Should fashion retailers still be launching resale platforms?

Either we’re running out of fingers, or it seems like fashion retailers continue to launch resale initiatives every other month. Just last month, Carhartt debuted its resale platform in partnership with Trove. Also in March, H&M extended its “Pre-Loved” program to the US in collaboration with ThredUp.

In the luxury space, brands from Gucci to Balenciaga seem to have staked their claim in the resale market. Suffice to say, the space is getting increasingly competitive. Yet the market continues to expand, begging the question: Is a resale platform still a good bet for fast fashion and luxury retailers? For most brands, the answer is yes, experts tell us.

“It’s a good idea for brands to explore the secondhand market and find out if they have a role in it,” Claire Tassin, retail and e-commerce analyst at Morning Consult, told Retail Brew. “And I see a lot of what’s been happening over the last couple of years as some fantastic experiments to see what the right type of investment is.”

Sustainability and circularity are factors both fast fashion and luxury brands take into account when deciding whether to pursue resale, but for luxury brands specifically, resale can also be a way to attract new consumers.

“If you’re a premium or luxury brand, maybe they couldn’t afford to buy [your products] at full price, but in a resale environment, they could,” Brian Ehrig, partner in the consumer practice of Kearney, told Retail Brew.

For Andy Ruben, founder and executive chairman at Trove, a branded resale solutions company that works with retailers like Canada Goose and REI, resale is a valuable proposition for retailers regardless of whether they’re in the premium space or fast fashion.

“For fast fashion, it’s lower-quality items that you can get without spending much, and for resale, it’s things that have already been owned that hold their value better,” he told Retail Brew via email. “Everyone wants newness; that is the core of retail.”

Show me the money: One of the values of resale for fast fashion retailers is the ability to minimize waste, but for Ehrig, the second-hand market is not necessarily a “money-maker” for those brands given labour costs involved in creating products and the challenge of profiting from resale at a low price point.

“Every single garment has to be checked thoroughly, and you have to make sure it’s ready for sale and to communicate to consumers where there might be flaws, to photograph it, to build the marketing story around it, to get it up on a website,” he said.

Still, he added, fast fashion brands can make money by using resale at their physical locations and drive more traffic to their stores, “so that hopefully consumers will come looking for the resale. They’ll find something there, and then they’ll find something new as well,” he said.

Not enough: While luxury brands may find more value in resale, it’s still not without challenges, including maintaining a steady supply. “There is technically enough supply sitting in people’s houses, but there’s not enough resale supply to satisfy the capacity that the resale these third-party resale apps have,” Ehrig said, adding that brands can address this by trying to do trade-in days in stores or other marketing events that can generate demand for items.

Tassin agreed, saying that inventory is a key issue when it comes to the resale market. “A big challenge in that secondhand space is recruiting more sellers into the space, because…there’s far more buyers and sellers and secondhand,” she said. “We need more people selling their stuff to make this a compelling market to shop in.”

She added that in order to succeed, brands should pay close attention to the market, which hasn’t changed much in the last year.

Per Morning Consult, consumers’ participation in the resale market is virtually identical to where it was last spring: 42% of the general population have made a secondhand purchase in the last three months.

Tassin said that number is “concerning,” despite the apparent stability of the market, and that brands tend to sell their secondhand products alongside their new products “and kind of compete with themselves almost in that way.”

A good way to address the inventory issue, per Tassin, is for retailers to reach out to their existing customers to encourage them to resell their products. “Knowing who that shopper is, making sure that you’re identifying the right platform or partnership in order to make that happen, and recruiting existing customers to be sellers or for that inventory to ensure that the first time somebody checks out your second inventory that there’s something attractive there is crucial,” she said. “A reason to come back is also really crucial.”