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Take-Back Programs Are Gaining Steam. Do They Actually Work?

As sustainability and circular systems gain attention in the fight against climate change, the true scope of the challenge can be daunting.

By 2030, one in five garments must be acquired through a circular business model to limit the global rise in temperature to 1.5 degrees Celsius, according to McKinsey & Co.

Consequently, brands have been frenetically launching take-back initiatives to capture more used clothing and to ‘close the loop’ within their supply chains. The underlying assumption of these programs is that production and consumption will go down as a new business model forms around the care and circulation of used items.

Yet, as these programs gain momentum within the growing resale landscape, clothing production and consumption continues to rise as does the waste associated with it. Like the sharing economy that preceded it, it’s becoming increasingly unclear if resale, and more specifically brand-owned takeback programs, are providing the solution they claim to be.

Perhaps the loudest criticism is not of take-back initiatives themselves, but rather of recommerce programs packaged to look like them.

“Many brands are coming online with used items but it’s actually just their return stream,” said Asha Agrawal, head of corporate development at Patagonia. “These are items within their 30-day window that may or may not have been worn. It’s a revenue optimization play for the brand.”

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Most brands doing recommerce are using a software provider like ThredUp, Trove or Treet to manage the reverse logistics and set up a dedicated resale website. These programs, at the least, can become another sales channel for the linear economy.

Nellie Cohen, who helped Patagonia build its first recycling program that segued into resale and repair is now the director of circular revenue models at Anthesis, where she helps brands and businesses adapt and plan for circularity. She said hypocrisy plagues take-back programs offering incentives or discounts on new products.

“What’s really happening with most of these schemes is just the facilitation of a transaction that flows through the brands and its peer-to-peer service provider,” Cohen said. Say the brand gives away a gift card as an incentive, then it’s out the value of the card, plus the service fee. The brand is betting that the customer will spend over the gift card’s value on new products. Because how could they resist?

“It’s nuts because the brand is supposed to be making money on the used product, but instead it’s displacing the old with the new,” Cohen continued. “It’s just more take-make-waste.”

Patagonia’s program stands mostly outside the fray of take-back duplicity. What started as a humble Tumblr blog, the company grew into a robust resale program that sells over 70 percent worn items (versus returns).

“When we started the Tumblr in 2005 the whole idea was, how do we get people to keep their gear in play longer? We encourage them to share the stories they lived in them,” Agrawal said. “From there, we hosted gear swapping events and it opened this whole world.”

Cohen started working with Patagonia in 2010 and helped the company launch its Common Threads initiative, a partnership with its customers to reduce consumption. “We realized in these early days that recycling was the last thing we should focus on,” she said. Instead, the team concentrated on making durable gear and preserving it at its highest value.

This venture led to a partnership with eBay, which at the time was the only big name in the apparel resale game. Customers who wanted to resell goods were asked to take the Common Threads pledge to list their product on eBay and Patagonia. This partnership paved the way for what thredUp has dubbed RaaS, or “resale as a service,” and it’s also how Patagonia built a large initial inventory of quality used goods to stock its resale program.

Gradually, Patagonia incorporated a repair workstream into the Common Thread program with eBay and set its sights on building a brand-owned digital resale channel. Today, this is Worn Wear, the company’s holistic circularity program that includes take-back, repair, resale and recycling. Its take-back program alone has grown more than 100 percent in the last two years.

Wornwear.com is an independently managed site where customers can shop for used items or trade-in qualifying Patagonia gear. When customers visit any Patagonia.com product page, they’re also directed to Wornwear.com through a “browse used” button that encourages alternative consumption habits. The branded experience on Worn Wear is distinct but cohesive, even though it’s run by a third party.

When Patagonia entered branded resale in 2017, it needed help with reverse logistics and found a partner in Trove. Used inventory presents unique challenges because it has to be sorted, assessed, stocked, and marketed differently than new to ensure the customer gets exactly what they’re expecting. Trove handles these challenges, manages single-SKU logistics, and runs the front-end resale site for the company. The reason they’re able to do this, Agrawal says, is because Trove vertically integrated with Patagonia from the start, instead of running a peer-to-peer, workaround model like the ones Cohen described.

