Alternative commerce models like rental, resale and subscriptions are stealing market share from traditional, linear methods of purchasing and product consumption, and the pandemic is supercharging their growth.
According to Deloitte, alternative shopping channels are projected to grow to $35 billion in total market share by 2023, capturing 9 percent of overall retail spend, up from $16 billion in 2018. By 2030, these platforms could see up to 30 percent of market share, the firm found in its 2025 apparel report.
Recommerce revenues growing more than 20 times faster than overall apparel earnings over the course of the past five years. Deloitte’s research estimates that 20 percent of shoppers have purchased used clothing before. In the U.S., clothing rentals are expected to increase by 15 percent by 2030—and that growth is projected to accelerate even further in markets like Brazil (20 percent), Indonesia (22 percent), China (23 percent) and India (38 percent).
Secondhand selling gets brands into the circular economy. “In a linear economy, goods are produced, purchased, and once consumed they are disposed of,” financial market data firm Refinitiv Starmine wrote in its “Do Resale Marketplaces Promote Sustainable Consumption?” report. The cycle, “also known as the ‘take-make-waste’ linear economy,” is now being replaced with a system that promotes donation, repair, re-selling and recycling.
Over the past decade, some retailers have adapted to a new circular reality. “The pandemic has also triggered an influx of new shoppers wanting to buy secondhand,” Refinitiv director of consumer research Jharonne Martis wrote, and “many have made the conscious commitment to change the way they shop by buying vintage as opposed to new items, which is better for the environment. ”
Supply-chain breakdown benefits The RealReal
The RealReal’s 2022 luxury consignment report says the pandemic fueled interest in secondhand premium goods over the past year. The luxury resale player has seen shoppers gravitate to locally sourced secondhand luxury goods, merchandise manager Kelly McSweeney told Sourcing Journal.
“It’s affecting almost every sector of the primary market,” she said of supply chain struggles, “but something that differentiates resale is that we don’t have those same constraints.” The RealReal sources all of its apparel, footwear and accessories from U.S. consignors, freeing it from international shipping delays.
“We’re getting over 10,000 items a day,” McSweeney said. “So when customers are going to the primary market and seeing items are sold out, they’re coming to resale and looking for those items that they haven’t been able to find.”
Sellouts at retail drive strong resale demand. “For items that are sold out in the private market, we see 50 percent more new buyers than a standard resale item,” she added. “It’s driving up demand, and it’s been driving up resale prices.”
Consumers are likely to succumb to “immediacy factor” they get on secondary platforms sourcing from shoppers instead of labels. “You might be on a waitlist for a handbag, jewelry or watch” sold by a luxury label, she said, “but then there are five different versions available for sale on The RealReal today.”
First-time shoppers also tend to come back, McSweeney said. “Once they’re shopping with us, they’re seeing that beyond those sold-out items” to a larger assortment of unique, one-of-a-kind luxury finds. “There’s so much breadth within resale. So we’re actually converting those new customers to returning customers,” she said.
Consumers of all ages are shopping luxury resale. Original vintage owners often sell their items to younger shoppers, McSweeney said.
“We’re actually seeing a swap kind of happen between some of them. Gen X, being a generation that invested in handbags, has these items that maybe they bought 20 years ago,” she said, naming the Louis Vuitton multicolor range, the Fendi baguette and jewelry from Tiffany & Co.’s “Return to Tiffany” collection as examples.
With trends from the 90s and early aughts back with a vengeance, consumers who lived through those periods are mining their closets to capitalize on earlier investments. Gen X consumers sold 37 percent more ’90s ready-to-wear product in 2021 than the year prior, and while their purchases jumped 61 percent.
“The value of these items has really risen,” McSweeney said, noting that apparel and accessories from Jean Paul Gaultier, Thierry Mugler and Missoni top consumers lists. “Gen X is selling those now, and Gen Z and millennials are scooping them up.”
Regardless of age, consumers new to resale flock to similar products and brands. The goods first-timers sell and shop are universal, with Gucci the No. 1 label and dresses the top item newcomers buy or sell. Other standout brands include Louis Vuitton, Prada and Chanel, with Tory Burch and Rag & Bone among the most popular contemporary brands.
The RealReal’s Gen Z consignors grew 56-percent year-over-year. “They’re selling Gucci accessories—whether it’s a sneaker, a belt or a crossbody bag, maybe it’s one of the first luxury items that they were gifted or something that they had invested in and they’re ready to make their next purchase,” McSweeney said.
