About three years ago, Sarah LaFleur noticed an intriguing trend taking off with customers of her brand, the online workwear label M.M.LaFleur: hundreds of them were buying, selling and trading secondhand blouses, blazers and pants in a Facebook group.
This gave LaFleur an idea: Why not host a marketplace on the brand’s own website?
At the time, the logistics proved too cumbersome and expensive to pursue the project. But things have changed. In the space of a few years, resale has rocketed from a niche still largely associated with thrift stores to the online fashion mainstream. Two secondhand platforms, The RealReal and Poshmark, are now publicly traded, and two more, ThredUp and 1stDibs, are expected to join them on the stock market later this year. Resale sites exist for just about every conceivable niche, from luxury to sneakers to marketplaces operated by Levi’s, Patagonia and Farfetch. Even Gucci recently partnered with The RealReal.
In the coming weeks, M.M.LaFleur will finally join the trend with a peer-to-peer platform where customers can trade with the label’s approval. The moment was right — secondhand sales had soared during the pandemic as consumers cleaned out their closets, and the recession bit into disposable income. It helped that all the brand had to do was promote the service; logistics would be handled by Archive, a start-up that builds resale marketplaces.
Secondhand success is no sure thing, however.
It’s expensive to ensure items for sale are authentic, in good condition and attractively presented to shoppers, whether the listing is for a $30 T-shirt or a $1,000 handbag. The RealReal, one of the oldest and biggest online resale platforms, has yet to turn a profit.
LaFleur said she sees her brand’s resale marketplace as more of a “customer loyalty channel” than a revenue driver. Mark Cross, an American luxury handbag brand that built its own secondhand platform, on the other hand, generates just below five percent of online sales via resale and sees the service as a way to bring in new customers.
“I don’t think any brand can afford to simply ignore resale but that doesn’t mean every brand should embrace it,” said Simeon Siegel, a retail analyst at BMO Capital Markets. “The question they need to ask is, what exactly are they looking for? A brand-enhancing experience for customers, or simply a transaction to make money?”
When M.M.LaFleur or Levi’s starts its own resale site, they are the underdogs in the market to sell their own clothes.
A consumer looking to sell their Mark Cross handbag can appeal to hundreds of thousands of potential buyers on Poshmark or The RealReal. A search for “Eileen Fisher” on eBay turns up nearly 100,000 results, from a $645 alpaca coat to a slightly damaged camisole selling for $2.
“The market itself is growing but it’s a lot more exciting as a multi-brand reseller,” said Aaron Cheris, partner and retail leader at Bain & Company, “Whether you’re Nike or Coach, there’s only so much inventory to collect for one brand.”
Levi’s and Mark Cross invite customers to bring in secondhand products to stores, but both still source from other secondhand suppliers such as flea markets to supplement their supply.
“For brands to buy things themselves is very resource-laden,” said Seth Weisser, co-founder of What Goes Around Comes Around vintage stores in New York and Beverly Hills. “These brands might know manufacturing really well, but the industry of resale is something else.”
Levi’s takes in customers’ worn jeans, which are sent to Trove, a white-label resale service, to list on the Levi’s Secondhand website. Levi’s also teamed up with Grailed to promote its 501 jeans on the streetwear-focused resale site. M.M.LaFleur sends customers ThredUp bags, which they can fill with unwanted clothing to sell on the resale platform for cash or a credit with the brand.
“It’s not an either-or proposition,” whether to work with established platforms or go it alone, said Jen Sey, president of the Levi’s brand. “[Resale sites] all have their own loyal fanbases.”
Every item for sale on a secondhand marketplace must be sorted, priced, photographed and described in a listing. Multi-brand resellers have giant warehouses where some of that work is automated. Few brands can hope to achieve the scale needed to do the same.
There are these [surprising] challenges, where when something feels like it should be easy actually isn’t at all.
At Eileen Fisher, for example, all new items must have a price tag that also includes a bar code and information about the materials used, information that comes from various departments. Eileen Fisher Renew, the resale arm, has to figure out what older pieces are made of and set its own prices, said Cynthia Power, the secondhand division’s director.
“There are these [surprising] challenges, where when something feels like it should be easy actually isn’t at all,” Power said. “If you’ve built your company as a retail company, offering resale requires a different set of practices.”
Some items aren’t worth the sale at all. Fashionphile, a resale website in which Neiman Marcus acquired a minority stake in 2019, said the reason it’s always profitable is because it only offers high-ticket leather goods and other accessories from ultra-luxe brands. Poshmark, where the average order price is $33, has reported quarterly profits, though as a peer-to-peer marketplace it has less inventory and logistical expenses.
What sells in stores may gather dust on a resale site. Eileen Fisher’s stretchy black pants, among its most popular items, barely moves in the brand’s secondhand market, Power said.
The resale world is divided between platforms that stock and sell used clothing themselves, such as The RealReal and Rebag, and peer-to-peer marketplaces like Poshmark and Depop.
A similar divide is emerging for brands. Many early resale adopters, including Eileen Fisher and Patagonia, use Trove to operate much of their resale operations, including building e-commerce infrastructure and shipping. Secondhand sales facilitated by the company more than doubled last year, and Trove plans to significantly increase its warehouse space in 2021, said founder Andy Ruben.
Archive, founded in 2020 by Emily Gittins and Ryan Rowe, operates on the peer-to-peer model. M.M.LaFleur will be its first brand to go live.
Peer-to-peer marketplaces can scale fast: they don’t have to bother with warehouses or photographers because sellers list and ship their own items. But it’s harder to control the quality of products or the shopping experience.
Vanessa Barboni Hallik founded her label Another Tomorrow last year with resale already baked into its sustainability-focused business model. With a background in investment, Hallik saw an opportunity in bringing resale in-house for luxury brands, and when she began building out her own label, she incorporated the logistics for secondhand from the start.
Each Another Tomorrow garment has a unique QR code that informs its buyer of the entire supply chain. The same code will serve as an authentication tool for when items are brought in for resale. And because Another Tomorrow is sold online, the company can use existing product photographs to supplement resale listings.
“If you don’t have a robust e-commerce business, then this would be a challenge,” Hallik said. “We see the overall profitability of the resale channel as being extremely strong with our digital ecosystem already in place.”
Mark Cross relies on its existing staff to manage resale, which has kept costs down. It also tends to traffic in high-ticket items: some secondhand bags sell for $1,000 or more.
With resale far outpacing the growth of the overall fashion sector, brands must consider their options.
“The reality is that 15 years ago, brands saw something called the Internet and questioned whether they wanted to be a part of it,” Siegel said. “They saw that it wasn’t profitable. But those that ignored it, ignored it at their own peril.”
The Future of Fashion Resale Report — BoF Insights
BoF’s definitive guide to fashion resale, covering the evolution of the market, its growth and upside, consumer behaviours and recommendations for crafting a data-driven resale strategy. To explore the full report click here.
The Future of Fashion Resale is the first in-depth analysis to be published by the BoF Insights Lab, a new data and analysis unit at The Business of Fashion providing business leaders with proprietary and data-driven research to navigate the fast-changing global fashion industry.