The resale boom
Over the last decade, while luxury brands were busy expanding into new and exciting markets, a trend has emerged of consumers reselling their luxury goods. This is in part due to changes in consumer behavior. Many fashion lovers no longer see the value in paying full price for products they know are available through third party consignors and resellers. This newfound zeal for pre-owned luxury is reflected in the rise of curated platforms like The RealReal and Vestiaire Collective, who are growing 40% YoY and have collectively raised more than $500 million. These serious new ventures have destigmatized the buying and selling of pre-owned luxury and converted thriftiness into a sort of virtue.
Aside from the price incentives, there are major environmental benefits to increasing the lifetime of products. According to the Waste and Resources Actions Program (WRAP) in the UK, prolonging the lifetime of products by 3 months can reduce fashion’s carbon footprint by 10% and save 150,000 tons of waste. Pay less while saving the environment – now that is a millennial sales pitch if I ever heard one.
But what do the numbers say? Funny you should ask. This segment has been grossly under studied, which is likely one of the reasons why brands don’t really know how to feel about it. ThredUp estimates the general consignment market will be worth $33 billion by 2021 (about 30% of which corresponds to luxury) and is growing 20 times faster than traditional retail. That is just the tip of the iceberg. When you move beyond consignment and consider the luxury resale market in general you move into the territory of ebay and Amazon. These online behemoths have been trying to enter the fashion vertical for years. Resale is the only market that is currently accessible due to the refusal of luxury brands to sell directly. The estimated size of the luxury resale market is more than $60 billion. According to the Chinese Used Products Association, Chinese consumers spent more than $44 billion on pre-owned luxury last year, which is 2x more than what they spent on new luxury.
Long story short, the resale market is big and promises to get bigger. The economic and environmental upsides have proven themselves to be worthy selling points for fashion consumers. The market does admittedly have a perception issue – many people feel uneasy about buying a stranger’s old clothing. But perhaps that can be grouped into the same category as getting into a stranger’s car or staying at a stranger’s house.
- Waste and Resource Action Program, 2012. http://www.wrap.org.uk/sites/files/wrap/VoC%20FINAL%20online%202012%2007%2011.pdf
- ThredUp, 2016. https://www.thredup.com/resale
- MT Korea, 2017. http://news.mt.co.kr/mtview.php?no=2017032115158843806&outlink=1&ref=https%3A%2F%2Fsearch.naver.com