Retail report: The resale market’s current playing field
According to a recent report by ThredUp, the mass and designer market resale site, the global second-hand market is expected to reach $350 billion by 2027, with the U.S. capturing $70 billion of that sum in 2027. The study also finds that online resale is expected to grow 21% annually, reaching $38 billion by 2027, making it the fastest-growing resale segment. Circularity, thus, is a hot topic among the designer and luxury resale market.
In the U.S., The RealReal set the golden standard for online consignment sales when it launched in 2011. Today, the landscape has drastically changed just as the resale platform faces scrutiny, ranging from authentication inaccuracies, lawsuits from stakeholders and brands because of said merchandise, and seller dissatisfaction with reduced income earned.
Thanks to native app-selling platforms, similar websites, and even private and public selling online and IRL, the market veered even more digitally. With the current abundance of options that offer sellers and buyers to off-load and obtain high-end circular designer goods, FashionNetwork.com looks at the competition in the resale fashion market.
One of the most significant changes to this market is a shift from individual sellers to brands regaining control of their merchandise in its secondary life cycle, thus providing a seamless experience to customers. In 2019 Reflaunt, a B2B site, was launched to address this, according to CCO and co-founder Felix Winckler, providing tools, infrastructure, and operational support to embrace circular economy practices, integrating the platform within brands and retailers’ websites. This also keeps customers on their website longer.
“At that time, fashion brands and first-hand retailers were largely excluded from the second-hand market. This resulted in customers purchasing and reselling the same fashion pieces, yet going through two disconnected experiences throughout the process,” said co-founder and CEO Stephanie Crespin. She gained second-hand luxury marketplace knowledge by founding StyleTribute.com, a pre-owned luxury fashion marketplace in Southeast Asia.
Reflaunt currently represents 20-plus prominent brand and retail names such as Balenciaga, Net-a-Porter, Mr. Porter, Harvey Nichols, Saks, Altuzarra, and Winckler and says it’s becoming “a powerful tool for enhancing customer loyalty and retention as a tech service provider that powers circular solutions.” Winckler said Reflaunt demonstrates a 3.5 annual consumer spending increase for its partners.
Those solutions can be tailored to customers’ needs via different resell models through buyback, consignment, or take-back options. Reflaunt is poised to address brands at a global level with its five international warehouse locations. Beyond tech tools and infrastructure, Reflaunt takes charge of the operations, including collections, sorting, digitalization, pricing, curation, and shipping of items allowing brands to focus on their core business while Reflaunt handles the logistics,” Winckler added.
For clients who don’t wish to sell their second-hand goods on their own site, Reflaunt leverages its integration with a network of over 30 marketplaces such as The RealReal, Vestiaire Collective, Poshmark, StyleTribute, and more to maximize sell-through.
Reflaunt takes a commission on sales and a license fee charged to the retailer and is poised for profitability in late 2024. Commissions work similarly to other marketplaces with varying rates of return. One feature is that customers returning goods can be paid in store credits, providing extra value earned.
Fashionphile’s offerings are confined to bags, shoes, jewelry, and other accessories. It also differs from commission models in that sellers are paid upfront for their merchandise versus waiting until it's sold.
According to Fashionphile’s VP of procurement and authentication, Lara Osborn, prices are determined by market demand and rarely the retail price, a system that The RealReal also uses. Fashionphile’s buyout payment reviews demand, scarcity, and overall viability to sell rapidly.
“To provide an example, a pair of well-loved Christian Louboutin heels in size 34 will not garner the same buyout percentage as newer 2023 Chanel Espadrille in any size with a similar retail price,” said Larson, adding that sellers’ acceptance rates fluctuate according to the method. “Sellers using our app or website take our offers 40% to 50% of the time, whereas sellers who take advantage of selling to us in person convert at rates as high as 80%.”
Osborn says fakes are increasing at an “eye-opening” rate. Among Fashionphile’s arsenal to evaluate the authenticity of goods are off-the-shelf tools such as microscopes, ultraviolet lights, x-ray machines, RFID scanners, and proprietary software.
“Ultimately, our arsenal of human intelligence gives us the cutting edge. Collections released every couple of months in fashion make it impossible to have a 100% automated authentication process,” she added.
Fashionphile invests heavily in training the human eye. Regardless of previous experience or fashion background, authenticators participate in Fashionphile University, which immerses trainees on a path of verifying everything from Louis Vuitton key pouches to Hermes Birkins, requires between 3,000 to 6,000 hours to become a Senior or Master Authentication Specialist level, respectively. The specialists are trained to detect poor construction, chemical odors indicative of cheap dyes and subpar engravings.
“Their extreme attention to detail and stellar research abilities are the two most qualifying skills that an authenticator can have,” Osborn notes.
In terms of offerings, Vestiaire Collective, which was founded in 2009, rivals The RealReal most directly. The approach, however, is vastly different. A significant distinction is that sellers can set their own prices and ship directly to the buyer.
