Branded Resale Becoming Fashionable Profit Driver

Online resale is set to return to growth this year after a decline that began in 2022, but the market is still a ways off from reaching the heights of 2021.

According to recent eMarketer data data, U.S. digital resale is expected to drive $80.60 billion in volume for 2024, down from $85.87 billion in 2021, following a 6.9% annual decline in 2022 that narrowed to just a 2.5% dip last year. The findings consider a variety of online platforms, including marketplaces like eBay, Craigslist, and Facebook Marketplace, but do not include purchases of used items via rental sites like Rent the Runway and Nuuly.

The RealReal turn a profit

The RealReal, known for selling pre-owned luxury consignments online and in 16 stores, recently turned a profit for the first time, challenging the notion that there’s no money to be made in the modern resale business. Last year, digital secondhand fashion marketplace ThredUp stated that it was relying on its resale-as-a-service offering to try to close the profitability gap. Its latest Resale Report on secondhand fashion, the 12th from the San Francisco company, projected a 23% growth for 2023, an increase from the previous year and a deviation from eMarketer’s findings.

Companies assisting clothing, footwear, and accessories brands in establishing their own quality-controlled resale shops online report steady progress among their clients.

“We have seen tremendous growth in branded resale across apparel and footwear,” said Emily Gittins, co-founder and CEO of Archive, the resale technology provider to Dr. Martens, DVF, New Balance, and The North Face. Some of Archive’s clients report 50% annual sales growth or higher. “We also are hearing from executives that they anticipate their resale sales to account for up to 10% of revenue in the next five years,” she added.

Purchasing pre-owned clothing and shoes no longer carries the stigma it once did, and Gen Z, in particular, is giving resale major street cred. These teen and 20-something shoppers tend to enjoy hunting for thrift-store treasures inside a Goodwill outlet or scoring a grail at The RealReal, but for one Gen Z activist, there’s one area of online resale that’s especially appealing.

Angela Busheska — a climate activist, founder of the En Route app for sustainable shopping, and a new Z Suite member — enjoys borrowing clothes from Rent the Runway but trusts brand-owned resale sites and their high-quality product imagery and descriptions when she’s in the market for a secondhand fashion purchase. She finds peer-to-peer sites like Poshmark, Depop, and Vestiaire Collective to be “too time-consuming” for her needs.

The Resale Movement Gains Traction

From H&M to Oscar de la Renta, brands at every tier in the market have cosigned the resale movement, but some are still waiting on the sidelines, possibly to their own detriment. “Resale is happening every day through an increasingly expanding variety of marketplaces, organic communities, and brick-and-mortar stores,” said Wilson Griffin, co-founder and CEO of Recurate, whose clients include Steve Madden, Mara Hoffman, Frye, and Mansur Gavriel. “Any brands that ignore that behavior are losing out on revenue, data, and customer acquisition — especially younger customers.”

Every brand should make resale a part of their digital strategy, said Kenny Pate, chief product officer of Arrive, the recommerce technology firm supporting clients including Burton and Yeti. Resale is not just a critical business lever that drives more revenue from existing customers and offers healthier margins versus liquidation, he continued, but it also captures sales of used goods that are happening outside of a brand’s control on third-party sites, while keeping valuable products out of the landfill.

Despite eMarketer’s projection that resale will return to positive momentum this year, the sector faces competition from the attractively low prices of fast fashion, said Griffin, especially when inflation weighs on consumer spending.

For now, branded resale is still in the early innings, said Griffin. “We have brands adding new channels to their existing programs, like adding customer trade-in to peer-to-peer, or using resale as an outlet for e-commerce returns,” he added. “Just like any innovation or new way of working, it takes time for brands to fully grasp the opportunity, incorporate it into their business, and optimize performance.”