John W. Collins, CEO of cost recovery and fee management platform chargeguard.

A recent spate of new resale programs from top brands and retailers comes as ecommerce software is making it easier to stand up a resale channel, and facilitate sales. The growth is only expected to continue. In apparel alone, ThredUp and GlobalData project that the global secondhand market will grow 127% by 2026, with online sales accounting for 50% of resale by 2024.

At the same time, there is more consumer demand for extending the life of goods as as awareness of fast fashion's environmental impact rises, and the clock on climate change ticks faster. Consumers are showing an interest in secondhand as a primary shopping channel. Another survey from ThredUp conducted ahead of the holiday season showed that 56% of all respondents said they are open to or prefer receiving an upcycled gift this year, while two-thirds of respondents said it is more socially acceptable to receive a secondhand gift today than it was five years ago. Seeing opportunity and an open date for a new shopping holiday, Poshmark launched Secondhand Sunday this year. It’s promoting resale as a means of reducing waste, as well as potentially saving money at a time of high prices.

Third wave resale

The recent gains and projected future growth continues a line of expansion that stretches back to the early days of ecommerce. eBay and peer-to-peer marketplaces like Facebook and Craiglist made secondhand sales part of the fabric of the internet. Over the last decade, platforms like ThredUp, Poshmark and The RealReal emerged to truly bring the concept of an internet-enabled thrift and consignment store to life.

A recent surge of activity shows how the market will evolve in the next wave with the help of ecommerce tools that are purpose-built for resale.

Brands like Allbirds, Lululemon and Hugo Boss are standing up and growing their own resale offerings. Platforms like Trove, Archive, Reflaunt and ThredUp are helping such labels launch their own resale platforms as an add-on to their ecommerce stores.

Luxury goods have long been exchanged secondhand in the consignment market. Now, online sales are enabling new channels. Recently, What Goes Around Comes Around said it will provide an avenue for shoppers to find accessories from brands like Louis Vuitton and Chanel on Amazon. Yoox-Net-a-Porter, which recently sold a sizable stake to Farfetch, is expanding its own resale marketplace to Italy and France. After a period of investment in selling new goods, eBay is returning to its roots as a secondhand marketplace as it sees growth among high-end resale and invests in new authentication for jewelry and collectibles, the Financial Times reported.

(Courtesy of Shein)

Fast fashion retailers, which created systems that quickly generate new styles but have come under scrutiny for the speed at which its goods pile up in landfills, also now see room for resale. In October, Shein, Pretty Little Thing and Zara both signaled they would launch resale services. They're standing up marketplaces where people who buy their products then quickly look for the next style can sell them again.

The category-specific focus is also extending into home goods, noted Spencer Kieboom, CEO of Pollen Returns, which offers return pickups for retailers. FloorFound is offering recommerce for big-and-bulky items, providing pickup, inspection and delivery along with resale capabilities for brands.

Even Goodwill – arguably the original home of resale alongside the Salvation Army – is moving into online thrift through the launch of the new platform Goodwill Finds, and brought on Modcloth and Urban Outfitters veteran Matthew A. Kaness to lead it.

The tactics of each vary.

Some, like Queenly, seek to play matchmaker between sellers and buyers. Without owning or handling any inventory, they provide the technology to make transactions happen between independent parties, while taking a fee.

For brands and retailers who work with services like Reflaunt, the opportunity lies in creating a channel for shoppers to sell their “pre-loved” goods back to the source from which they purchased it, and obtain store credit or other benefits in return.

Shein is taking an approach between the two. Items are listed with the retailer through Shein Exchange, but the final resale transaction happens between buyers and sellers, not between buyers and Shein.

Showing your values

While the approaches are distinct for individual goals, there is common ground that unites this wave. Brands and retailers are responding to a push to reduce the footprint that consumer goods leave on the environment. With the alarm bells for the climate change emergency getting louder, many are putting a bigger priority on sustainability, especially among Gen Z consumers who are growing up with more awareness than ever that the ability to access new styles on demand has the byproduct of piling up waste.

Consumers are increasingly interested in extending the life of their goods. They also want brands and retailers to show what they’re doing for their world along with their latest styles.

“More and more consumers are interested in brands and companies that also have strong value propositions paired with their branding. Sustainability is a key value that consumers care more about than they have in the past,” Queenly’s Nakashima said.

While many environmentally-minded improvements happen in the choices made in manufacturing and transportation in the supply chain, resale is visible to the consumer. So standing up a program helps them stand out, and starts a relationship, said Karl Lillrud, an author and speaker specializing in ecommerce and retail innovation.

