Secondhand clothing is the new black. Driven by sites like Poshmark, thredUP and The RealReal, the apparel resale market is outpacing the primary one and becoming the go-to fashion staple for socially conscious Millennials and Gen Z: around 30% will participate in resale or rental transactions this year, and that will go up to 50% in 2020. What’s more, these two generations are likely to spend more money with their favorite retailers if those retailers sell secondhand apparel or have an environmentally conscious way of dealing with returned and excess stock (score one for the environment!).
This clear shift in consumer behavior is putting pressure on retailers to have sustainable business practices and implement better solutions for their returned and excess merchandise. A recommerce solution is the way to go.
So, what kind of recommerce solutions are out there? There are a few options, depending on your goals (revenue boost; brand loyalty; brand protection; offset loss; operational efficiency). Let’s break some of them down:
Returned, Inspected, Resold To Consumer Via Private Label Site
Brands like REI and Taylor Stitch have launched online, private-label sites to resell used, repaired or rebuilt items to consumers. All the items have been inspected and are sold at a discounted, set price; in most cases demand is greater than supply and items sell out quickly. By having their own recommerce sites, these retailers are able to manage — and dominate — their brand’s own resale market. The marketing, quality and channel control, and the ability to capture previously untapped revenue, is a huge win, not to mention the positive brand image and loyalty that is established.
Third Party Resale Marketplaces
Secondhand sites like Poshmark, ThredUP and The RealReal are driving a secondary market ecosystem of selling and buying, but in a polished and trendy environment. What’s more, they are serving as small-business incubators: what began as someone selling a handbag out of her closet has shifted into a full-time reselling business (and with it, a need for consistent merchandise to resell).
You can take advantage of this growing apparel reseller community by leveraging or creating a sales channel that caters and markets — on your terms — to this specific buyer group. This might include selling via a B2B recommerce marketplace that connects your returned and excess merchandise directly to fashion resellers.
A Customized B2B Online Auction Marketplace
Many retailers are opting to build their own B2B marketplaces in order to auction bulk quantities of returned and excess merchandise to business buyers around the country. From salvage and discount store owners to online sellers to mom-and-pop shops, refurbishers and exporters, a robust buyer base exists for just about every product regardless of condition. What’s nice about an online auction channel is that it makes it just as easy to sell to a thousand business buyers as it does to five jobbers. More buyers generate more demand: this pushes prices up and allows for a faster sales cycle.
A marketplace also enables a consistent auction cadence: you can list every week (versus letting inventory pile up in your warehouse until the end of the season). Retailers and brand owners including Macy’s, QVC, Zulily and Wolverine Worldwide are currently using their own private auction sites to sell excess merchandise directly to their own specific and approved buyer base.
Obviously a direct-to-consumer resale site (like what REI and Taylor Stitch are doing) is best for channel control and brand protection; that said, there are plenty of ways to avoid channel conflict if you choose to go the B2B marketplace route. For example, set specific restrictions on your buyers; this could include mandating all items be delabled prior to resale, excluding resale on third-party sites, establishing geographical limitations, setting remarketing rules and selling only to exporters.
Contemplating a recommerce solution is one thing, but let’s look at what it actually takes to implement and drive a recommerce program.
Dedicate Resources: Given the complexities involved in running a recommerce business it’s important to put a strong team in charge. This might include having a project manager to oversee all aspects — one who can build the program, get it going, and continue to evolve it. As this area of the business becomes more prevalent, you should think about building out a dedicated team to support on an ongoing basis.
Outsource If Need Be: Partnering with service providers that specialize in returns management and remarketing can smooth the process for retailers and brands. The operational aspects of processing, sorting and listing items for resale can be complex and they are not necessarily the core competency of the retailer. This is especially true if you resell via a B2B online auction marketplace platform: knowing how to best assemble inventory as well as how to target, drive and sustain the right buyers will substantially increase pricing and velocity. In this case you should look for a vendor that has online marketplace expertise.
As fast fashion continues to go out of fashion and retailers remain under the microscope for ethical and sustainable business practices, the apparel industry will need to shift how it thinks about returned and secondhand clothing. If a recommerce solution is not on your radar, it should be.
Eric Moriarty is B-Stock’s Vice President, responsible for establishing and overseeing partnerships with some of B-Stock’s largest clients including Whirlpool, Wayfair, Sears Holdings and Amazon. Moriarty has decades of experience building successful B2B and B2C online marketplaces. He was eBay’s first category manager and a key contributor in developing and implementing category strategies. He launched eBay’s New Business Group, incubating categories including Baby, Health & Beauty and Food & Wine. Reach him at email@example.com.