“Our platform also allows the seller to keep items in their closet while it’s listed and make more from each sale than other luxury resale outlets,” said U.S. CEO, Samina Virk via email.
If a buyer wants a product verified, they can ask Vestiaire’s 140 experts—90 physical and digital authenticators and 50 quality control experts—to review it before delivery.
“Authenticators complete 750-plus hours of training, including two preliminary months of preparation upon joining Vestiaire, plus over 180 yearly hours of continuous training to maintain fashion knowledge and monitor the latest trends,” she added.
Vestiaire’s MO focuses on community trust and sustainability; the former was confirmed in a 2022 study that 92% of its users perceive Vestiaire Collective to be trustworthy, and 91% consider their authentication process reliable. The latter has been a core pillar since its founding, which helped them achieve B Corp status in 2021. A recent fast-fashion ban is an example of Vestiaire Collective's commitment to being eco-conscious. Another draw is the thrill of the hunt for fashion lovers, according to a Boston Consulting Group 2022 survey, who discover highly curated goods that reflect current fashion trends.
According to Virk, Vestiaire is also highly committed to technology improvements and has recently committed most of its investments here. A recent partnership with Chloé and digital ID company EON uses blockchain technology, allowing for an instant resale feature. The program involves Vestiaire Collective buying back iconic styles in good shape that can be exchanged for a Chloé site credit or UNICEF donation.
Vestiaire’s app has improved engagement and personalization, including gaming aspects and a sustainability leaf filter to let buyers shop within local markets. The brand expanded to the U.S. in 2014 and recently strengthened its position by acquiring Tradesy.
TheRealReal makes selling extremely easy with its in-home concierge service. However, long-term sellers have recently complained about decreased earnings. For instance, contemporary-priced brand items that retail from $300 to $600 new may garner as little as $4 to $12.
According to Noelle Sciacca, senior fashion lead at The RealReal, prices are set using advanced algorithms based on internal data from selling almost 33 million items and external trends. Machine learning and data science are powered by product classifications that factor in brand demand, condition, style, and age.
Consignors who achieve the highest selling level can earn back 75% of the selling price, though 50% is more common. The human touch is still there, says Sicacca. “Our pricing also includes human oversight to take external factors into consideration, such as a popular creative director departure (when Phoebe Philo left Celine [in 2018], we saw an immediate 30% spike in demand for her pieces) or a perennially popular style like Louis Vuitton’s Neverfull selling out on the primary market,” she said.
Regarding the fair or unfair association with selling fake merchandise, The RealReal focuses on the 200K counterfeits they’ve kept off the market since 2011. Sicacca describes a “rigorous authentication process” in one of four centers in the country, where their team of expert authenticators must take at least 40 hours of training, and continued education is offered to experts and authenticators to enrich expertise.
A unique aspect of The RealReal is the collaborations that create new, upcycled goods. The most recent was with jeweler Presley Oldham (nephew of 90s designer Todd Oldham), who created new pieces made from damaged jewelry and loose stones collected by the site. Other upcycled collaborations include a Catbird jewelry collection and ready-to-wear pieces from designers such as Stella McCartney, Jacquemus, Collina Strada, Gypsy Sport, and Jonathan Cohen. Sicacca says it’s an opportunity The RealReal will explore.
“Upcycling is another way to extend the life cycle of luxury items. It’s a creative solution to keep damaged items in circulation and out of landfill,” she said.
Apps have led the charge, especially among younger resale sellers and buyers, with sites like Depop, Poshmark, and Grailed, which is currently promoting the app heavily in Out of Home advertising in New York City.
Poshmark tends to have higher quality merchandise, while Grailed’s selection goes across the board to include high-end luxury watches.
Social networks, digital and IRL
Social apps such as Instagram have also inspired luxury resale. To wit, veteran fashion editor Sasha Charnin Morrison frequently appears on luxury livestream @CovetbyChristos to sell her collection of 1980s and 1990s Chanel jewelry she inherited from her mother. (However, Charnin Morrison quickly points out that she also sells via other platforms and outlets such as Poshmark, TheRealReal, and Housing Works, depending on the motivation and item).
Perhaps the most curious of luxury resale is the birth of the fashion personalities sale. This past Mother’s Day, the second installment of #SaleoftheCentury was organized by former Vogue staffer, writer, and fashion consultant Liana Satenstein. Along with fashion industry icons like Lynn Yaeger, Mickey Boardman, and Sally Singer, Satenstein wrangled client Chloe Sevigny to empty their closets.
"People want to buy other people's clothes; it's better than going into a store and buying new stuff," Satenstein suggested, adding, "This is a nice way to do it, and with Chloe, the demand was off the hook.”
She relayed a story of Sevigny telling a buyer some garment lore involving flirting with her now husband. "The pieces have a context or story that isn't always translated through the platform," she said. The flirting story is a case in point. "It was a cute story. You can't get that online.”
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