This week, a look at the potential for a resale-fueled holiday season.
With widespread supply chain issues threatening their holiday product selections and sales, brands are bulking up their inventories with used versions of their popular styles.
“Every brand [executive] is saying their shelves are going to be empty this holiday season,” said Karin Dillie, vp of partnerships at resale-as-a-service platform Recurate. “So we have a number of new clients that signed on in the last quarter with the intention of creating a robust marketplace in the next couple of months. They want to ensure that, for items that run out, people can turn to secondhand options.”
Recurate, which launched in February of 2020, currently facilitates peer-to-peer resale on the e-commerce sites of 25 brand clients, including Mara Hoffman, Rachel Comey and La Ligne. Thirteen more brands have recently signed contracts with the company and will have resale up and running ahead of the holiday shopping rush.
Dillie said the company is currently working with brands to email-target customers who bought popular items in the last year. “The messaging is, ‘Hey, we hope you love your item. But if you don’t, there’s a strong demand for it.” And we encourage them to sell it, so that others can buy it.”
More brands will be rolling out similar email campaigns “more meaningfully” in Q4, she said. “It’s set to curb some of those supply issues, for sure.”
At the same time, Recurate clients, including travel bag brand Peak Design, are increasingly offering access on product pages to available used versions of styles. That’s instead of restricting used styles to dedicated resale pages. Doing so somewhat mirrors Amazon’s strategy of allowing shoppers to weigh options of the same product according to different factors, like newness and price.
The Amazon Effect: a PeakDesign.com product listing with new and used options
Meanwhile, resale retailers selling direct-to-consumer are betting that brands’ inventory issues will boost their own business.
“A slowed-down supply chain will result in longer waitlists for luxury goods that are already difficult to purchase at the retail level,” said Charles Gorra, founder and CEO of luxury resale accessories company Rebag. “That will drive consumers to look for ready-to-ship options on the secondary market.”
Sarah Davis, founder and president of luxury resale handbag company Fashionphile, echoed that sentiment. “The supply chain issues that are slamming brands are not issues for us. Our inventory isn’t sitting in containers on a dock outside L.A.; it comes straight from [sellers’] closets,” she said. “This has been an unexpected tailwind for [resale], and we’re expecting holiday to be huge for us this year.”
Gorra pointed to Louis Vuitton’s Pochette Accessories, which, according to Rebag’s Clair Report pricing guide, retain up to 143% of their retail price. They’re currently sold out on Louis Vuitton’s website, but available for purchase on rebag.com.
And Davis said that, for the first time in Fashionphile’s history, its “Following” page is the most-visited page on its site. The takeaway is that more shoppers than ever are champing at the bit for specific products to become available.
Such workarounds are clearly necessary.
The inventory issue
“About half of our retail clients have come to us saying they’re worried about how supply chain issues, worker issues and fulfillment issues will affect their fourth quarter,” said Vic Drabicky, founder of digital consultancy January Digital. “They won’t have the usual inventory, so they’re keeping products at full price, knowing they can sell through them. But then, at some point, they’ll be stuck.”
Sarah Engel, CMO and chief people officer at January Digital, added “Analysts are saying that holiday [sales are] going to be up 7-9% year-over-year, and more. But [those predictions] are looking at consumer spending trends, people saying, ‘I’m going to spend this.’ The product won’t be there for 6-8 months. Even if the brands can get products into the country, there are literally no trucks to get them from point A to point B.”
Historically, the holiday season has been a crucial sales period for brands, driving the most sales of the year and pushing annual numbers to projected goals. In an August 2021 Glossy and Modern Retail survey of 45 brand and retail employees, 36% said Black Friday and Cyber Monday are the “most important” sales days for their business, ranking them a 10 out of 10 in importance. And 38% called the holiday shopping season outside of Black Friday and Cyber Monday “most important.”
Meanwhile, a September 2021 Glossy and Modern Retail survey of 54 brand respondents showed that 31% are running holiday promotions this year for just a week or less, with 11% avoiding promotions altogether. Sixty-seven percent of brands plan to run promotions for four weeks or less.
In terms of staffing up for the holiday, 53% of the 34 brands with warehouse and fulfillment employees said they’re at least somewhat concerned with securing enough staff for the holiday season. Sixty-five percent of the 20 with brick-and-mortar stores said they’re at least slightly concerned with staffing them.
Allowing customers to source products from each other while retaining their business would no doubt alleviate the strain on owned channels.
