Second-hand news: online clothing resale is here to stay

Like many Gen Zers, my kids got bitter in traditional clothing stores. For reasons of both sustainability and cost, they now only shop at thrift stores.

Trained on a recent outing, I funded an update to my daughter’s wardrobe and got Lucky jeans for myself while spending less than a new pair would have cost the mall.

But Christmas presents are going to be a challenge. With the release of the Omicron variant, I didn’t feel like browsing the shelves again and kids would frown at new items. This leaves the online market booming.

Clothing resale websites were already starting to take off before the pandemic: BCG consultants said last year that a quarter of global shoppers bought a second-hand item in 2019 and predicted that the fashion share of opportunity in the global closet could increase from 21% to 27% by 2023.

But global lockdowns have really boosted investor interest in the sector’s growth potential. This year, the American sites ThredUp and Poshmark joined the public markets. In Europe, Kering, owner of Gucci, invested in Vestiaire Collective, the craft market Etsty bought Depop and private equity group EQT supported a significant fundraising for Vinted at three times its previous valuation.

A GlobalData study commissioned by ThredUp optimistically predicted that organized resellers (as opposed to traditional thrift stores) would grow 11 times faster than regular clothing retailing, and the total second-hand market would double to $ 77 billion. in dollars by 2025. Younger consumers are fueling the trend: 42% of Gen Z and Millennials bought second-hand clothes last year.

Flowering is now emerging from the rose. ThredUp and Poshmark shares are down more than 80% from their highs at the start of the year. Even RealReal, which has been listed for longer, has seen its share price drop by more than half since February.

Much of the skepticism is justified. Online resale of clothes is getting more and more crowded. Bigger players are coming their way, and successes start to intersect as they develop. Poshmark, for example, reported slowing third quarter revenue growth as it tipped into a loss.

Competition from bricks and mortar is also increasing now that stores have successfully reopened. For shoppers who enjoy the thrill of discovery, browsing online struggles to beat rummaging through a thrift store display. And department stores like Selfridges and Neiman Marcus are wooing those looking for genuine brands and vintage pieces.

Consumers who turn to the opportunity for cost reasons also have other options. Fast fashion stores and websites from Shein in China to Primark in UK are booming. Sweden’s H&M is a triple threat. She not only sells new cheap clothes but also collects old clothes for recycling and several of her brands have entered the resale market.

Despite the challenges, the online resale market is consolidating and maturing rather than flaring up. As sustainability becomes a driver of consumer behavior, fashion will feel the heat. It accounts for around 10% of greenhouse gas emissions due to long supply chains and the heavy use of synthetic petroleum products.

This suggests that used sales will only become more attractive – to original manufacturers. There are few better ways to reduce total carbon emissions than by reselling the same products. Customers are also likely to pay more if the manufacturer guarantees their authenticity. Enthusiasts argue that artificial intelligence and blockchain will accelerate validation and attract new buyers, just as dealer-certified “used” cars broadened the used vehicle market in the 1990s. The Ultimate Dream is to create a circular market, where loyal customers return goods they are tired of and receive credit which they use to buy more.

Kate Fletcher, professor of sustainable design at the London College of Fashion, doubts that reselling clothing solves the sustainability problem. “The industry is trying to maintain a fundamentally high impact model by substituting second-hand goods,” she says. “People’s wardrobes are crowded.

That hasn’t stopped groups like online luxury retailer Farfetch from trying to capitalize. Last week, it acquired Luxclusif, a resale platform that provides technology to brands wishing to engage in online resale.

Last year, 32% of Gen Xers and 16% of Baby Boomers purchased second-hand clothes, according to GlobalData. If luxury and fashion companies can convince more of us to follow kids, there is a lot of money to be made.

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