With trade-in initiatives and recommerce marketplaces, brands and retailers are standing up their own secondhand operations.
Wrangler has a new line of secondhand goods. (Photo courtesy of Wrangler)
Looking for where apparel and accessories trends are heading next? Consider the goods that are already out there.
If a spate of new initiatives launched in the last several weeks is any sign, resale is emerging as a must-have offering for brands and retailers. Glamour called it “fashion’s most important growing sector.”
Thrift and consignment have been cornerstones of the retail landscape for years, and eBay led the way for resale in the internet era. But with the growth of ecommerce, there has been a shift in who is selling secondhand goods. It’s not just independent stores and sellers anymore. Platforms like ThredUP, The RealReal, DePop and ReBag made secondhand goods the primary business model of their online marketplaces. Now, with tools more widely available and well-trafficked websites of their own, the brands and retailers who sell the goods when they're new are standing up operations to keep their products circulating through the economy.
This embrace of recommerce is fueling growth of an online resale industry that is projected to be valued at $15.5 billion by the end of this year, according to a forecast from eMarketer. By 2025, ThredUP projected in a 2021 report that the overall secondhand industry will reach $77 billion, and grow at 11 times the rate of the broader retail clothing industry in doing son.
As the Earth Day timing of many of the announcements about the new initiatives underscored, it’s clear that brands and retailers are considering the natural environment, as well as retail. Recognition of the pollution generated by the garment industry and the long-standing difficulty with recycling textiles are leading brands and retailers to build sustainability into their own operations.
When it comes to how they do so, the new initiatives offer plenty of examples. Here’s a look at several that launched in recent weeks:
Allbirds is aiming to double the lifetime of its products. The footwear brand launched ReRun in February, offering customers the option to trade in gently-used shoes for $20. In turn, Allbirds said it would sell the used shoes for $59. The initiative underscores how brands are partnering with other firms to move resale forward, as Allbirds worked with tech company Trove to launch ReRun.
Lululemon expanded its Like New program to stores across the US in April. Through this initiative, customers can trade in “pre-loved” items like pants, shirts and jackets for an e-gift card. It also has an online platform to shop the goods that were traded in. With a pilot program launched in 2021, this Earth Day announcement was proof that such initiatives can scale beyond launch.
Even luxury players are getting involved. Hugo Boss announced plans to launch a new platform called Hugo Boss Pre-Loved later this year. This will allow secondhand items to be returned for store credit. In turn, Hugo Boss will curate a secondhand collection on its website. The brand will also launch a repair program in Germany, allowing owners to mend their current goods rather than seeking new threads right away.
The denim brand marked Earth Day and its 75th anniversary with a new (old) line. Wrangler Reborn curated a mix of vintage and preloved jeans. With jeans dating back decades, it's proof that care of clothing can keep it circulating through the economy for years.
“The greatest form of sustainability is longevity, and this collection is a testament to the durability of Wrangler denim,” the company wrote in a news release. “Some of the items in the collection have been around for more than six decades and still stand strong today.”
PacSun is bringing resale to youth. Partnering with ThredUp’s Resale-as-a-Service division, the apparel brand’s Pre-Loved Pac program now includes a channel on its website that offers a digital shop with secondhand items. For anyone with PacSun gear, it is offering clean-out kits, and an option to receive payment in the form of a PacSun gift card for any goods they send in.
Outdoor-oriented resale platform Out&Back is launching an in-store resale program that allows it to expand into hard goods. Launched in 2019, the Denver-based platform already accepted soft goods like outerwear, tents and backpacks. Partnering with Dick’s Sporting Goods and Public Lands locations in Denver and Pittsburgh, the resale platform will now have gear buyback programs that can accept skis and snowboards in-store. Call it omnichannel resale.
"Fashion ecommerce is one of the most cumbersome customer experiences that exists," said Rent the Runway CEO Jennifer Hyman.
Photo by Daniel G. Wells III, used under a Creative Commons license.
The rise of generative AI is bringing with it a groundswell of interest and concern about how the capability to automatically synthesize information and create something new will change how we work.
Given that AI will sit within the architecture of our digital lives, it’s also worth considering how the technology will introduce new tools for other aspects of life, as well.
For two ecommerce innovators in the apparel space, it’s a time to explore how it will transform shopping. Rent the Runway is set to roll out new AI-powered search capabilities, while Stitch Fix is drawing on a long history with data science and machine learning to personalize the inventory buying process.
Here’s a look at the initiatives underway at each company, and their visions for the future:
Rent the Runway is putting a focus on the customer experience this year as it seeks to retain more subscribers and continue a yearslong push toward profitability.
This is resulting in the introduction of a variety of new initiatives, from the addition of an extra item to all orders to speeding up page load times. Yet as CEO Jennifer Hyman zooms out, she sees change being necessary on an industry-wide level in fashion. Beyond adding new features, AI can play a transformational role.
