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Resale: risky business or rewarding revenue stream?

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The resale industry is soaring as entrepreneurial sellers trade on the inflated premiums buyers are prepared to pay for the hottest products and brands.

The clothing resale market is expected to grow from $18bn (£13.7bn) in 2017 to $33bn (£25.1bn) by 2021, a report by analyst Fung Global Retail and Technology has found, while the sneaker resale market alone generates between $6bn and $7bn (£4.6bn and £5.3bn) globally, resale trading site StockX reports.

Running parallel to the mainstream market, resale often trades on hype, and many limited editions sell for much more on sites such as Ebay and luxury resale website Vestiaire Collective. A lace maxi-dress from the sell-out Erdem x H&M collection, originally priced at £229.99, is currently on Ebay for £495, while a branded hoodie originally priced at £49.99 is listed on Vestiaire Collective for £150.

Such is the popularity of the format, US-based resale site The RealReal has recently opened its own store in New York’s Soho, as has specialist bag resale site Rebag.

The implications for brands and retailers are not universally positive. They may miss out on revenues as goods are sold on, and “dodgy sellers” can cause reputational damage with fakes.

As the market evolves and becomes increasingly sophisticated, Drapers speaks to industry insiders from across the spectrum to find out their thoughts on the benefits and drawbacks of a complex and growing industry.

Ceanne Fernandes-Wong, vice-president, EMEA, luxury resale site Vestiaire Collective

Ceanne fernandes wong  vp emea

A lot of the brands that we sell, for example Céline, you don’t find online in the way that we can make them available. If you’re somewhere that doesn’t have a physical shop, we’re giving more opportunity for the consumer to engage with the brand. 

The brands that are sold on our site don’t see us as a competitor – they see Vestiaire Collective as a partner. They would much rather that people buy through us, because we authenticate. We provide transparency to the process rather than people going to the grey market or underground resellers.

We work with the brands both from an authenticity standpoint, and we also share insights. Not information – because we are different companies – but we have an open dialogue with a lot of the different maisons.

The resale market is so interesting. Because of their scarcity, items can have a much higher resale value than at original retail, and that can really drive a market. If you look at Louis Vuitton and Supreme, Louis Vuitton has raised so much capital because the brand is a cult brand that gets so much from the resale market. 

A lot of brands are being very strategic in terms of how resale value works with their business. If they can show that a handbag that costs £3,000 still has a very high resale value, that helps the consumer to purchase something at that price point – they know it’s not going to lose value. It gives a layer of trust for consumers and it helps them make the decision to part with £3,000 for a handbag.

I think the market will continue to gain in popularity as the consumer mindset shifts to being more mindful. That’s the key thing we’re seeing, that the customer wants to make informed choices. They’re asking how can they make more mindful choices with their wallets. 

Melanie Mohr, founder, video resale app Yeay

Melanie mohr

One of the key drivers of resale is the entrepreneurially minded young generation of consumers. They aren’t just sold to any more. Tthey are actively involved with brands, reviewing, recommending, creating content – and reselling.

Teenagers are more likely to listen to recommendations from one another now than they are to brands. So when a teenager resells a brand and creates their own social and marketing materials, the brand benefits from turning their fans into their best marketers. Brands don’t need to compete with reselling – they just need to find ways to collaborate.

We started out as a c2c marketplace and we saw teenagers reselling pre-used fashion – and they were really good at it. We saw there was an even bigger b2c opportunity where we could take reselling a step further by actively connecting brands with teen sellers.

We recently launched a feature on Yeay to help brands turn their fans into a new kind of reseller. We are working with Asics Tiger for a project where anyone who wants to resell one of their sneaker lines can make a product video – and earn an income when someone buys through their video.

Resale can be a huge opportunity for brands, and could even be seen as a marketing initiative. Resellers can provide brands with great user-generated content. More than fighting against it, brands should think about how to embrace it in the right way.

