Kayla Marci

June 8, 2021

Insights into the resale market boom

With the second-hand market heating up, we round up what makes this market tick and the challenges new entrants face.

There’s a "purge surge" looming. According to ThredUp, 80% of US consumers plan to refresh their closets once the pandemic is over by either tossing items they no longer want or buying something new. 

As retail continues to embrace the second-hand market, repurposing unsold or unwanted inventory will be critical in managing waste amid this phenomenon. 

In our sustainable fashion in 2021 report, we highlighted closing the loop as a core theme for retailers to reduce their environmental impact, saluting the power of the resale market, which is only getting bigger. In a recent game-changing deal, Etsy snapped up Depop for $1.6bn. 

The future is second-hand. Read on to discover why.

What to refine your sustainability strategies with the power of Retail Market Intelligence? Reach out for a demo today. 

resale market

Vestiare Collective Email UK - May 24, 2021
 

Perception has shifted 

Consumer attitudes and shopping behavior are much different now than a decade ago. As discussed on episode 26 of the unEDITED Podcast with Helen Riley, Fashion Acquisition Manager at eBay, any stigma around second-hand fashion being unhygienic has dissolved with customers now proud of their thrifted finds. Even fashion's most fickle demographic, Gen Z, has given second-hand shopping their blessing. In a joint report between Bain & Co. and Depop, 75% of the platform's users surveyed (90% of which are under the age of 25) said they shop second-hand to reduce fashion consumption. Additionally, 55% said their motives were "to find one of a kind pieces," while 45% use Depop "to tap into trends," proving that while Gen Z are often portrayed as the figurehead generation of sustainability, trends remain paramount to their wardrobes. 

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Images via Depop
 

Overproduction and overconsumption are in overdrive

It's been predicted that globally, we are expected to be discarding more than 134 million tonnes of textiles a year by 2030. Yet, the fashion industry is still overproducing. While the pandemic reduced the sheer volume of newness flooding the market at hyper-speed last year, big drops are now back in a big way. Throughout May, new product arrivals across the UK, Germany and Spain returned to pre-pandemic levels and eclipsed them. Consumers are purchasing more than ever, where a reported 155.9 million US shoppers are preparing to purchase new items after the pandemic is over. This makes circular fashion a fundamental cornerstone of sustainability, underscoring the need for retailers to be upcycling and repurposing pre-existing goods.

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It sells

Looking at the results from some of the major players in this space highlights why the pre-loved market is so desirable - it's incredibly successful. According to The RealReal's full-year results its sell through rate in 2020 was 99%. The market's rapid sell through rate is also telling by analyzing the age of stock it is currently holding compared to traditional luxury businesses. 

Comparing US sites, 89% of the products available at Vestiaire Collective are under three months old, while only 4% have been listed for over a year. At Luisaviaroma, 30% of products available have been online for over a year. While at Mytheresa, the average age of goods is between 3-6 months. Resale platforms may offer styles from the archives, but they sell through before they have the chance to go stale. 

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Affordable goods for luxury's future consumer

Gen Z are set to make up 40% of the luxury market by 2035. In addition to trends and conscious shopping, price is a significant factor for this demographic. The Depop report revealed 65% of users shop second-hand for the lower prices attached. The resale market can certainly extend the hype for items, therefore increasing their value - our 2019 report uncovered a 374% price hike for an original Supreme x Louis Vuitton Danube Satchel. However, on average, prices remain below non second-hand luxury sites, promoting accessibility for younger consumers to get their foot in this market. 

The below chart used EDITED pricing data to pinpoint Gucci products' entry, exit and average price point on the home site vs. third-party sites. While Vestiaire Collective doesn't offer the most extensive range, it has the most affordable prices.

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Gen Z are the ultimate skeptics

With more retailers prioritizing to reduce their impact, the number of sustainable products is growing every year. However, what actually makes a product conscious is still cloudy to consumers. A recent Genomatic survey unearthed that 72% of US consumers are aware of environmental issues in fashion, but 42% are confused about what makes a garment sustainable. Also, as demand for eco and ethical products grows, so does the potential risk of greenwashing. Gen Z are already more skeptical of how much brands really care than other consumer groups and require ultimate transparency and authenticity. While the second-hand space isn't without challenges, pre-loved clothing is more easily identifiable as responsible than other sustainable alternatives on the market. 

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Image via Depop
 

The challenges

For all of the second-hand market's allure, it's not without its eco and ethical drawbacks. Only an estimated 10-15% of donated clothing is resold in the US. Charities are inundated with consumers dumping unwanted goods, which end up in landfills or shipped to poorer nations.  

Gen Z's interest in this space had led to the Thrift Flipping phenomenon, where shoppers buy up pre-loved garments to refresh or alter and then resell - often for a higher price. While this demographic is applauded for their entrepreneurship, some Thrift Flipping is being hailed as problematic. It can take away from low-income consumers shopping at charity stores because they have no other alternative. Sustainable TikToker, Megan McSherry (@acteevism), also addressed that Thrift Flipping often involves buying up larger sizes to be taken in. This only benefits shoppers with size privilege and making it even harder for consumers to shop for sustainable size-inclusive apparel, which is already limited. With luxury's reluctance to cater to larger sizes, it's also harder for resale platforms to cater to this consumer with designer goods. 

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The RealReal Email - May 31, 2021
 

Recent developments

In addition to Etsy purchasing Depop to target a younger audience, several other retailers have been pivoting their strategies to get in on the resale action. 

  • Mytheresa has partnered with Vestiaire Collective on a resale service that will kick off by inviting its top clients to sell their pre-loved luxury handbags online in exchange for store credit.
  • The rental market experienced a turbulent 2020 as events were put on hold. This recently led to Rent the Runway entering the resale space by also making all of its inventory available to buy outright.

  • George at ASDA partnered with wholesaler Preloved Vintage Kilo and launched a second-hand fashion range in 50 stores across the UK.

  • Sellpy, the majority H&M-owned Swedish resale platform, has announced plans to expand into 20 more European countries

  • Resale company Recurate secured $3.25mn in funding, which it will use to fuel expansion after signing partnerships Mara Hoffman, Frye, Re/Done and more.

  • JD Sports partnered with trainer resale company Sole Responsibility, which will sell the sports giant's end of line or slightly damaged sneakers via its eBay site, helping avoid unnecessary landfill waste.

  • In April, Nike launched its Refurbished program in eight outlet stores nationwide, contributing to its goal of increasing the number of products it can repair, recycle or re-home tenfold in five years. The program will collect shoes to be graded, sanitized, restored and then resold at 15 stores at a reduced price based on their condition.

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Sellpy Homepage SE - June 4, 2021
 

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