New sentiment around resale
According to Recurate, most of its clients exclusively offer resale shoppers store credit for 100% of the purchase price. Fifteen percent of a brand’s resale shoppers also buy a new item at the time of purchase. The handful of clients offering cash to sellers typically choose to give 70-80% of the purchase price, pocketing the rest. Customers with the option to take brand credit or receive cash choose credit 75% of the time, according to the company.
“Resale as a gift will scale even further this year,” said Gorra.
According to Samantha McCandless, svp of merchandise at The RealReal, the luxury resale company’s requests for gift boxes in 2020 increased 60%, compared to 2019.
The sneaker market helped set the tone. With buzzy styles often sold in limited quantities, holiday gifters of sneakerheads have increasingly turned to resale hubs like StockX and Stadium Goods. And, in 2020, nearly half (47.2%) of Americans planned to buy secondhand gifts during the holiday season, according to a report by ThredUp and GlobalData.
Market trends are set to boost that percentage this year. Influential brands are making used goods cool by keeping them in rotation. That includes Gucci with its custom, refurbished styles available at its newly launched The Vault and Prada with its nylon handbags. As for the latter style, sales of both original and new versions have spiked at Rebag, Gorra said. Meanwhile, brands including Todd Snyder and Banana Republic have recently brought back best-sellers from their archives. And others, like L.L. Bean, have released artfully curated vintage selections.
Overall, according to ThredUp and GlobalData, resale is expected to grow 11-times faster than the primary clothing market in the next five years. The rise of conscious consumerism is also a factor.
Resale’s holiday opportunity
In preparation for holiday 2021 shopping, The RealReal announced on October 4 its expansion to categories beyond fashion, including sports and outdoor gear, collectibles and electronics. It also expanded its Get Paid Now program, allowing sellers to be paid 60-75% of the resale value immediately, rather than wait for the item to sell.
“It’s a great [option] if they want to use their commission for holiday shopping,” she said.
The company’s marketing messaging for holiday will focus on “encouraging members to gift the unexpected while supporting a more circular economy,” McCandless said. She noted that its offerings include both vintage items and pieces sold out in the primary market.
For its part, Rebag will host a “gift suite experience” on its site, meant to help shoppers discover the best handbags and accessories to give this year. And ThredUp will feature a holiday shop made up of holiday outfits, winter outfits and gift ideas, all with a price-point focus, a spokesperson said. It will also be promoting its gift cards, while noting that they require minimal packaging, contributing minimal holiday waste. Fashionphile, meanwhile, will be prompting shoppers to “choose used for your holiday shopping.”
For brands avoiding discounting to get the most out of available holiday inventory, offering items on resale permits them to still use messaging around saving money. Doing so will no doubt provide a competitive edge during this year of economic instability.
As Adam Siegel, co-founder and CEO of Recurate, pointed out, “A vast majority of a brand’s Instagram followers are ‘brand lurkers,’ versus customers. They may be unable to afford a new piece by the brand, but this gives them a way in.”
Like with Rebag’s Clair Report, displayed resale items also make apparent the resale value of items, which could work to clinch primary sales.
That’s the aim for 1-year-old teen apparel brand Woodley+Lowe, which soft-launched a resale platform early this month. “Our customer can now come to our site and buy a $78 dollar sweatshirt, knowing she can resell it, or [she can] just buy something pre-worn, which puts us at a price point comparable to Brandy Melville or Princess Polly,” said co-founder Rachel Thebault. “That’s without sacrificing any of the quality, sustainability or craftsmanship we stand for.”
The potential for brand-owned resale
Where brands have an advantage on outside resale platforms is in customer acquisition costs. While Poshmark, for example, is paying to get in front of customers looking to shop a certain brand in the secondary market, brands are often selling their resale items to their current customers. That’s the case 50% of the time, Dillie said. Brands can also sell their unsold and returned items through their own resale platform — a practice that brands have been relatively quiet about, but have increasingly adopted through resale platform partnerships.
Resale-as-a-service partnerships have been sweeping the industry. Last week, The RealReal announced that it’s powering resale for multi-brand luxury e-tailer MyTheresa. That followed Net-a-Porter linking with Reflaunt in September and Farfetch with ThredUp in June. And individual brands across the board are calling on the increasing number of Recurates and Troves of the world, in order to own their products’ sales throughout the lifespan. Even fast-fashion brands are going there, now that Gen Z’s proven demand for the category on Depop.
“In the next five years, resale will be just as diverse and omnichannel as retail is right now,” Dillie said. “Inevitably, every brand is going to offer resale — otherwise, they’re wasting half of their opportunities to engage customers, giving them away to Poshmark after the initial sale.”
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