Meanwhile, their millennial counterparts are parting with their skinny jeans, from premium denim brands like Rag & Bone, J Brand and Frame, though similarly aged shoppers are snapping them up. “It’s not necessarily the end of skinny jeans,” she said. “They’re just circulating between customers who are interested in the trend and those who are moving on from it.”
Gender-fluid styling is also seeing notable growth. “Over the past few years, we’ve definitely seen men purchase oversized bags that would technically be within the women’s category,” McSweeney said—and now that trend is translating to shoulder bags and crossbody styles as well. Bottega Veneta handbags alone have seen 62-percent growth with male shoppers, while Eckhaus Latta, a brand that sells genderless designs, has seen its resale value grow 71 percent year over year. Genderless Brooklyn-based fashion label Telfar has seen 117 percent growth since the year-ago period, with resale values averaging more than double an item’s original MSRP.
“We kind of have this idea that our editorial team speaks to a lot—’bags and blazers for everyone,’” McSweeney said. Women are shopping men’s shirts and suiting, with 29-percent growth in these categories. Sales of Balenciaga menswear to female shoppers rose 69 percent in 2021.
“The scope of what shoppers are buying is definitely broadening as well,” she added, with rising interest for gender-fluid vintage pieces. “There are a lot of designs from years past that lend themselves to being worn by a breadth of body types. Anecdotally, we see in our retail stores that customers are gravitating towards the vintage section, and shopping both men’s and women’s product.”
Arrive courts outdoor brands with a fully circular platform
Elsewhere in alternative commerce, rental platform Arrive is expanding into resale—and aiming to create a fully circular system for brands looking to keep their products in use longer.
On Monday, the Santa Monica, Calif.-based company, which facilitates rentals of outerwear, sporting equipment, camping tents and more for companies like Arc’teryx, The North Face, Columbia, Marmot, Eddie Bauer and Mountain Hardwear through its Arrive Outdoors platform, announced it would be augmenting its enterprise rental platform with the option to purchase goods deemed unsalable by their makers.
Large volumes of e-commerce returns can’t be re-shelved or resold at full price. Arrive will clean, refurbish and grade returned items for sale at its facilities before offering them for resale on its brand partners’ e-commerce sites.
“We work with our partners to understand which of their products are frequently returned, and then we identify what would be a good fit for resale,” Arrive CEO and co-founder Rachelle Snyder told Sourcing Journal. Brands often work with third-party logistics providers (3PLs) to manage their returns processing, and items that aren’t up to par often get cast by the wayside.
“What we can do is redirect the returns that can no longer be sold”—items that receive a Grade B or Grade C from the 3PL—and give them a little TLC, Snyder said. “We then hold onto that product until a customer purchases it, and then we ship it off to them anywhere in the U.S.” The channel will also prolong the life of Arrive rental products that need to be retired from circulation.
Arrive’s resale program launched this week with Dick’s Sporting Goods and subsidiaries Golf Galaxy and Public Lands, along with Eddie Bauer, which launched rentals with the platform in July. The expansion comes as recommerce services like rental, resale and subscriptions are set to grow from 7 percent to 14 percent by 2024, Cowen found. With shoppers buying into sustainable business models, the value of the circular economy worldwide is set to hit $4.5 trillion by 2030, Accenture data showed.
While most resale platforms rely on take-back models or peer-to-peer selling, Arrive takes aim at returns, Snyder said. Retailers expect shoppers to return more than $761 billion in merchandise sold in 2021, accounting for 16.6 percent of total retail sales in the U.S.
“One of the biggest opportunities to reduce the negative environmental impacts of products is to use them longer,” Eddie Bauer vice president of marketing Kristen Elliott, told Sourcing Journal. “We already build apparel and gear that lasts a lifetime, but by launching programs for product rental and used product resale, we’re able to increase the lifecycle of a product even further.”
Providing options to buy or borrow helps open up the sector to more shoppers, she added. “Offering product resale helps ensure more people can more easily outfit themselves for outdoor experiences, which is our mission.”
Elliot said the “rental program is off to a great start and we’re adding even more styles to the site to ensure people can outfit themselves for four seasons, all year long.”
These new channels are “just the start.”
“We’re in the process of adding product repair and upcycled product programs as well,” Elliott said, with an upcycled collection launching in March with Portland, Ore.-based manufacturer Looptworks.
Snyder believes Arrive can serve retailers big and small.“Our platform is pretty agnostic to company size and pretty agnostic to the product and industry,” she said.
