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Recommerce: The Thrift Store Goes Digital


Recommerce: The Thrift Store Goes Digital

Ugh. That thrift store smell. If you’ve ever been to Goodwill or even a trendy consignment boutique, then you know the...

8 Minutes Read

Ugh. That thrift store smell. If you’ve ever been to Goodwill or even a trendy consignment boutique, then you know the dank, moth-ball tinged odor well. It’s the only drawback to the otherwise euphoric experience of finding that perfect vintage top or rugged jacket that will be a staple of your wardrobe for years to come. Unlike many capitalist institutions, the Millennials haven’t managed to “kill” thrift stores. In fact, the generation and their Gen Z compatriots are ushering in a new era of thrifting. Recommerce (or “reverse commerce”) is the future of fashion. It represents the digitization of second-hand or thrift stores. The model gives second life to used or out of season goods through ecommerce supply chains. The thrill of the chase remains, augmented by data about the full life cycle of garments and a sense of corporate responsibility that comes from the reduced waste of recycled clothing. This is especially important for an industry as notorious for waste as the fashion industry, where over 16 million tons of textiles go to landfills in the US every year. Recommerce is the rare business model that achieves the triple-bottom line. The approach is profitable for businesses taking part, avoids any exploitation of laborers, and helps the environment through reduced waste.

While shopping at thrift stores is nothing new, some emerging trends among young shoppers have accelerated the proliferation of recommerce operations:

  • Younger consumers are pushing retailers to be more responsible for their impact on the environment. As fashion customers grow increasingly knowledgeable about the impact of their consumption on the world, they have greater desire to shop with brands that share their concerns. While some seek brands with plans in place to reduce their carbon footprint by selling garments made with recycled materials, others turn to the resale market. Second-hand goods sales have the least impact on the environment since they require no further processing or use of additional materials. In fact, if every piece of apparel were eventually part of the resale market, global emissions from the fashion industry could be reduced by 73%.
  • Interest in the side gig economy also propels the resale market. The allure of making big bucks as a reseller on Poshmark, Grailed, and other second hand market places draws people in to the industry as active participants. In an era of fast fashion, consumers still recognize the value of staying power. Sellers of second-hand goods have chosen to tap into that value for themselves, thus creating a market dynamic similar to that of ride-hailing services. More sellers encourage more buyers in the marketplace, and vice versa.
  • And finally, never underestimate the allure of “flexing for the ‘Gram” or portraying a lifestyle on social media (Instagram or elsewhere) that is more lavish and luxe than reality. Some young people refuse to even be photographed twice in the same attire. This propensity for poshness certainly adds up. Buying second hand clothes at steep discounts allows them to keep living this (perceived) life of luxury. Others simply see recommerce as their opportunity to sample luxury goods that would otherwise be beyond their usual price points for apparel purchases.

For much of the history of fashion retailing, the industry has taken a linear approach. Materials are sourced. Apparel is designed. It is then sold to consumers. Whatever happens after that has been immaterial to clothing brands. Armed with the digital tools of ecommerce, intrepid direct to consumer (DTC) startups have seized on the market opportunity to bring circularity to the fashion industry. Circularity in business is the concept in which materials are continuously reused, in a way that creates new value and reduces or eliminates the waste going to landfills. Not surprisingly, agile DTC startups are the dominant players in the recommerce market. Automation of inventory SKU and detail processing, apps that personalize the apparel assortment by shopper preference, and algorithms sorting through all the data to better inform retailers are key technologies of the recommerce revolution. The businesses involved have found ways to simplify the messy process of physically sorting through stacks of used clothes (there’s that smell again) and moved the experience online. Now customers get email alerts or push notifications when their favorite brands are in stock or a cashmere sweater in their size arrives.

These brands are successfully using technology to enhance the experience of thrifting and capitalize off the excitement of buzz worthy new releases. Grailed is a second-hand marketplace for mens designer apparel and footwear. Buyers can find gently used luxury threads without breaking the bank or breaking a sweat rifling through mounds of clothes. ThredUp caters to women and has a more mass market approach to its assortment. Thus, the service bills itself as the largest online consignment & thrift store. But Poshmark remains the market pleader in brand recognition for online second-hand marketplaces. While each brand has a different approach the market, they all succeed by bringing convenience to the experience for customers by combining the logistics approach of ecommerce with the thrill of thrifting. The upstarts have a sizable lead in this market, but why should digitally native brands have all the fun?

The traditional retailers are primed to steal away recommerce marketshare from their more agile and focused competitors in. They may be laggards, but with the right digital toolset and partnerships, legacy brands can leapfrog/catch up to their burgeoning competitors. The second-hand markets only exist in the first place because of the value of the brands that are being sold. Instead of allowing others to benefit from that tertiary value, branded manufacturers are beginning to enter the resale market themselves.

Yerdle has emerged as a key partner for brands entering the resale market. The business partners with retail brands to create recommerce sites. The brands typically offer customers discounts or vouchers for returning their unused or defective items. Yerdle handles the collection, sales channel, and data analytics of the white label operation. This creates an additional revenue channel for brands and offers them advanced analytics about the common ways in which their garments break down. The Renewal Workshop builds upon this approach by actually repairing damaged goods. This allows brands to reclaim even more items that would otherwise go to the landfill. Finished apparel leaves the Renewal Workshop with co branded tags to let consumers know the product has been refurbished. The products are offered on recommerce sites for discounted prices. Brands can use this channel to reach new customers that shop at a different price point from their traditional market. Thus far, Yerdle and The Renewal Workshop have worked with outdoors brands like REI, Patagonia, and The Northface. But designer fashion brands Mara Hoffman and Stella McCartney have also taken advantage of the resale market with strategic partnerships.

As the resale market continues to mature, established fashion brands have a growing variety of options for ways to enter he market themselves. Brands can work with resellers (Poshmark, TheRealReal, eBay) to create customized presences on their reselling platforms. Or partner with white label services (Yerdle, The Renewal Workshop) to set up their own recommerce websites with more brand control. The resale operation can also be brought in house. This allows brands to completely to control the entire experience and extract as much data as possible from the process.

Recommerce combines environmentally friendly business practices with enhanced analytics about the full life cycle of apparel products. With sales of $24 billion in 2018, the secondhand market is well established. And with projected growth to over $50 billion in the next five years, all retailers have the financial incentive to participate in the market. Even the first family of reality TV has jumped into the fray with the launch of their Kardashian Kloset recommerce website. No matter the approach they take to entering the resale market, retailers must have the appropriate infrastructure in place. Offering non-traditional goods via ecommerce calls for agile product labeling systems and fulfillment processes. Looking to the future of this space, the companies that master visual search will have even greater competitive advantage in their ability to effectively capture value for secondhand apparel. As model names or styles change over the years, having visual search that can match vintage gear with current trends provides customers with an integral link in their shopping experiences for secondhand clothes that fit the modern wardrobe. And, thankfully, this can all be done without encountering the thrift store smell. The future of fashion beckons.

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