Inside a thredUP distribution center. (Courtesy photo)

“If we offer something that will be of value to them, like reselling, then we will get them into the store, and we will be a good guy,” Lillrud said. “With that, we will give them the value that they're looking for, but also the opportunity to sell something, either now or in the future, because we create an extended relationship with that consumer.”

In turn, customers will then go and tell others about their experience, creating its own kind of circularity in word of mouth.

“The value that you get from customers bragging about how they just saved a little bit of the planet by repurposing previously used products – that will build for the long run, and it will attract customers that you don't have a relationship with yet because of the what they hear from their peers,” Lillrud said.

This could also result in opportunities to create a new experience for consumers. Karl Lillrud talked about a collaboration between Star Wars and H&M, where people could pick from a selection of secondhand shirts and shoes that were given back to the retailer, then choose a Star Wars print to have affixed to the item. This engages consumers not just in resale, but in the reuse process. With the emergence of goods that cross physical and digital media through innovations like NFTs, Lillrud sees more opportunity for co-creation ahead. It’s a way for brands and retailers to demonstrate that they are meeting expectations being voiced by younger generations that they will take steps for the environment.

“They are ready to jump on these initiatives to show that they support it,” Lillrud said.

Resale and returns

When it comes to resale, there is the consumer-facing side, and there is the logistics side, which often happens out of view. For resale to work, it has to make sense for both aspects of the business. After all, setting up resale requires additional resources and the ability to execute a program that will delight customers even as it complements the business aimed at selling goods the first time.

On the logistics side, Kieboom sees a good reason that retailers are showing more interest: Lots of inventory is coming back to them.

Returns are rising right alongside overall ecommerce growth, with the National Retail Federation reporting that the return rate grew from 10.6% in 2020 to 16.6% in 2021. While retailers offer generous return policies to consumers, these returned goods have been among the causes of excess inventory behind the scenes for many brands and retailers. So, the opportunity presented by resale to activate a new business line that will not only recirculate goods, but also create revenue streams around them is an appealing one.

mannequin in front of windows

Resale is fashionable. (Photo by Clem Onojeghuo on Unsplash)

Further, resale channels can potentially solve a key logistics problem for brands: Returns require that the supply chain be activated to recover a good in a process known as reverse logistics, and this is not an area that operates with two-day shipping guarantees.

“When you have fast out, you have to have fast back, and right now you have fast out with slow back,” said Kieboom, the Pollen Returns CEO. Especially as more brands make direct-to-consumer operations a larger part of their business, they have less capacity to process all of the returns coming their way.

So there are resource savings to be had in creating a resale program that engages consumers in dropping off their items, having them picked up, or even providing the infrastructure to resell products to others on their own, as Shein is doing.

Yet just like on the front end of a sale, there is interplay between brand and logistics that presents risk, as well. Even if a good is being resold by someone else, trust still matters.

Kieboom uses a hypothetical: Say one of these DTC-inclined retailers creates a program that cuts out the middleman in returns: When a consumer returns an item, it is sent directly to another consumer who bought a pair of shoes online instead of back to a warehouse.

A number of scenarios could play out: The person returning the good may not send to the buyer in time, or it may be excessively damaged or worn when it arrives. One could even imagine a scenario where the item wasn’t sent at all. When a buyer is presented with an issue, they are likely to call the retailer to seek recourse, so it becomes part of their experience with the retailer. Even though the retailer is not involved in the transaction, it is still their name on the clothes, and their equity with the consumer, on the line. For retailers considering lifetime value, that risk is not just that they lost one purchase, but many over time.

While this hypothetical isn’t playing out at this time, the point is that a resale program must be an extension of the brand. Key building blocks of this, like providing a great customer experience and fostering community, can be just as valuable in the secondhand experience as it is in selling goods the first time around.

Resale communities

When those elements are in place, the upside is that a resale program can be reciprocal for the people who buy and sell on it. Queenly makes community space for people to ask questions of each other, and connections that lead dresses to new homes are made all the time through that channel. These days, the majority of users on Queenly are now both buyers and sellers: they both make dresses available for others, and head to the platform in search of formalwear for an upcoming occasion. When they are ready to sell, the platform is designed to make it easy to create a listing. Several of the dresses have even had multiple lives as they move beyond a second owner, said Nakashima.

The embrace of a garment's many lives gets to another key shift that has taken place in fashion: Resale is on-trend. Thrift and vintage were once looked down upon, but they slowly became more fashionable over the last couple of decades. Now, resale and internet entrepreneurship go hand-in-hand. And with more secondhand goods becoming available, there is room for more marketplaces that specialize, whether it is Queenly for formal dresses or WhatNot for collectibles.

With this category focus, customers can not only use the internet to find particular products they like. They can also find their people.

“With specialty marketplaces,” Nakashima said, “You're matching buyers and sellers with exactly what they're looking for.”

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