The retail industry has been rapidly transitioning to digital for over a decade, with ecommerce penetration sitting at around 20% in 2021, a figure that’s expected to rise to almost 25% by 2025. Second-hand fashion and clothing has been available on marketplace platforms and from third-party sellers for some time, but in response to the increased demand for sustainable, circular fashion, ‘recommerce’ has emerged as a major player in ecommerce — particularly for brands marketing to Generation Z.
“Sales in the second hand clothing market are expected to reach $77 billion by 2025” - ThredUp
Investment is pouring into the recommerce sector, which is currently valued at $24 billion, a figure that’s expected to double to $51 billion over the next two years. In response, brands are looking for ways to reclaim control of the sales cycle of their second-hand goods, while others are investing directly in the resale marketplaces that have fuelled the sector’s stellar growth.
In this blog post we’ll take a look at the status quo of recommerce and sustainable retail, and explore our predictions for the sector’s development over the coming years.
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First let’s get the definitions out of the way:
A culmination of different trends and shifting cultural attitudes, especially among younger consumers, are the predominant driving forces behind recommerce growth.
Both Gen Z and Millennials are price-conscious consumers, placing importance on the price of products when making buying decisions. Gen Z in particular are less likely to have a stable, comfortable income, but are particularly attuned to the importance of sustainability and making environmentally conscious decisions. This makes second-hand clothing a practical and appealing option that ticks a lot of boxes — it’s more affordable than new clothing, and it’s ethically responsible.
Largely rejecting fast fashion and the perception of low-quality clothes and the poor working conditions in which they’re created, younger consumers are opting for products that are made well and made with consideration to quality and living wages.
Second-hand clothing is a pivotal part of this equation. On the one hand, it’s easy to get luxury or top-end pieces at an affordable price second-hand, and on the other, consumers can avoid contributing to the cycle of overproduction.
Recommerce is also aiming to bring the experience of vintage or second-hand shopping online. Users can find unique items that aren’t necessarily available from major retailers or from the latest seasonal collections and can enjoy the experience of ‘hunting out’ something special.
The current wave of online clothing recommerce was initially driven by sites like Depop, Poshmark, and Vinted, which cater to online and mobile consumers. They offer marketplace, social commerce, and peer-to-peer platforms where individuals can buy and sell clothes.
Depop has more than 31 million registered users as of 2021, 90% of whom are under 26. Poshmark and Vinted have even more, with 60 million and 45 million users, respectively.
With such large user bases, power sellers have emerged, many of whom have made their own small fortunes selling vintage fashion at a markup.
“Given that the second-hand clothing market is growing 11 times faster than retail, established brands in the fashion and wider ecommerce sectors have started making moves to capitalize.”
Luxury fashion brands, however, are taking a different approach towards recommerce. With most of the resale of luxury fashion brands already taking place on established third-party marketplaces, like Fashionphile and Vestiaire Collective, it’s uniquely challenging for these brands to break in.
To get around this problem, luxury brands are turning to verification technologies, as well as platforms that will let them control P2P resale of their own second hand goods.
Brands can outsource the entire resale process to platforms like Trove, who take care of product collection, relisting, and logistics. This way they can regain control of the resale of their own products without having to create a resale platform from scratch.
Then there are businesses like Entrupy who specialize in solutions that allow brands and sellers to verify the authenticity of second-hand luxury products. Entrupy’s AI system is trained to recognize counterfeits simply from photos.
This transfer of power away from individual sellers and back to brands will likely continue as more and more businesses work out their own ways to cash in on recommerce.
The COVID-19 pandemic has spurred an interest in sustainable commerce and fashion among consumers of all age groups. According to ThredUp’s Annual Resale Report, 51% of consumers have become more opposed to environmental waste than they were at the start of the pandemic.
Businesses were already aware of the power of sustainability from a brand perspective. It’s a differentiating factor and a major building point for lasting brand loyalty. Considering the fact that the fashion industry accounts for around 10% of the world’s greenhouse gas emissions, it’s also something that consumers are actively scrutinizing more and more.
While the importance of sustainability for brands in the fashion industry is broadly understood, until recently, it was limited to factors like materials sourcing and manufacturing methods. But many brands are now turning to new initiatives that are more focused on the circular economy.
Back to Zalando’s Zircle — it’s more than just a move into the recommerce sector. It’s part of Zalando’s push to promote a circular, sustainable approach towards fashion. Customers can return clothes they buy from Zircle to Zalando in exchange for coupons.
Then there are businesses like outdoor clothing brand Arc’Teryx, which are taking their efforts to move towards sustainable commerce and one step further. The outdoor clothing brand started a recommerce program called ReBird back in 2019. The initiative allows customers to trade in their old items for 30% of the retail price and offers clothing repairs using recycled or excess material from the manufacturing process. Any items that can’t be repaired are either recycled or donated.
Industry giant Nike has also launched its own in-house recommerce initiative where customers can trade in their old shoes. Nike will fix them and then resell them at a discount as refurbished items.
Circular initiatives like these are popping up across the industry, with Crocs and Uggs having recently announced refurbishment and resale programs. It’s not just fashion brands turning to this model either. Ikea is expanding its resale program to 33 stores across the US following a successful pilot in Conshohocken, PA. which saw 100% of returned furniture resold instead of recycled.
A key way to encourage adoption is for brands to link their sustainable resale programs with loyalty programs. Tying marketing initiatives together with corporate social responsibility is a great way to combine action on sustainability with long-term business growth and customer loyalty.
Most in-house resale and recommerce initiatives offer customers store credit when they trade in used products. If they’re tied into a loyalty program, this offering could be expanded to loyalty points or any kind of personalized reward, increasing the appeal of the resale program massively.
The new wave of recommerce and sustainable recommerce initiatives is still in its infancy. But there’s much more to come. Expect to see industry leaders like Depop expanding their platforms with new features, big fashion brands reclaiming their own vintage products for certified resale, and loyalty programs being added to the recommerce equation.
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