Ridwane Ettoubi, founder, sneaker consignment store Presented By London

Cp pb shop front cover 01

Cp pb shop front cover 01

Presented By is a consignment store and much more. We have tried to provide a hub for everybody who is enthusiastic or involved in the sneaker community.

We verify every single thing that comes into the store. We also clean, restore and customise trainers. We’re a gallery, and we showcase limited edition and sought-after trainers that people have only seen images of before.

We don’t work directly with brands, and I can’t speak on their behalf, but I think we almost add to their marketing campaigns. If there’s been a release, then we’re pushing that as well – we’re adding to the fuel and the hype.

We sell it in an environment that’s safe. We all know about the replica and fake industry, and there are so many fakes out there. Whatever we’re selling, consumers know that they’re buying the genuine article. We could almost go as far as to say that we’re protecting the integrity of the brands and their items.

Resale also indicates to the brands the strength of their releases. If they’ve released a silhouette and they can see that it’s really popular, then maybe they can see they should be focusing on that.

The consignment model has been around for a long time, especially in the US, and we’ve been lacking in the UK. I think the resale market is increasing, simply because there’s more awareness of it. It’s not a new concept, but we’re highlighting it on the UK front.

Katie Baron, head of retail at innovation research and advisory company Stylus

Katie baron head of retail stylus

There has been a concern that resale can ‘muddy’ brand image, but this is largely because brands haven’t bothered owning the resale of their own products, instead allowing products to be re-sold on secondary sites where consumers may be allowed to represent their goods however they see fit.

Resale is now perceived by consumers as being entrepreneurially attuned rather than mired in ‘second-hand’ stigma. Smart brands are pulling resales back in-house with branded resale events – clawing back significant slices of revenue lost to consumer reselling.

There’s also a perception that resale makes product more accessible, which could hinder merits of exclusivity, which you could say is true of luxury. But when you consider that many luxury items rise in value with age, resale and luxe is actually the perfect pairing.

Peer-to-peer trading can be hazardous. This shouldn’t put fashion brands off however, if anything, they have an important role to play in combating this activity. Brands can respond to the trading-mindset of Gen Z by creating their own digital services grounded in safe reselling, transparency and personalisation.

Ravi Grewal, director at menswear independent Stuarts London

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Resale has always been there. Sites such as Ebay were built on resale before they allowed retailers or individuals to create shops and sell new products as well as old.

For the growth of second-hand sales, full-price sales would have to rise also. Some consumers may buy more new items, knowing they can sell them on other market places to get some value back and put towards more new items they like.

The resale of certain brands will help brand value. For example, I found a website that sold second-hand designer handbags, told my wife about it, and almost instantly she began browsing and found that bags she owned were worth even more than when she originally bought them.

Rare sneaker releases will be at the top of resale buyers’ list. As long as there is a demand, retailers can enjoy selling at full price. What a person does with the purchase after that is his or her choice. I think it’s clever, and if they can sell at higher price on a market place, then good luck to them.

 

Stavros Karelis, founder and buying director of independent concept store Machine-A

Stavros Karelis, Machine A

I disagree completely and I am very against it. Not as a retailer, but as a customer. Connect and buy something for yourself – don’t buy it to resell it. This doesn’t make clothes special, it adds to a wrong system of over-consumerism and a disconnection from any real value, because it is all about profit.

It is something that we see daily, but doesn’t affect the Machine-A business, because the brands that we work with don’t experience that hype. However, when we have products that we know customers might buy to resell, we try to stop it. We try to be careful – not allowing people to buy a lot of units, for example – to make sure we satisfy demand from all our customers, especially the regular ones.

When resale is basically buying a popular product and reselling for a very big price, it means that other customers might not be able to find what they’re looking for, without having to pay a lot more for it.

It’s a choice for brands in how they want to present themselves and how they want to be popularised. I don’t think it’s a great thing, mainly because you don’t pay the actual prices.

 

What’s your view? Email us at drapers@emap.com

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