The outdoor retailer was also an early investor in Trove (back when it was a sharing economy platform called Yerdle) and partnered with its team to develop branded resale. “They went from selling people’s blenders and lemon squeezers to pivoting into a white label resale platform,” Agrawal said. Today, Trove counts other large outdoor and apparel brands like REI, Allbirds, and Arc’teryx as clients.

Behind the scenes, Patagonia’s clothes are shipped, aggregated and sorted for repair and resale at a large hub in Reno, Nev., that powers the Worn Wear site. If an item is deemed beyond repair, Patagonia’s team identifies the best recycling solution. “End of life is one of the most systemic challenges for the apparel industry,” Agrawal said. “We really need innovation that allows blended textiles to be recycled.”

Along with Bill Gates’ Breakthrough Energy venture, Patagonia supports Circ, a company that’s developing ways to recycle polycotton blends. The technology isn’t ready at scale, Agrawal says, but Patagonia sends textiles to Circ to experiment, iterate and share learnings in hopes that it will be soon.

While Patagonia has more than a decade of take-back experience under its belt, Eileen Fisher introduced the first program to the market. And today, it is still the only brand that takes back any garment, no matter the condition. The brand’s Renew program, which started in 2009, built inventory by asking employees to bring in old clothes and then opened to the public four years later, giving customers a small $5 credit to redeem in thanks. After more than a decade, Eileen Fisher has collected nearly two million garments, taking in around 20,000 each month.

Carmen Gama, the director of circular design for the brand, was brought in specifically to figure out what to do with damaged inventory, something most brands don’t address.

About 30 to 40 percent of what Eileen Fisher gets back is in near-perfect condition and can be resold immediately, another 30 percent is flawed but still wearable and may get repaired or resold, and the remaing 30 percent is damaged. Gama says the brand has five solutions for damaged inventory. The first is repair, which the brand is building internally so items can be resold. The second is remanufacture, where garments are deconstructed and sewn back together.

“We don’t call this upcycling because it’s greenwashed,” Gama said. “Brands can claim something is upcycled just by using deadstock materials that may not be used. For me, upcycling is giving it more value than it had before, and remanufacture may not always do that.”

The brand’s third and largest damaged workstream is its Waste No More program, which uses felting to create zero-waste accessories like hats, bags and home goods. Some also go into commissioned “wallworks” that hang in homes and galleries across the U.S. and Europe. The final two solutions, which are outsourced, are fiber recycling, where garments are shredded and spun with other fibers to make new fabric; and downcycling, where blended or extremely damaged fibers are sent to the building or auto industries. Gama says downcycling accounts for 5 to 10 percent of the brand’s take-backs today.

While distinct in their approach, both Patagonia and Eileen Fisher’s take-back programs are largely managed in-house or through an integrated, long-term partnership. Other brands have recently ventured into resale using a RaaS partner or “operating system” like ThredUp.

A sweater from Eileen Fisher’s Waste No More upcycling initiative. Courtesy

Madewell partnered with ThredUp on an in-store pilot in 2019 where customers could shop a special selection of pre-owned Madewell denim. In 2021, the J.Crew Group-owned brand expanded its program with a white-labeled resale channel and an online shop dubbed “Madewell Forever,” the first one run on ThredUp’s RaaS program.

The brand has been in the resale space since it began collaborating with Blue Jeans Go Green in 2014 to divert denim from landfills but, Liz Hershfield, head of sustainability at Madewell said, “We have doubled down on circularity with the launch of ‘Madewell Forever.’ In the first six months, we collected about 180,000 pairs of jeans…via our in-store denim trade-in option—that’s nearly 1,000 pairs of jeans collected daily to be reused or recycled.”

