A growing number of fashion brands are beginning to recognize the importance of resale as a force in the global market. Many of those brands are working directly with existing resale platforms like The RealReal and ThredUp rather than building out an in-house retail program, citing the cost and complexity of building one from scratch. Most recently, Levi’s launched a resale program with help from resale technology company Trove, which also powers the resale programs at REI and Patagonia, among others.
So how difficult is it to build an in-house resale program? Opinions differ, based on who you’re talking to. Allison Sommer, senior director of strategic initiatives at The RealReal, said she doesn’t feel worried that brands will take it in-house. Instead, she thinks the complexity will mean a lot more interest among brands in working with The RealReal — like Gucci, which became a partner earlier this month.
“Can brands do it themselves? Sure, they can try, but we’ve built a whole proprietary platform around this concept, and a lot of brands are not equipped to handle it,” Sommer said. “The brands are realizing that resale is good for everyone.”
Andy Ruben, CEO of Trove, said that even large brands with a lot of resources at hand balk at the cost of setting up an entire resale program from scratch. Ruben estimated that it would cost $50 million to get a program off the ground without a partner. He declined to say how much Trove charges for its resale tech, but he said resale margins are typically higher than regular retail and using Trove usually pays for itself within a few months.
On top of that, he said using a partner saves brands time: “Brands have so much else to deal with and think about,” he said. “Without even mentioning Covid, they’re figuring out their Amazon strategy, they’re dealing with supply and demand factors, counterfeits. So many things taking up time and attention for brands. Working with someone like us or even a ThredUp or a RealReal pays for itself. It’s incremental revenue.”
But for some brands, the lift is not nearly as prohibitive as some resale platforms make it sound. Ulrik Garde Due, CEO of Mark Cross, said that his brand’s resale program, which celebrated its one-year anniversary this week, has been successful and was relatively simple to set up.
The program, called the Vintage Shop, lets consumers send in their old Mark Cross products (limited to products released before 1990), either by mailing them in or bringing them into a Mark Cross store. Mark Cross buys them, authenticates them, does repairs if need be, takes photos and lists them on its online store. The Vintage section has prominent placement on the brand’s online store, displayed next to the men’s and women’s section. Mark Cross also promotes it through email blasts and on Instagram.
Garde Due said the operating costs are higher, given that each product needs to be processed individually, but that those costs were offset by the fact that much of it is done using already existing resources: All the authentication is done by a manager at the company who has a deep knowledge of the archives, and the Vintage section of the store is powered by the same backend system that handles the rest of the brand’s e-commerce sales. Garde Due said the biggest lift is not in logistics or processing, but in content creation.
“You have to take product shots on every product that comes through, so that’s where the majority of the costs are for us” Garde Due said. Taking product shots can cost at least several hundred dollars for high-quality photography and the processing of the photos.
And the big trade-off is scale.
Garde Due declined to give specific sales data, but said the Vintage store’s sales have been growing by triple digits every month since it launched. The brand is intentionally keeping the scale small — a few dozen new products per month — in order to keep costs in check. Notably, he said that 20% of customers who buy something from the Vintage shop go on to buy new products, as well. For that reason alone, he said the resale shop is worth it.
Resale’s biggest resource drain is that each product is a unique SKU. Most brands are built to sell products under a single SKU, all in the same condition and requiring only a single product code, a single set of photos and a few size charts, whether they’re selling dozens, hundreds of thousands of products. For resale, as the number of products rises, so too does the number of unique SKUs, unique photos and unique condition assessments. Costs scale up exponentially, as well.
“We’ve been talking with a major athletic brand who has been working on an in-house resale program internally,” Ruben said. “When you’re doing resale for ten or even 100 items a month, you can do it out of a conference room. When you’re doing 100,000 products a month, that’s when you run into problems.”