“From my perspective, this is going to be the third leg of the stool,” she said of alternative commerce models. “You have brick-and-mortar, then you have traditional e-commerce and then you have your circular commerce.”
Rebag incentivizes secondhand shoppers and seller participation
Meanwhile, luxury handbag and accessory resale platform Rebag is courting consumers with a new loyalty program.
Rebag Rewards offers shoppers perks based on the volume and value of goods that they trade, sell or buy. Through the multi-tiered incentives program, members earn points toward future purchases, as well as early access to unique and exclusive products, free shipping and returns, annual discounts, and event invites.
“We want to make Rebag the default luxury resale platform for our customer group, and that’s where the idea for rewards came in,” CEO Charles Gorra told Sourcing Journal. “We took a lot of inspiration from others in the consumer space, and tried to transpose that onto our business model.”
Rebag also surveyed customers to find out what they want. “One thing we thought was interesting is that discounts are not necessarily top of mind” for the Rebag user, Gorra said, “especially for the highest tier customer groups.” Instead, “much of what came up centered around access to product.”
The company traffics in high-value, often limited-edition items, Gorra said. “If you visit when new product comes in, that’s when you get the opportunity to snap up that Birkin in the color you’ve always wanted.”
Secondhand shoppers and sellers have a unique opportunity to earn points and perks with rewards for all their Rebag transactions, not just money spent on the platform. Customers who have traded, sold or purchased at least $500 in merchandise are enrolled in the free program automatically beginning at the bronze level, which earns them a 10-percent annual discount and free shipping and returns on orders worth more than $500. They can work their way up through the silver, gold and diamond tiers as they rack up more sales and purchases, earning 24-hours early access to sales, priority support and greater annual discounts as they spend or sell more. “To my knowledge, there’s no equivalent programming out there,” Gorra said.
With nine retail locations, a mobile app, and an e-commerce site, Rebag traffics in designer handbags but has expanded into small accessories in recent seasons. “We’ve added things like scarves and hats and sunglasses, costume jewelry and watches,” Gorra said. “I would say the range of what you can find on Rebag now is much broader,” giving consumers more opportunities to shop and consign. “By expanding our footprint into other categories, we’re extending the frequency of interactions.”
Items can be sold in under an hour through Rebag’s upfront payment offering. The platform’s recently launched Clair Trade allows members to buy and sell an item in a single, combined transaction.
Tier status and perks accumulate over a Rebag Rewards member’s lifetime of transactions on the platform, Gorra said, and will remain active for those who transact at least once every 12 months. Members earn one point for each dollar in sales or purchases they make, and every 1,000 points provides a $20 value toward future buys on the site. Upon launch, Rebag is giving all members 2,500 free points, or $50, as a means of introducing them to the rewards program.
Though marketplaces like Vestiaire Collective and ThredUp dominate resale, individual labels are also getting in on the action. “Brands’ interest in launching their own resale projects is an indication of increased consumer adoption of resale,” Gorra said. “Eventually we see Rebag as a partner and a resource to support those endeavors, as operating a resale platform at scale requires significant expertise.”
“This is a favorable signal for the industry and will continue to fuel the overall growth of the circular economy,” he added.
Kids clothes are entering the resale market, too
This week, children’s clothing brand Tea Collection became a pioneer in the children’s resale space with the launch of Tea Rewear, a new sales platform for secondhand clothing.
Created with children’s resale marketplace Kidizen, Tea Rewear will live on the brand’s e-commerce site as its own vertical. Shoppers trade in their pre-worn products for credit toward future purchases. Shoppers can mail in their used clothing directly to the brand or visit one of company’s retail partners in Austin, Charlotte, Philadelphia or San Francisco. Tea Collection plans to grow its network of retailers over time.
The expanded partnership and launch of a dedicated resale site grew out of Tea Collection’s success on the Kidizen marketplace, which currently lists more than 20,000 of the brand’s baby and kids clothes for sale. The brand’s durability and quality resonate with progressive consumers and drive strong resale value.
“For twenty years, Tea Collection has been committed to creating heirloom quality, globally-inspired clothing designed to be passed from kid to kid,” founding CEO Leigh Rawdon said.
“Given how quickly kids grow out of their clothes, it’s no surprise that kidswear is projected to be the fastest-growing resale segment in the coming years,” Dori Graff, co-founder and CEO of Kidizen, added. The new platform aims to “provide parents an easy eco-friendly way to pass on outgrown items and shop for their kid’s next size as they grow.”