“I think that fashion ecommerce is one of the most cumbersome customer experiences that exists. You are searching through pages and pages and pages of content to find the items that you like and no one likes doing this,” Hyman told analysts on the company’s earnings call this week. “As an industry that still is selling physical products, AI is going to be -- fashion is going to be a major beneficiary as an industry.”
As a rental service, Rent the Runway has a distinct niche in fashion that lends itself to AI’s advantages, Hyman said. As opposed to a retailer that a consumer may visit a couple of times a year, RTR is used frequently by customers. So Hyman said there are opportunities to turn Rent the Runway into a “utility” by creating a more seamless experience.
This frequent use also provides a “highly unique” dataset, Hyman said. They know what a customer is planning to do based on what they rented. They know whether she liked or disliked an item, and many customers are reviewing 10 items per month. They know her size and how an item fits. This can be put to work in tools that allow customers to ask questions, and find answers.
The first application that combines AI and these advantages will appear in the coming weeks, when Rent the Runway plans to launch a beta of AI-driven search. The tool will allow customers to search for common terms or use cases for an item. So a person will be able to write “Miami vibe,” “‘clambake in Nantucket,” or “tropical motifs,” and receive results about what to wear for such an occasion.
The goal is to help customers sift through the endless aisle, and instantly finds what's right for them.
“I think that across all fashion sites, all over the world, the way that people are searching for product is fairly vanilla, it's fairly functional, right?" Hyman said. "You can go to a site and search for a T-shirt, you can go to a site and search for a black-tie gown. The fact that we're going to be able to enable our customers to search how they actually want to use this closet in the cloud, to search for items to wear to my beach bonfire this weekend, that is a completely different way to search, and I think that it really brings out the value proposition of what a closet in the cloud is all about."
Hyman sees this as a first step in the company using AI models to improve the product experience, and expects more tools to appear in the coming months. RTR is also introducing an SMS concierge experience for onboarding that allows customers to text with a member of the customer service team. The company is already exploring ways that AI can be incorporated into that tool, as well.
In the longer term, Hyman said the company has a vision that will leverage AI to allow customers to communicate with Rent the Runway asynchronously across different modalities, and have a stylist that is constantly available to recommend items, pick out new inventory and answer questions.
“If we are utilizing AI appropriately over the next few years, I see no reason why someone even has to come to our website,” Hyman said.
Stitch Fix has long married AI with human curation to provide outfits on a subscription basis.
“For years, we have utilized capabilities in generative AI, injecting scores and language into our personalization engines and, more recently, automatically generated product descriptions,” CEO Katrina Lake told analysts. “We have also developed and implemented more advanced proprietary tools such as outfit generation and personalized style recommendations that create a unique and exciting experience we believe is unmatched in the market.”
A new area where the company is applying AI is inventory buying.
“We have historically utilized a number of tools to make data-informed decisions with our inventory purchases,” Lake said. “Now, directly leveraging our personalization algorithms, we have developed a new tool that creates an exciting paradigm shift, which will utilize math scores at the client level to drive company-level buying actions. We expect the clarity of demand signals at the individual client level to drive more proactive and efficient inventory decisions as a company. And because of this, we expect to see higher success rates on fixes and drive increases in keep rates and [average order value] over time.”
Early results are promising. When compared with existing buying tools, testing showed a 10% lift in keep rate and AOV. By the end of this quarter, Stitch Fix expects 20% of all purchase orders to be algorithmically informed.
With experience using AI and a team in place to build, Stitch Fix is investing in the technology. Like Rent the Runway, it also has a unique dataset that offers an immediate advantage.
Here are Lake’s thoughts about how Stitch Fix’s AI strategy:
One of the things that I love about our experience is that we have generative AI that's really in more of a visual format. And so, the outfits that we have in our app, those are actually taking into account your preferences, what we know about you, and then in combination with what we know that you own in your closet. And to be able to kind of continue to push that technology and to be able to continue to give people more value in their experience with Stitch Fix, that's a really good example of, I think, a capability that is, firstly, really aligned with our capabilities around data and personalization and really unique to us.
And then I think it's also really compelling because I really think that pushes us as we think about what that addressable market is. I think if we can push outfits to be something that can be an asset to everybody, I think that is a universal thing that people would love to be able to have, is to have access to advice on a daily basis around what to wear and how to wear it.
While these are distinct companies, their plans lead us to a common conclusion: While the talk around generative AI might be new, many technology-forward companies already have assets sitting inside them that can be leveraged to build new tools. Uncover what’s already there, learn about the AI’s capabilities and develop a solution that's right for your organization. Then, talk to customers to determine how to improve it. It might mean commerce looks different, but that’s okay. The point is to create a better experience.