Hershfield didn’t have data to share around Madewell’s ThredUp partnership since it’s still relatively new but did note that the brand plans to collect one million pairs of denim by 2023, on top of the one million it has already collected (which are upcycled or turned into building insulation). To expand beyond denim Madewell also added Clean Out Kits, a familiar staple of the ThredUp brand, to its program. Customers will continue to receive a $20 credit for any jeans they send in and can earn credits for other clothes deemed worthy of resale.

The high monetary reward that’s given to customers and the sheer amount of used denim flowing into this program in a short amount of time could raise deeper inquiry about how these programs are structured and if, as Cohen warned, they could be making more money off new clothes than used.

“Providing an incentive to our customers not only rewards them for their contribution but also ensures they feel motivated to continue participating in these take-back programs,” Hershfield countered, which makes sense given the brand is building its used inventory from scratch. Madewell is also thinking holistically about circularity, not just end-of-life, and designing for durability—a claim many of its avid denim fans can attest to.

With interesting collaborations with indie brands like La Réunion and ReKut to upcycle garments and a brick-and-mortar secondhand pop-up under its belt, there’s no doubt that Madewell is raising the profile of take-back programs. But a potential drawback of running its program on a RaaS platform is that the brand loses some control of the customer journey.

“Re-commerce is the second wave of e-commerce,” Cohen said. “Companies that built strong e-commerce experiences early on have done very well. Turning that business over to ThredUp in some ways is like shifting the re-commerce business to Amazon. It might not matter immediately, but the more a brand can build and curate for a custom experience, the better it will fare in the long run.”

For instance, by going in-house or using a vertically integrated partner, brands are often able to develop more detailed product classifications and pages for used items, making it easier for customers to find and choose them over new styles.

Anecdotally, Jen Lewis, the founder of artisan brand Purse & Clutch, said that as a busy mom and business owner, she likes the ThredUp experience. “It’s the most thoughtful and easy option I’ve found so far,” she said. “It lets me search exactly what I need, while also removing myself from the fast-fashion industry.”

Keyed into the idea of resale, Lewis also explored Treet to help her manage a take-back program for her own brand. While pricey, the platform was alluring because it promised to build and run her resale website while handling customer service. For now, however, Lewis decided against it because she doesn’t have enough used inventory. “The catch-22 of designing a high-quality product is that it lasts and my customers want to hold onto it.”

Another independent brand owner, Miranda Bennett, agrees the resale space can be tough for slow fashion brands. She launched her eponymous label in 2013 based on zero-waste and plant-based design principles.

After partnering with Eileen Fisher’s Renew team on an event, Bennett decided to launch an in-house garment take-back program where clothes are revitalized and sold at bi-annual sample sales.

But Bennett’s styles are seasonless and designed to wear interchangeably, which means less come back. “When you start a take-back program you have to ask how frequently people are purchasing your clothes and what their average lifecycle is. The volume of goods out in the world from Eileen Fisher is far greater than ours, so resale can become a whole new business model for them,” she said.

Participation will come, but she knows it will be more gradual. Bennett also said she hopes that new recycling and circular textile innovations will be available to her soon. “There’s this idea that slow fashion brands operate at the margins of Fashion with a capital F. I look forward to an industry that’s more open source.”

She’s referring to companies like SuperCircle, which just partnered with sustainable fashion powerhouse Reformation on a fiber-to-fiber recycling program. When realized, a program like this will bolster the credibility of claims that take-back programs “close the loop” as old garments become new again. While programs like SuperCircle are designed to work with brands of all sizes, other technology can be prohibitive to smaller brands because large amounts of clothes are required to start recycling.

Through its partnership with SuperCircle, Reformation will also become one of the first brands to show customers whether their piece was ultimately upcycled, recycled, or downcycled on a dedicated website. And the brand has diversified its take-back initiatives through additional partnerships with ThredUp and Rent the Runway, giving customers multiple ways to engage.

“We’re trying to change consumer behavior with take-back programs,” Cohen said. “So we have to make it easy on people, meet them where they are, and ensure everything is sustainable on the backend.”

This article appeared in Sourcing Journal’s Circularity Report. To read the full report, click here.