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The Next Generation of Resale Sites

Investors are backing resale platforms that go after niche categories like formalwear, kidswear and outdoors apparel as the resale market continues to grow.
Products from Dotte, a marketplace for kids resale.
Products from Dotte, a marketplace for kids resale. Dotte.

Dominic Rose knows the ins and outs of the resale market.

The London-based entrepreneur served as the chief operating officer of Depop as it scaled globally and became the go-to secondhand platform for Gen-Z shoppers. Before that, he was the director of strategy at Asos where he ran, amongst other parts of the business, its resale division.

Rose left Depop in February, a few months before it was acquired by Etsy for $1.6 billion, and recently joined the investment firm Founders Factory. He’s already back in the resale market, this time as an investor in Dotte, where parents can buy and sell secondhand children’s clothing. He believes resale for kidswear has a Depop-sized future.

“The opportunity is in extremely high-frequency purchase behaviours,” he said. “The average parent is transacting on kid’s clothing far more than any other purchase they make. So if you build the deep relationship and get high frequency from buyers and sellers, it will deliver really good economics.”

Dotte is part of a new generation of resale start-ups that sees a big opportunity in filling in the gaps not already dominated by the category’s giants, including The RealReal, Poshmark and StockX. Queenly, where shoppers can find gently used prom dresses and other formalwear, raised $6.3 million in a July funding round led by Andreessen Horowitz. Requipper, a resale site that sells used outdoors gear and apparel also recently raised funding from Ulu Ventures and ALIAVIA Ventures. Secondhand watch marketplace Chrono24 recently raised about $117 million in funding from investors including Aglaé Ventures, the family investment firm from LVMH’s Bernard Arnault.

The opportunity is in extremely high-frequency purchase behaviours.

Much like the new crop of online marketplaces specialising in Black-owned brands or products from direct-to-consumer start-ups, many niche resale sites pitch themselves as an antidote to e-commerce sites that stock tens of thousands of items. They’re counting on shoppers getting fed up with sifting through an endless online garage sale.

“There is just so much stuff on [large resale sites], sometimes it gets overwhelming,” said Sarah Dyer, a Brighton-based illustrator. She likes to score secondhand clothes from sustainable brands like Bobo Choses on Dotte for her three daughters.

The Single Category Opportunity

Many of today’s resale giants started out as niche operations too. ThredUp’s founders first tried men’s dress shirts and kidswear before settling on a broader approach. StockX is best known as a place to buy and sell rare sneakers, though it now stocks everything from baseball cards to handbags.

Dotte co-founder Louise Weiss said kidswear is such an important expenditure in a parent’s life that it deserves its own resale site, rather than existing as a sub-category on a larger platform. She said the growing number of Millennial and Gen-Z parents also creates an opportunity.

“Parents are a distinct group with distinct needs; they’re busy and there hasn’t been a resale solution designed for them,” Weiss said.

Trisha Bantigue and Kathy Zhou, co-founders of Queenly, see pageantry as another underserved market (the site allows shoppers to search for outfits by event, from weddings to winter formals). Women spend hundreds of dollars on dresses for competitions, and often resell them to friends or in private social media groups.

Resale startup Queenly sees formalwear as a big resale opportunity.

“This is a shopper that has hundreds of dresses in her closet and is trading them in-person,” said Bantigue, who has spent years competing in pageants.

Bantigue said the pageant community develops a deep trust for one another and are more likely to buy each other’s dresses. Requipper co-founder Sasha Landauer said outdoors enthusiasts are also similarly particular about their gear and feel more inclined to shop from fellow outdoorsmen.

“If a site is known for selling one certain category, and they do it well, they bring a level of trust,” said Joseph Sartre, a venture capitalist with Interlace Ventures, which has invested in Queenly.

If a site is known for selling one certain category, and they do it well, they bring a level of trust.

Category-focused resale sites also have a clear roadmap for expansion, said Connie Chan, an investor with Andreessen Horowitz. A site like Queenly that starts out selling formal dresses can then offer the same customers accessories or shoes, for instance.

“That’s how you get virality,” Chan said. “They will remember that it’s tailor-made for a particular hobby they identify with.”

Niche Challenges

Not every category has enough demand to warrant its own niche resale site. Rose said focussing on categories where customers are likely to return is key. Chan said picking categories with high average order value is important since used goods don’t have as high margins as retail.

Dotte charges a 15 percent commission rate, which doesn’t leave room for high profits when baby trousers and toddler dresses are being sold on the site for £15 (products on Queenly and Requipper, by contrast, can sell for several hundred dollars).

“The model works at scale,” Weiss said. “There’s a huge amount of kidswear available and the turnover is fast. An engaged shopper will keep coming back.”

Inventory is another challenge. Weiss said “parents are time-poor” and don’t necessarily have the capacity to post old clothes. Dotte has also signed on several kidswear brands to sell their excess inventory.

Requipper is piloting a consignment service, where the company will go into the homes of outdoor enthusiasts and sell their gear for a 40 percent commission.

“The outdoor community has tons of gear in their garage and they don’t want to ship it out, but they don’t want to throw it away either,” Landauer said. “So if we can eliminate all frictions by coming to them, it’s a value proposition.”

The new resale sites must also compete with bigger, established rivals. Depop and Poshmark offer prom, quinceañera and pageant dresses, and parents have plenty of options on Poshmark and ThredUp.

“The problem is always about customer acquisition,” said Karin Dillie, the former director of business development at The RealReal who now works at Recurate, which builds in-house resale programs for brands. “How are you bringing on customers when there are these massive competitors who are already building out these categories? You need both buyers and sellers, so it can get very hard.”

How are you bringing on customers when there are these massive competitors who are already building out these categories?

But Rose believes there is enough demand within the resale space for marketplaces big and small.

“There will be multiple winners,” Rose said. “The overall resale market is growing so substantially that it’s stealing share from traditional businesses, not other resale marketplaces.”

Bantigue and Zhou say they can lean on their niche community for growth, like working with pageant-winning influencers and the Miss USA organisation. Dotte creates parenting content on social media to attract buyers and sellers, while Requipper has been working with college outdoors clubs.

“It’s a difficult proposition to be all things to all people, as opposed to doing one thing really well,” Rose said. “There’s value in community and building deep resonance.”

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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.

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