Why Fashion Brands Need to Own This  Billion Opportunity – Source Journal

Why Fashion Brands Need to Own This $82 Billion Opportunity – Source Journal

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

Consumers are increasingly calling for branded resale, according to a new study published Monday by resale-as-a-service platform 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 UK and the US, nearly three-quarters (74 percent) said they engaged in clothing resale on a or other level.

While industry types tend to think of sustainability initiatives as either expensive or difficult to scale, offering a peer-to-peer platform is a “relatively low-pledge, low-resource” way to tap into a market expected to blow over $82 billion by 2026 in the US alone, said Karin Dillie, Recurate’s vice president of partnerships.

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

The fact that survey respondents cut across age, gender and socioeconomic lines also busts a long-held myth that reselling is largely aimed at conscious-minded Gen Zers and young millennials, Dillie said. While it’s true that a group of “circulars”—that is, people who buy and sell used at the same time—have emerged from these younger demographics, so-called “recommerce” participants who do either or both defy easy characterization.

“Our data has been kind of wrong; people have been buying used and selling used for a very long time, says Dillie, who used to work at luxury auction house Sotheby’s. “It’s really technology that’s scaling it, so I think that’s partly why there’s a younger demographic that’s really getting into it 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 hunt for rarified items. The survey found that 64 percent of shoppers and 55 percent of sellers shopped for mid-price brands 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 buyers and 27 percent of sellers actually traded in luxury names such as Chanel, Gucci and Supreme.

Although 71 percent of re-trade participants cared about their impact on the planet, supporting Mother Earth was not high on the list of priorities. Only 12 percent of buyers and 15 percent of sellers engaged with second-hand because of the environment. Most buyers (22 percent) bought pre-owned as a way to save money. The No. 1 reason people sold castoffs (23 percent) was to get rid of unused items.

Recurate and BBMG found that offering a peer-to-peer option is not only the fastest way for brands to own the entire 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 used marketplaces. Sellers also prefer it because they get to keep most of an item’s value, which is a major driver of their behavior.

But brand-led reselling, where brands take back their old items in exchange for cash, credit or discounts, also has its advantages, Dillie said. Companies may want to start a returns program so they can authenticate high-value items, perhaps using digital IDs, or make them available for drop-off at physical locations. They can, through this more practical approach, also phase in a cleaning and repair component or provide an opportunity to recycle garments that are worse for wear. Ultimately, she said, there is no one-size-fits-all solution, and Recurate’s goal is to operate a diversity of resale models that can co-exist.

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

No matter how brands do it, taking ownership of used goods increases their stickiness level, she added. Example: 75 percent of people Recurate and BBMG surveyed said re-commerce 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 used was an option.

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

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

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 result in less waste. Today’s generation is used to a fast pace of consumption, with even 72 percent of repeat customers buying items every two to three months, the survey found. Reselling, he said, allows people to scratch that itch without accumulating new resources. And as re-trade becomes more widespread, they will also begin to look for brands that sell higher quality products because they will have greater resale value and stay in circulation longer.

Siegel likens this to the automotive industry, where people tend to buy cars with resale value in mind. Consumers may be willing to pay more for an item initially if they know they can squeeze a better price down the road. In the case of brands, being able to offer resale with little eroded value 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 round of funding 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. By the end of the year, it hopes to be involved in a further 50.

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

“It’s almost like a stampede now of brands … and I think this is going to continue for a while,” he said. “I think they’ve all come around to recognizing the growth of the market.”

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