Why fashion brands need to own this  billion opportunity – Sourcing Journal

Why fashion brands need to own this $82 billion opportunity – Sourcing Journal

Why fashion brands need to own this  billion opportunity – Sourcing Journal

If fashion houses are still sleeping on peer-to-peer reselling, it might be time to wake up.

Consumers are increasingly clamoring for private label reselling, according to a new study published Monday by reselling platform-as-a-service Recurate in partnership with social impact agency BBMG.

Of the roughly 11,000 adults they surveyed from a dozen different markets around the world, including Australia, Canada, France, Germany, Italy, the United Kingdom and the United States, nearly three-quarters (74 percent) said they they were involved in the clothing trade at some level. .

While industry types tend to think of sustainability initiatives as expensive or difficult to scale, offering a peer-to-peer platform is a “relatively low and low resource” means of accessing a market that is expected to outgrow the $82 billion by 2026 in the United States alone, said Karin Dillie, vice president of partnerships at Recurate.

“You don’t have to build that warehouse,” Dillie said. “You don’t have to return all the items and things like that.”

The fact that respondents cross age, gender and socioeconomic lines also breaks down the entrenched myth that reselling is largely the purview of Gen Z and conscious young millennials, Dillie said. While it is true that a cohort of “circulars,” that is, people who buy and sell secondhand at the same time, has emerged from this younger demographic, so-called retrade “participants” who do either or both defy a easy characterization.

“Our data has been incorrect; people have been buying and selling secondhand for a long time,” said Dillie, who used to work at the luxury auction house Sotheby’s. “It’s really technology that’s scaling it, so I think that’s part of why it’s a younger demographic that’s really engaging with it now. Because, you know, at Sotheby’s, the lowest value they can sell is $20,000, which is a pretty high bar.”

Another debunked misconception is that people search for rarefied items. The survey found that 64 percent of buyers and 55 percent of sellers were dealing with mid-priced brands like J.Crew, Lululemon and Nike, followed by 40 percent of buyers and 42 percent of sellers. sellers of fast fashion brands like Gap, H&M and Zara. In fact, only 28 percent of buyers and 27 percent of sellers traded with luxury brands like Chanel, Gucci, and Supreme.

Although 71 percent of retrade participants worried about their impact on the planet, supporting Mother Earth was not high on their list of priorities. Only 12 percent of buyers and 15 percent of sellers engaged in secondhand items due to the environment. Most buyers (22 percent) bought used vehicles as a way to save money. The No. 1 reason people sold their scraps (23 percent) was to get rid of unused items.

Recurate and BBMG found that providing peer-to-peer choice is not only the fastest way for brands to own the full lifecycle of their products, it’s also the most in-demand. Nearly 90 percent of circulars and 80 percent of participants said they trust brand-led resale more than secondhand markets. Sellers also prefer it because they can retain most of an item’s value, which is an important factor in their behavior.

But brand-managed resale, where brands take back their old items for cash, credit or discounts, also has its advantages, Dillie said. Businesses may want to start a returns program so they can authenticate high-value items, perhaps using digital IDs, or make them available for shipment at physical locations. They could, through this more practical approach, also incorporate a clean and repair component or provide an option to recycle garments that are in a worse state of wear. Ultimately, he said, there is no one-size-fits-all solution, and Recurate’s goal is to drive a diversity of reselling models that can co-exist at the same time.

“There’s a smorgasbord of ways to engage with your customer,” Dillie said. “So when we talk to brands about our technology, we really explain to them almost in a consultative way about what their end goals are. How do you want to interact with your customer?

Regardless of how brands do it, taking ownership of their secondhand products increases their level of stickiness, he added. Case in point: 75 percent of people surveyed by Recurate and BBMG said re-trading would increase their brand loyalty and frequency. Another 85 percent of circulars, 74 percent of buyers and 69 percent of sellers said they would try a new brand if secondhand was an option.

For brands that are spending to acquire new customers, reselling can accomplish the same thing at “much lower costs” 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, the buying and selling of the second-hand item,” he said. “It’s more of another opportunity to engage your customer, bring them back into your ecosystem, and have an opportunity to increase that customer’s loyalty.”

For Siegel, who considers himself a “deep” 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 constant turnover. and result in less expense. The current generation is used to a fast pace of consumption, with as many as 72 percent of re-trade shoppers purchasing items every two to three months, according to the survey. Reselling, he said, allows people to scratch their itch without sucking up new resources. And as re-trading becomes more widespread, they will also start looking for brands that sell higher quality products because they will have a higher resale value and stay in circulation longer.

Siegel likens this to the automobile industry, where people tend to buy cars based on resale value. Consumers may be willing to pay more for an item up front if they know they can get a better price later. For brands, being able to offer retrade with little eroded value can also be a testament to the quality of their products.

In the meantime, the two-year-old company is keeping busy. In May, Recurate raised $14 million in a Series A funding round led by Chicago-based investor Jump Capital. He currently works with over 50 brand partners including Another Tomorrow, Frye, Mara Hoffman, Outerknown and Steve Madden. By the end of the year, he hopes to add another 50.

Brand-led reselling is still a relatively new concept and requires a different way of thinking, Siegel said. But while Recurate used to have to educate companies about the market opportunities of resale, now it’s brands that are knocking on its door.

“Now it’s almost like a brand stampede … and I think this will continue for a while,” he said. “I think everyone has come to recognize the growth of the market.”

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