How digital is driving the acceleration of fashion resale

Resale is currently growing 11 times faster than the broader retail clothing sector, suggests new research on the second-hand clothing market. According to figures cited in ThredUp’s latest report, the resale and traditional thrift market is predicted to be worth $84 billion by 2030 – more than double what the fast fashion market, at $40 billion, will be worth by the same year.

Last year, we explained how many retailers are looking into resale, as some, such as Levi’s, launched their own second-hand offerings, while traditional charity shops like Oxfam made the shift online. Now, with high-profile acquisitions, and technology companies tapping into resale-as-a-service, there’s been renewed acceleration within the resale market.

Growth of second-hand platforms being driven by social media

ThredUp states that the growth of the second-hand clothing market is being driven by younger consumers, with 40% of millennials and Gen Z consumers shopping secondhand clothing, shoes, or accessories in the past 12 months. Spurred on by the desire to save money and/or buy more sustainable fashion, young consumers are also using social media apps like TikTok and Snapchat to share in their love of thrifting and vintage clothing. The hashtag #secondhandfashion has 23.8m views on TikTok.

Fashion marketplace Poshmark recognises the opportunity afforded by social media platforms, having recently launched its own mini shop within Snapchat that allows consumers to browse and buy within the platform itself. As well as furthering Poshmark’s ability to personalise content and connect with its existing community, the new channel will allow it to reach a higher percentage of younger consumers. Speaking to Forbes, Poshmark’s chief marketing officer, Tristan Young, cemented this aim. “Poshmark mini will introduce millions of new shoppers to Poshmark while deepening its relationship with Gen Z, an important and fast-growing part of its community,” he said.

Meanwhile, another company hoping to reach this valuable demographic is Etsy, which recently acquired the resale app Depop in a $1.6 billion cash deal. With 90% of Depop’s userbase under the age of 26, Etsy looks set to capture a new audience (keeping Depop separate from the much older consumer base of its Etsy platform).

For young users, Depop’s appeal stems from its highly social and highly curated aesthetic, whereby sellers are encouraged to use other social media platforms in conjunction with Depop to ‘build their brand’ and continue the lifecycle of clothing.

Looking for reworked handbags, who's selling? #depop pic.twitter.com/jzg4e9qWUj

— Depop (@depop) August 15, 2021

Indeed, Depop could be a profitable move for Etsy, as other second-hand platforms are proving the market’s current and predicted strength. ThredUp revealed that its revenue grew by 26.7% in the second quarter of this year, reaching nearly $60 million. Similarly, Poshmark announced a 22% rise in net revenue to reach $81.8 million, while its active buyers were up 16% to seven million.

The emergence of resale-as-a-service

As the resale and rental market gains traction, we are also seeing retailers invest in their own services. Urban Outfitters is one such example, recently launching Nuuly Thrift – a website that enables customers to resell products from any brand (not just Urban Outfitters). According to a press release, customers will be able to transfer the money from any transaction made into their own bank account, or redeem them for ‘Nuuly Cash’, which will be worth 10% more at Nuuly Thrift and other Urban Outfitters brands. 

Elsewhere, H&M has launched H&M Rewear in Canada, similarly enabling customers to buy and sell clothing online from any brands.

Of course, resale operations aren’t easy from a logistical perspective, but it’s no coincidence that multiple retailers are launching similar initiatives around the same time. The reason is that many are now partnering with new and emerging ‘resale-as-a-service’ companies that provide both the technology and operational expertise needed to run them. One of these tech companies is Reflaunt, who is behind H&M Rewear as well as Harvey Nichols’ new resale service.

Speaking to Fashion United, Reflaunt’s CCO and co-founder Felix Winckler describes the core proposition of Reflaunt as a platform “made to simplify the listing process.” Essentially, Reflaunt acts as the ‘middle man’ for brands, taking care of the resale process on multiple second-hand platforms including eBay. Its USP is that it creates customer journeys in line with the brand’s tone of voice and identity, ensuring that it blends in with its wider CX (and functions like customer support and marketing). 

Another company offering resale-as-a-service is ThredUp, which recently announced that it is to acquire fashion resale business Remix Global AD, in a move that will see it continue its European expansion. Currently, ThredUp offers its technology and services (including fulfilment) to the likes of Fabletics, Urban Outfitters, and for the Madewell denim resale service. The latter enables customers to return any pair of worn denim jeans (from any brand) in exchange for $20 credit. From there, the denim goes through a quality checking process via ThredUp’s distribution centre before being resold online or in select Madewell stores for a fraction of the original price. 

Interestingly, it’s not only fashion brands that are tapping into resale opportunities. Recently, LG announced a partnership with ThredUp as part of its ‘Second Life’ campaign, cementing the demand for sustainability initiatives across industries. The campaign will enable US customers to order a ‘LG Donation Clean Out Kit’, enabling them to ship any second-hand apparel, shoes, and accessories to ThredUp for free. In exchange, LG and thredUP will donate $5 to a select charity of the seller’s choice, before giving the items a ‘second life’ and reselling them on the ThredUp marketplace.

Trove – the platform behind Lululemon and Levi’s resale services – is another tech company gaining traction. Trove recently generated $77.5 million in funding, bringing its total amount to $122.5 million. According to Brook Porter, a founding partner at G2 Venture Partners, the reason that many more retailers are showing interest is to account for the lack of authority over the sale of their own second-hand goods elsewhere.

“Brands are all coming to the same realisation: They see massive amounts of their products on peer-to-peer websites and have no control,” he told Business of Fashion. As a result, resale-as-a-service companies like Trove enable brands to take command of their product – as well as delivering wider benefits for the customer including sustainability and affordability. 

What is ecommerce-as-a-service? 

Using data to determine second-hand demand

A large percentage of luxury brands have steered clear of resale partnerships, with many believing that the second-hand market can diminish exclusivity as well as dilute the importance of new collections. However, technology platforms are trying to convince luxury brands that the market is now too big to ignore.

One example of this is The Archivist, which helps luxury brands ‘reclaim’ their products, mainly through data insights on how their products are faring outside of their own channels. Its Resale Intelligence solution monitors what products are selling and where, and helps brands find and take action on the sale of counterfeit goods. According to Vogue Business, future services from The Archivist will also include “in-store buy-backs, a branded secondhand marketplace, and a peer-to-peer marketplace for buying and selling.”

With demand for second-hand luxury fashion on the rise, authenticity and control (powered by data) could become a key differentiator for retail brands enabling the sales of second-hand fashion.

Similarly, for The Archivist and other resale-as-a-service companies, the ability to help retail brands draw back consumers from rival second-hand marketplaces – and crucially, win loyalty – is likely to further generate investment in the space.