Resale is, as currently practiced, a terrible business. Companies that aspire to be intermediaries between buyers and sellers of second-hand clothing have two options, neither of which is attractive: One method involves the platform handling the transactions itself, which means renting warehouse space at various locations. cities to store clothes, in addition to hiring a small army of Chanel. Jordan scholars and ologists to authenticate merchandise, as well as photographers to create listings and more.
Option two, leaving all of that to the client, brings its own problems. It’s more work for sellers, a major reason why about 40 percent of US consumers surveyed by BoF Insights have never tried reselling. With fewer gatekeepers, sites can be inundated with fast fashion and other dubious merchandise. And this model does little to assure buyers that they won’t be scammed (one reason most peer-to-peer marketplaces still employ authenticators for more expensive merchandise). Commissions are also lower, creating an incentive to overspend on customer acquisition.
Those flaws are becoming more apparent as reselling platforms report results (ThredUp is next, on Monday). When the economic outlook first began to change, some theorized that second-hand sellers would benefit from an influx of consumers who could no longer afford to buy new. Instead, resellers appear to be suffering from the same drop in online shopping that is hurting sales at DTC’s brands.
Costs are also rising. The RealReal said earlier this month that it is struggling to find enough sellers to expand its more lucrative consignment business. Poshmark, which has been profitable in the past, is no longer, due in part to higher marketing costs as it seeks out new customers and tries to convert sellers into buyers. The big American push from Paris-based Vestiaire Collective will only add more pressure.
The scalping platforms say that they will eventually be profitable, although the exact date tends to be in the distant future, if they give any at all. The way forward comes down to scale and efficiency: These companies need all those warehouses, authenticators, and vendors to process as many bags and dresses as quickly as possible to justify the cost. For years, the category’s champions have held out hope that artificial intelligence and automation could change the economy: computers that are better at recognizing fake Dior bags than humans, and warehouses where robots do most of the work.
Progress has been slower than expected, and it’s telling that Tradesy, which built its authentication system around analyzing the data it collected about sellers, was acquired by Vestiaire Collective earlier this year and is due to shut down in 2023. Still, the less glamorous technology is helping. in the margins. A bright spot for The RealReal last quarter was that more sellers are shipping items themselves thanks to an improved self-service option.
What to see this week
August 15 Armani Code Parfum, a new concentrated fragrance, goes on sale as part of the brand’s ambitious expansion efforts.
About the results of Holdings
T. J. Maxx, Macy’s results
US Retail Sales
Estee Lauder Cos., Kohl’s Ross, Tapestry results
UK retail sales
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