In recent years, consumers have poured much of their wallet share into resale, so much so that re-commerce could drive $60 billion of the apparel, footwear and accessories market by 2024, doubling its 2020 share, according to Cowen.
New and established resale players alike, such as Galaxy and Trove, are rising to meet that demand.
Galaxy launched late last month with the mission of attracting Gen Z through an increasingly popular channel for reaching young consumers: livestreaming. The video-powered resale marketplace’s goal, according to co-founding CEO Danny Quick, is to foster a sense of community in the experience of buying and selling secondhand, vintage, handmade and upcycled fashion.
The platform, available through iOS and web browsers, allows merchants to broadcast selling sessions in real time, while viewers can tune in and shop from their phones, tablets or computers. “We have a native iPhone app for merchants, which serves as the nerve center for their selling experience,” Quick told Sourcing Journal. “Within the application, sellers can manage their inventory, pick their show dates, create video drops, go live, and handle their fulfillment of orders.”
Viewers need only RSVP to a live show using their mobile number, removing the burden of downloading an app, making an account, and receiving a bevy of unwanted push notifications. “When the merchant goes live, they tap one button in the Galaxy app to text everyone who RSVP’d,” Quick said. “Viewers can tap the link and join the live via their web browser on mobile or desktop and chat, shop, and buy without having to download an app.”
The entertainment-geared shopping experience is designed to bring a social element to shopping that the company believes will entice young shoppers. Influencers, young sellers and fashion sales platforms alike can chat with watchers while they buy, giving them the feedback they need to make informed decisions about purchases and mimicking, in some ways, the in-store experience that many have missed out on during the pandemic. Live video connects people in a way that “static, 2D images” can’t, Quick said.
“Galaxy enables merchants to go live, interact directly with their community, and sell without ever leaving the livestream,” he continued. “Viewers are expected to chat interact with the merchants, which enables a ‘co-created’ entertainment experience where viewers actually help shape what is happening in the live by what they say.”
“It’s much closer to watching a live sporting event, calling the next play from your phone, then watching it happen on the screen,” he added. “You can ask a question and watch the creator respond directly to you. It’s very powerful and a new way for merchants to build their communities.”
Formerly head of product for Beyoncé at her company Parkwood Entertainment, Quick founded Galaxy alongside Nathan McCartney, who was senior vice president for Jay-Z’s ROC Nation, and Brandon Brisbon, an experienced software architect who oversaw mobile development for Charles Schwab.
“We started Galaxy to help accelerate what we see as an important worldwide movement: a shift from traditional and uninspired employment to a new generation starting businesses around their passions,” McCartney said. “By lowering the barriers to entry and making it more fun and accessible to shop and sell, we can continue to grow the size of the resale community while positively impacting people’s lives as well as our environment.”
Unlike marketplaces that share earnings with their consignors, however, Galaxy does not take commissions from sales. “Galaxy is focused on empowering a new generation of creators and entrepreneurs in secondhand fashion,” Quick said, noting that one of the biggest pain points for sellers is the high fees on transactions. “It actively takes money out of these small businesses every time they get a sale.”
By eliminating this burden, merchants on the platform are able to reinvest more of their earnings into their Galaxy businesses, helping them to grow faster, Quick said. “Galaxy exists to enable merchants to build their community on Galaxy, and by extension, grow their business,” he said. “Today, we offer a suite of free tools that span inventory management, live streaming, messaging, logistics and fulfillment and more.”
In the future, the company plans to introduce a subscription tier that allows sellers access to more community and sales tools, he said. So far, the business model is drawing interest from experienced sellers and novices alike. “We are onboarding sellers on a one-by-one basis to ensure that they have the best launch experience,” Quick said. “We’ve scheduled over 100 shows in less than 30 days and our waitlist grows daily.”
So far, the company has onboarded merchants from the U.S. and U.K., Quick said. “We’ll gradually roll out our seller platform to other regions of the world, including Canada and the rest of Europe,” he added. “From a buyer standpoint, we have users from all over the world as anyone can participate in our live shows and make purchases.”
Proof that retail’s paying attention to re-commerce came when Trove raised $77.5 million in a Series D funding round it announced last month. The resale technology platform, which powers re-commerce experiences for REI, Levi’s, Patagonia, Eileen Fisher, Lululemon and other fashion brands, has raised $122.5 million to date, with G2 Venture Partners, Bank of Montreal, Capital One Ventures, Commerce Ventures, Wellington Management, and Trove’s current board investors are contributing to the round.
Trove—which processed nearly 1 million items last year—plans to use the investment to onboard new branda, strengthen its technology and logistics infrastructure, enter the luxury market and appeal to more shoppers globally, CEO Andy Ruben told Sourcing Journal.
“Not every brand is going to win in resale—in fact, it’s going to be very lopsided,” he said. The brands poised to succeed are those that build and design durable, appealing products, he added, noting, “There is a lot of demand for those products, no matter how many people have gotten to wear them or own them before.”
Ruben believes it’s important for any brand—whether it’s a sport, outdoor or luxury player—to own the interaction with the consumer from start to finish. “When a brand sells an item to a customer for the first time, that is just the start of the relationship,” he said. Now that many shoppers are beginning their brand journeys through secondhand product, those labels must think about how they will be perceived when presented without context, among competitors, on a resale marketplace. They lose not just the ability to tell their story, but also the opportunity to create a deep and lasting impression, Ruben added.
This is an especially hard pill to swallow for luxury brands. “A majority of new customers for any brand of that caliber [is] having their first brand experience on Poshmark or The RealReal,” Ruben said. “That’s a miss.” Shoppers buying high-value products expect an elevated experience, from packaging to service, which resellers may not be inclined to provide. “It’s an existential threat for luxury brands,” he said.
Trove intends to deepen ties with the luxury sector and empower premium labels to take on their own re-commerce, he added. And as it prepares to add new brands, it is also investing in its core technology.
“We want to make the process more intelligent, create more feedback and data for brands to make better decisions and get even more value, customers, loyalty, revenue and margin out of this fast-growing space,” Ruben said, noting that Trove has invested “tens of millions of dollars into the platform so far.”
“The brands we work with already make money every time a customer brings an item back and they resell it,” he said, “but we will get to the point that they will know exactly how much they’re improving the lifetime value of the customer relationship for every item a customer brings back.” New algorithms will help brands determine the types of items that sell best, where they can buy them back, and where they can be sold at the greatest value.
The funding will also support Trove’s expansion into Europe and markets like Canada and China. “The brands we support now are global, and because they’re global brands they understand this is a global shift in the way that customers shop,” he said. Consumers aren’t just looking to curb costs during an ongoing pandemic—their attitudes toward secondhand dovetail with their beliefs about consumption.
Investors have cottoned onto the value of the burgeoning business model. “The apparel industry needs to address its negative environmental impact, and re-commerce offers the industry a path to significantly reduce its carbon footprint and waste profile,” Marc Khouzami, managing director at Bank of Montreal’s Impact Investment Fund, told Sourcing Journal. “Trove’s re-commerce solution will enable brands to own the channel at scale and actively participate in driving the industry to a more sustainable future.”