The American boutique chain Francesca’s took its time getting into the secondhand clothing business.

The private equity-backed retailer spent nearly a year considering different resale models and spoke with four potential partners before landing on ThredUp, the secondhand fashion site that also provides business-to-business resale services for brands. Forever Francesca’s launched in late January.

“We knew we needed to be in resale but we wanted to arrive in the most expedient and cost-effective way,” said Jann Parish, Francesca’s chief marketing officer.

Branded resale is booming, with retailers ranging from Shein and Canada Goose to Mara Hoffman and Balenciaga adding some kind of secondhand commerce to their stores or websites. But building a resale business from scratch is expensive and labour-intensive. It’s also not easy to turn a profit — most big, resale-only platforms like The RealReal and ThredUp operate in the red.

A parallel industry of white label resale platforms has sprung up to handle much of the behind-the-scenes work. Some, like Archive, Treet and Recurate, specialise in building peer-to-peer services, where a brand’s customers buy and sell pre-owned pieces from each other. Others, including ThredUp and Trove, collect secondhand items and create sales listings.

Most charge a set-up fee and then take a percentage of each sale, though services like Trove that manage the logistics from end to end can be more expensive.

Ultimately, launching a resale service should command the same kind of thought and consideration that goes into designing a collection, according to Mimi Margalit, a retail strategy consultant and former head of DTC merchandising at Rebecca Minkoff.

“Resale is merchandising,” said Margalit. “If you don’t pick the right experience, if you don’t pick the one that your customer finds the most meaningful or resonates the most, then it’s not actually going to be the most successful.”

A Sea of Options

The first retailers to offer secondhand fashion built that business out themselves (Urban Outfitters, for instance, says it has stocked its stores with vintage clothing for almost 40 years). As online resale took off in the late 2010s, a start-up called Yerdle, now known as Trove, began building out secondhand websites for brands like Patagonia, Eileen Fisher and REI.

Today, Trove has plenty of competition, from Recurate and Reflaunt to Archive and the Archivist. In Europe, Faume and Rebelle are two budding options. Most of these services tout their ability to build tailored platforms based on the specific needs of a brand.

Net-a-Porter offers a personal concierge service via Reflaunt, where customers can send in or schedule an at-home pickup for pre-owned designer pieces they’d like to sell. The luxury e-tailer then lists their products across 20 resale marketplaces, including The RealReal and eBay, offering a Net-a-Porter credit when the items sell. This model makes sense for Net-a-Porter because it understands its affluent shoppers are more likely to be secondhand sellers rather than buyers.

Recurate and Archive offer both the peer-to-peer model as well as a managed inventory model where brands collect the pre-owned merchandise and ship them out to sellers. Archive also pairs some of its brands with third-party warehouse partners to collect, condition, clean, repair (if necessary), and re-sell items on the branded marketplace, such as with The North Face.

Retailers can also outsource resale to big consumer-facing online resale platforms, including The RealReal and Vestiaire Collective, which accept overstock and returned merchandise.

Managed Versus Peer-to-Peer

When shoe label Sarah Flint was looking to venture into resale, it went with a peer-to-peer site created by Archive to keep down labour and logistics costs.

“We just didn’t feel we had the capacity to handle inventory,” Flint said.

On the other hand, peer-to-peer doesn’t make sense for every brand — especially premium labels that may want to authenticate, clean and photograph high-value archival pieces. Oscar de la Renta launched its managed resale channel, Encore, in 2021 to showcase vintage styles collected from boutiques and clients. The pieces are authenticated and refurbished in-house before they’re listed on the site, run by Archive.

Francesca’s ultimately rejected the peer-to-peer model because there was no guarantee that its customers would engage in resale on their own, said Parish, whereas ThredUp’s existing base of shoppers and supply of Francesca’s products is already proof of concept.

Some brands work with multiple resale platforms. Even after workwear label M.M.LaFleur launched its peer-to-peer resale marketplace, M.M. Second Act, in 2021, it maintained a partnership with ThredUp to provide customers free “cleanout kits” in which to send in their pre-owned clothing, regardless of brand.

For many retailers, resale is as much a marketing play as a major source of revenue.

“How we use it is customer acquisition and retention,” said Sarah LaFleur, founder and CEO of M.M.LaFleur. “Right now, roughly 25 percent of customers of Second Act are first-time customers … We have actually seen them convert into full-price customers.”

Parish, of Francesca’s, also counts the costs of running resale as part of the retailer’s marketing budget. Being a cash-out option on ThredUp is a driver of customer acquisition, she said, but it costs about half as much as paid advertising channels such as social media.

The Customer Experience

For French brand Ba&sh, the most important attribute for a resale partner was being able to provide a seamless experience for customers and having a “good interface on the site,” said Desiree Thomas, CEO of Ba&sh North America. After reviewing three possible candidates in the US, Ba&sh ultimately chose Archive and a peer-to-peer model. In Europe, Ba&sh works with Faume, a managed resale marketplace.

“We wanted to make it as easy as possible for the customer,” Thomas said. “From a visual standpoint, [Archive] is a user-friendly experience and a straightforward buyer approach.”

There are considerable differences in how resale services build their respective platforms. Archive and Treet, for instance, create a mirrored resale website that’s separate from a brand’s main e-commerce experience, while Recurate allows brands to host their resale marketplace on their online shops directly. This means that when the main website gets a content update, the resale channel does too, so that it’s always consistent with the brand and minimises additional upkeep for the brand, according to Margalit.

“Ultimately, resale is an extension of your brand perception,” she said. You’re presenting your brand through this experience and you’re putting yourself at the hands of a software company that’s creating a service for you.”

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