Identifying the most advantageous resale strategy for your unique brand: A guide
In today's world of savvy consumers and financial uncertainty, secondhand goods have never looked more enticing. Headwinds such as inflation, mounting student debt, and increased interest rates have driven people to prioritize used items over new products in 2023. However, it's not just economic factors driving the surge in the secondhand apparel market - industry experts predict it to grow nine times faster than the overall market by 2027, according to ThredUp's 2023 Resale Report.
The shift towards secondhand shopping is reshaping retail and inspiring brands and retailers to jump headfirst into the resale market. Now, 163 brands have established dedicated resale shops, spanning across the globe from renowned labels like J.Crew and H&M to popular mall stops like American Eagle and outdoor and athletic brands such as Smartwool and Beyond Yoga. It offers numerous benefits for new entrants who aim to acquire new customers, advance sustainability initiatives, and bolster revenue.
The reasons for brands to engage in resale are crystal clear, but selecting an ideal model may not be. Two prominent resale models have emerged: a managed resale program and a peer-to-peer (P2P) resale program, both operated by third-party providers. At first glance, these two models may seem to deliver the same services, but they provide diverse advantages for both brands and customers.
Option 1: Managed Resale Program
For brands seeking a third-party provider to manage their resale endeavors, services like ThredUp's Resale-as-a-Service (RaaS) come into play. This type of program allows the resale provider to handle everything for the brand, managing secondhand inventory, powering a white-label resale shop, and overseeing tasks such as processing, fulfillment, and customer service. Brands are only responsible for aligning on creative factors and any ongoing marketing efforts to ensure that the resale experience is consistent with their overall brand and attracts customers.
Brands opting for a managed resale program can scale an impactful resale program from the very start. Eight of the top 10 branded resale programs with the largest secondhand inventories utilize a managed service model, with American Eagle's resale program powered by ThredUp's RaaS leading the pack offering over 30,000 listings.
Managed resale programs not only boast a broader selection of inventory but offer a streamlined buying and selling experience for customers. The entire experience - from listing and photography to shipping and packaging to customer service - remains uniform and in the brand's voice. According to Alicia Chin, Director of Sustainability and Social Impact at Smartwool (a VF company), the brand chose a managed resale model after evaluating offerings from six different providers.
"When we began exploring resale vendors in 2020, there were a multitude of new players and various options," Chin said, "Navigating the space definitely took some time, and understanding which business model would be most suitable for a smaller brand like Smartwool was crucial. We opted for a managed service model because we wanted to quickly scale our program and attract new customers to our brand."
Customer feedback on Smartwool's resale program powered by ThredUp's RaaS has been overwhelmingly favorable. The brand boasted a 99% sell-through rate of secondhand items within the first 90 days of its resale shop going live.
Option 2: Peer-to-Peer Resale Program
Another resale option brands can consider is a partnership with a third-party provider offering a P2P resale model. Providers such as Archive and Treet specialize in connecting a brand's customers directly to one another to buy and sell pre-owned apparel.
P2P shops can be an excellent fit for brands prioritizing the promotion of camaraderie among their existing customers. For example, children's clothing brand Tea Collection features a P2P marketplace on its site, where buyers and sellers can interact directly, allowing them to negotiate prices, ask questions, and discuss product details. This model fosters customer engagement and interaction, thereby cultivating a strong sense of community and brand loyalty among users actively involved in buying and selling.
P2P programs connect customers in ways that managed programs cannot; however, brands should be aware of key differences. For instance, inventory essentially depends on customer participation, which can complicate scaling a program and generating impact. Most P2P resale programs, on average, have fewer than 300 listings, whereas the average listings for a managed resale program surpass 5,000. Brands have little control over the resale process, with each seller handling photography, item descriptions, communication with buyers, and fulfillment. This lack of control can lead to inconsistencies and deviations from the brand's message and tone.
Discovering the ideal fit
There is no one-size-fits-all approach to branded resale, with some offerings more suitable for one brand than others. For brands pondering resale models, Chin advises taking the time to understand the pros and cons of each model and to learn from peers who are already in the resale market.
"When you commence the process, consider your brand's ultimate goals, target audience, and the resources you possess or will require to manage a resale platform."
- The surge in the secondhand apparel market is anticipated to grow nine times faster than the overall market by 2027, according to ThredUp's 2023 Resale Report.
- With 163 brands having established dedicated resale shops, spanning across the globe, the shift towards secondhand shopping is reshaping retail and inspiring brands and retailers to jump headfirst into the resale market.
- The reasons for brands to engage in resale are crystal clear, but selecting an ideal model may not be, as two prominent resale models have emerged: a managed resale program and a peer-to-peer (P2P) resale program, both operated by third-party providers.
- Among the top 10 branded resale programs with the largest secondhand inventories, eight utilize a managed service model, with American Eagle's resale program powered by ThredUp's RaaS leading the pack offering over 30,000 listings.
- For brands prioritizing the promotion of camaraderie among their existing customers, P2P resale programs might be an excellent fit, allowing buyers and sellers to interact directly, cultivating a strong sense of community and brand loyalty.
- Finance, lifestyle, and fashion-and-beauty businesses, as well as technology companies, are navigating the economic turbulence of inflation, housing, and increased interest rates by exploring resale programs that cater to sustainability initiatives while attracting new customers.
- Alicia Chin, Director of Sustainability and Social Impact at Smartwool, notes that the brand chose a managed service model for their resale program after evaluating options and aiming to quickly scale their program and attract new customers to their brand.
