Resale is huge. It has a major impact on keeping clothing out of landfills, drives new/younger clients and is big business. However, this isn’t a story about resale. It is about brands being excluded from resale revenue and, because of technology solutions , that’s over. Four of the four major resellers have listed publicly or been acquired in the past 39 months and, in contrast, 4 out of hundreds of retail sector companies (traditional retail, brands, ecomm) have IPO’d over the same period of time. It is worth it for brands and retailers to take a good hard look at the resale revenue their product generates - for OTHER businesses! Based on revenue and capital market share, there is clearly a reason for brands to take a piece of the pie.
For the most part, within each of these resale company’s earnings, brands have been shut out of the financial model. The resellers serve as marketplaces for buyers and sellers of goods. The value of the goods however, is fundamentally determined by the brand’s investment in design, production, craftsmanship and the sheer brand value. Yet brands are not part of this ecosystem.
Further, these marketplaces are primarily marketed as a place to get discounted goods. Price and assortment are the main focus.
Financial synopsis of the biggest players:
stock symbol:TDUP IPO’d in 3/21 at $14.00 currently at $18.36 +31.14% Market Cap: $1.78B
We are an online consignment thrift store for your closet, your wallet and the planet.
stock symbol:POSH IPO’d in 1/21 at $42.00 currently at $25.23 -39.93% Market Cap: $1.83B
A connected shopping experience…a leading social marketplace for new and secondhand styles for women, men, kids , pets , home and more.
stock symbol:REAL IPO’d in 6/19 at $20.00 currently at $12.59 -37.05% Market Cap: $1.17B
Shop. Sell. Dream. The future of fashion is circular.
acquired by Etsy or for $1.65B
The fashion marketplace where next generation come to discover new items… connecting to make fashion more inclusive, diverse and less wasteful.
(source: https://stockanalysis.com/)
In contrast, in the same period of time:
2019 saw 3 retail sector IPOs (Chewy, Levi Strauss, Revolve)
2020 there were 0 retailer sector IPOs
Not that market cap and IPO’s are the only measures of total addressable market - the point is the entire model of nearly a $1.0Billion in sales is built on the equity of brands.
Revenue/trailing 12 months
ThreadUp $206M
Poshmark $300M
The RealReal $368M
Depop $70M *
TOTAL $944M
(source: https://stockanalysis.com/)
*2020 numbers from WSJ
And this mega-resale landscape, does not include the scores of independent brick and mortar vintage/thrift/consignment locations.
Brands have been left out of the narrative. And, when you think about it, the brands’ equity (quality, craftsmanship, allure) is what drives sales and has a direct impact on the sell-ability of product for the resellers.
To that end, some brands have activated their own resale programs.
Eileen Fischer: Renew, Lightly used clothing, Knit To Last :
Urban Outfitter's Nuuly is a Thrift Store app
And there are more - however the number of programs is small.
There are multiple benefits of resale not just revenue - brands can cultivate loyalty and reduce churn to other sites for lower-priced lightly used items.
However, the biggest benefit is sustainability. The fashion industry has MAJOR environmental issues and generating revenue from resale helps move the sustainability needle and keeps clothes out of landfills.
What To Do
Smart retailers know that new solutions are needed.
SMARTER retailers know to stall, or wait is not an option.
Brands wonder….
We’ve worked hard for our brand equity and quality – how can we earn more on the 2nd, 3rd and 4th bite of the apple? How can we get new Gen Z clients to try our amazing product? How can we contribute to the prevention of clothing ending up in landfills? How?!?
So how do brands “easily” get a piece of the pie of the resale market?
The answer is a familiar one – find outsourced services.
Enter Resale Tech.
These solutions offer plug and play technology for retailers and brands.
Let’s take a look at some players:
Treet is a resale marketplace software solution that helps fashion brands be more circular and own the secondhand markets for the items they produce. The mission at Treet is to make secondhand feel firsthand for consumers and brands around the world. Treet is making it incredibly easy and profitable for any fashion brand to launch their own fully branded peer-to-peer resale marketplace.Their customers can buy and sell items from each other in a trusted environment in a way that feels akin to shopping on their main site. Treet handles all of the logistics and customer support while brands share in the profit.
Coming from a different angle, Save Your Wardrobe is a Fashion Tech Startup using AI to make fashion more sustainable. SYW is launching technology to recommend new outfits based on what a customer already owns and makes shopping recommendations to complement existing garments. They also recommend creative ways to up-cycle the life of owned clothes to prevent them from being discarded.
What’s the takeaway?
It’s time for brands and retailers to jump on resale.
The good news is that there are options.
The better news is that they do NOT have to be experts at resale execution.
As I heard in my neighborhood growing up …. “I gotta guy for that.”
Well, these technology solutions are the brands’ “guys”.
Solutions:
Treet.co (featured)
Reflaunt
Recurate
Save Your Wardrobe (featured)