Why Fashion Brands Should Own This $82 Billion Opportunity – Sourcing Journal

If fashion companies are still sleeping on peer-to-peer resale, it may be time to wake up.

According to a new study published Monday by resale-as-a-service platform Recurate in partnership with BBMG, consumers are increasingly asking for brand-owned resale.

Of the approximately 11,000 adults they surveyed from a dozen different markets worldwide, including Australia, Canada, France, Germany, Italy, the United Kingdom and the United States, nearly three-quarters (74 percent) said they engaged in some level of physical activity. the resale of clothing .

While industry types tend to view sustainability initiatives as expensive or difficult to scale, providing a peer-to-peer platform is a “relatively low-lift, low resource” means of tapping into a market that expected to reach more than $82 billion by 2026 in the United States alone, said Karin Dillie, Recurate’s vice president of partnerships.

“You don’t have to build out that warehouse,” Dillie said. “You don’t have to take all the stuff back and stuff like that.”

The fact that survey respondents break age, gender and socioeconomic lines also busts a long-held myth that resale is largely the purview of conscious Gen Zers and young millennials, Dillie said. While it’s true that out of this younger demographic has emerged a group of “circulars”—that is, people who buy and sell second-hand at the same time—so-called recommerce “participants” who do not defy either, or both, easy characterization.

“Our data was more or less incorrect; people have been buying second-hand and selling second-hand for a long time,” says Dillie, who used to work at the luxury auction house Sotheby’s. “It’s really technology scaling it up, so I think that’s partly why it’s a younger demographic that’s really into it right now. Because you know, at Sotheby’s the lowest they can sell is $20,000, which is a pretty high bar.”

Another debunked misconception is that people are on the hunt for rare items. The survey found that 64 percent of shoppers and 55 percent of sellers traded in mid-price labels such as J.Crew, Lululemon and Nike, followed by 40 percent of shoppers and 42 percent of sellers for fast-fashion brands such as Gap, H&M and Zara. Only 28 percent of shoppers and 27 percent of sellers traded luxury names like Chanel, Gucci and Supreme.

While 71 percent of recommerce participants were concerned about their impact on the planet, supporting Mother Earth was not first on their list of priorities. Only 12 percent of shoppers and 15 percent of sellers are concerned with second-hand because of the environment. Most buyers (22 percent) bought second-hand as a way to save money. The #1 reason people sold their cast-offs (23 percent) was to get rid of unworn items.

Recurate and BBMG found that providing a peer-to-peer option is not only the fastest way for brands to own the full lifecycle of their products, it’s also the most requested. Nearly 90 percent of circulars and 80 percent of participants said they trust brand-driven re-commerce more than second-hand marketplaces. Sellers also prefer them because they retain most of an item’s value, which is a major driver of their behavior.

But brand-managed resale, where brands take back their old items in exchange for cash, credit or discounts, also has its advantages, Dillie said. Companies may want to initiate a take-back program so that they can authenticate valuable items, perhaps through the use of digital IDs, or make them available for shipment at physical locations. They could also, through this more hands-on approach, phase a cleaning and repair component or provide an option to recycle garments that wear less. Ultimately, she said, there is no one-size-fits-all solution, and Recurate’s goal is to power a diversity of resale models that can coexist at the same time.

“There’s a mishmash of ways to engage with your customer,” Dillie said. “So when we talk to brands about our technology, we’re really guiding them almost in an advisory way about what your end goals are? How do you want to engage with your customer?”

However brands do it, owning their second-hand goods increases their stickiness, she added. Example: 75 percent of Recurate and BBMG respondents said recommerce would increase their brand loyalty and frequency. Another 85 percent of circulars, 74 percent of shoppers and 69 percent of sellers said they would try a new brand if second-hand was an option.

For brands looking to acquire new customers, resale can accomplish the same thing at “a much lower cost” than traditional marketing channels, including social media, said Adam Siegel, co-founder of Recurate.

“The real benefit isn’t necessarily in the immediate transaction — you know, buying and selling the second-hand item,” he said. “It’s more about another opportunity to engage your customer, to bring them back into your ecosystem and have the opportunity to increase that customer’s loyalty.”

For Siegel, who considers himself a “deep green” environmentalist, finding value in the “second, third, and fourth sales” of products has the potential to displace the production of new goods, allowing brands to decouple profits from the constant churn and resulting in less waste. Today’s generation is accustomed to a blazing pace of consumption, with as much as 72 percent of recommerce shoppers purchasing items every two to three months, the survey found. Reselling, he said, lets people scratch that itch without sucking up new drugs. And as recommerce becomes more widespread, they will also look for brands that sell higher quality products because they have a greater resale value and stay in circulation longer.

Siegel likens this to the auto industry, where people tend to buy cars with resale value in mind. Consumers may be willing to pay more for an item in the beginning if they know they can command a better price later on. In the case of brands, being able to offer low-depreciation recommerce can also be a testament to the quality of their products.

Meanwhile, the two-year-old company is keeping busy. In May, Recurate raised $14 million in a Series A financing round led by Chicago-based investor Jump Capital. It currently works with more than 50 brand partners, including Another Tomorrow, Frye, Mara Hoffman, Outerknown and Steve Madden. It hopes to have another 50 on board by the end of the year.

Brand-based resale is still a relatively new concept and requires a different way of thinking, Siegel said. But where Recurate used to have to inform companies about the market opportunities of resale, it is now brands that knock on the door.

“It’s almost a rush of brands now… and I think this will go on for a while,” he said. “I think they’ve all come to recognize the growth of the market.”

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