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Why Brands Need to Take Ownership of This $82 Billion Opportunity

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

Consumers are increasingly clamoring for brand-owned 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 polled from a dozen different markets worldwide, including Australia, Canada, France, Germany, Italy, the United Kingdom and the United States, nearly three-quarters (74 percent) said they engaged in clothing recommerce on some level.

While industry types tend to think of sustainability initiatives as either costly or difficult to scale, offering a peer-to-peer platform is a “relatively low-lift, low-resource” means of tapping into a market expected to blow past $82 billion by 2026 in the United States alone, said Karin Dillie, Recurate’s vice president of partnerships.

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

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

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

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Another debunked misconception is that people are hunting for rarified items. The survey found that 64 percent of shoppers and 55 percent of sellers trafficked in mid-priced labels like 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 shoppers and 27 percent of sellers, in fact, traded in luxury names like Chanel, Gucci and Supreme.

Though 71 percent of recommerce participants cared about their impact on the planet, propping up Mother Earth wasn’t foremost on their list of priorities. Just 12 percent of shoppers and 15 percent of sellers engaged with secondhand because of the environment. Most shoppers (22 percent) purchased pre-owned as a way to save money. The No. 1 reason people sold their castoffs (23 percent) was to get rid of unworn items. 

Recurate and BBMG found that providing a peer-to-peer option isn’t only the quickest way for brands to own the full life cycle 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 recommerce more than secondhand marketplaces. Sellers also prefer it because they get to retain most of an item’s value, which is an important driver of their behavior.

But brand-managed resale, where brands take back their old items in exchange for cash, credit or discounts, has its advantages, too, Dillie said. Companies might want to initiate a take-back program so they can authenticate high-value items, perhaps through the use of digital IDs, or make them available for consignment at brick-and-mortar locations. They could, through this more hands-on approach, also phase in a cleaning and repair component or provide an option to recycle garments that are worse for wear. Ultimately, she said, there’s no one-size-fits-all solution, and Recurate’s goal is to power a diversity of resale models that can coexist 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 walk them through almost in a consultative way of what are your end goals? How do you want to engage with your customer?”

However brands do it, taking ownership of their secondhand goods increases their stickiness level, she added. Case in point: 75 percent of the people Recurate and BBMG polled said that recommerce would increase their brand loyalty and frequency. Another 85 percent of circulars, 74 percent of shoppers and 69 percent of sellers said they would try a new brand if secondhand was an option.

For brands that are shelling out to acquire new customers, resale 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 is not necessarily in the immediate transaction—you know, the buying and selling of the secondhand item,” he said. “It’s more so about another opportunity to engage your customer, to bring them back into your ecosystem and have the opportunity to grow the loyalty of that customer.”

For Siegel, who considers himself a “deep green” environmentalist, finding value in the “second, third and fourth sale” of products has the potential to displace the production of new goods, allowing brands to decouple profits from the constant churn and resulting in less waste. Today’s generation is used to a quick-fire pace of consumption, with even 72 percent of recommerce shoppers snapping up items every two to three months, the survey found. Resale, he said, lets people scratch that itch without hoovering up new resources. And as recommerce becomes more widespread, they’ll also start looking for brands that sell higher-quality products because they’ll have greater resale value and stay in circulation longer.

Siegel equates this with the automobile industry, where people tend to buy cars with the resale value in mind. Consumers could be willing to pay more for an item at the outset if they know they can squeeze a better price down the road. In the case of brands, being able to offer recommerce 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 round of Series A 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 onboard another 50.

Brand-led resale is still a relatively new concept, and one that requires a different way of thinking, Siegel said. But whereas Recurate used to have to educate companies about resale’s market opportunities, brands are now the ones pounding on its 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.”