Supply Chain Shakeup   //   May 20, 2024

The case for and against brand-owned resale

After nearly 130 years in business, outwear brand Filson has seen some of its vintage products go for thousands of dollars on the resale markets. Some of its cruisers go for twice the retail price. Neil Morgan, the brand’s head of strategy, said the company’s products fetched more than $5 million in gross revenue on third-party resale platforms like eBay and Poshmark.

That’s partly why, in December, it launched Filson Unfailing, a secondhand resale platform on its website. Customers can trade in their used items online or in-store and receive cash or credit. Secondhand buyers can also inherit the lifetime warranty that comes with the products.

“There’s an opportunity for us to create the marketplace for it, it keeps it within our universe,” Morgan said.

By some accounts, the resale market is booming. ThredUp’s widely cited Resale Report says the global secondhand apparel market will grow three times faster than the overall apparel market. However, some projections specific to the United States suggest that growth is slower than expected. EMarketer shows that revenue from online resale will surpass $80 billion this year. That’s $8 billion lower than a prior forecast due to weakened demand. From there, the market is expected to climb to $91 billion in 2027. 

For brands, the question becomes whether it’s worth trying to build out a bespoke online resale platform amid competing priorities. Wilson Griffin, CEO and co-founder of resale software platform Recurate, said that comes down to ensuring brands can make money doing it.

“If you can create a model where brands are actually benefiting from the resale of their own products secondhand, that completely changes the mindset of brands,” he said. “All of a sudden, they’re encouraging people to participate in resale because there’s actually margin to be made on reselling these items, and [it] encourages more investment in quality and durability.”

Here’s a breakdown of the pros and cons facing brands as they get into resale. 

For: Encouraging reuse and circularity

Clothing brand M.M.LaFleur runs a profitable peer-to-peer resale service called Second Act that launched about four years ago. So far, it’s led to the sale of more than 25,000 items across 16,500 orders. CEO and founder Sarah LeFleur told Modern Retail that she envisioned resale being part of the brand’s online operations since its founding.

“Our bodies change sizes and shapes over the years. The idea that what you buy is going to last you forever is a fantasy,” she said.

M.M.LaFleur, which uses Archive to run its resale program, recently expanded the inventory in Second Act by adding in returns or items that need a repair. That can be as much as 1.5% of its total inventory. So far, the company has sent 3,176 items to be repaired since Fall 2023. About 94% were able to be listed, and more than 1,300 have been sold so far. 

“Having the repair and rehab program has really boosted that inventory,” she said. “These are good products and they should find a home no matter what it takes.”

Griffin from Recurate said the more secondhand becomes a standard offering from brands, the less they may have to rely on making new products. This can help companies meet internal or external sustainability benchmarks due to less material use or cutting emissions. ThredUp’s report found that 45% of retail executives who offer resale said it’s helping them satisfy investor damages around ESG goals.

“What drives us is creating the tools for brands to launch their own resale program. [They] benefit from that resale program and, over time, change the way that they operate into business,” he said.

Against: Concerns about “cannibalizing” new sales or profitability

Many brands may not want to get into resale because of concern hat people will buy the used item instead of a new one. Nearly half of the retailers told ThredUp in its survey with GlobalData that resale “may cannibalize sales in the short term” even if it provides long-term growth.

Griffin at Recurate said the company’s data doesn’t support that. “The customers who are buying these items would otherwise have been shopping on Poshmark, or DePop, or eBay,” he said.

Gayle Tait, CEO of resale operator Trove, said she often hears the same concern. “My answer to that is: Your main line of business has already been cannibalized by secondhand sites, off your site,” she said.

Along those same lines, though, many brands still don’t see value in taking resale in-house, like some luxury brands that have sat out the trend. And even some who do decide to start running it don’t make a profit.

For: Can be tailored to the brand or market

If a brand does decide to enter resale, there are multiple models to choose from. Some opt for a peer-to-peer marketplace where the user takes photos, creates the listing and ships the item out directly to a consumer. Others — like Filson — may want a trade-in-style program where the item is sent to the brand for inspection, repairs or certification before it’s listed on the platform. Some brands, like J.Crew and Toms, pay ThredUp to operate a white-labeled version of its service on their site.

Emily Gittins, CEO at Archive, said that brands can start small by picking a model that works for them. Others may choose one product category, like apparel, and leave out accessories. Over time, they scale the program by adding additional resale models, additional product categories, and expanding to new markets.”

Tait from Trove, which works with Filson, said the company aims to understand each brand’s specific goals. That includes creating pricing systems that are accurate and competitive, and can also take into account vintage or archival pieces. “If they have an item that’s really high value, we want to make sure that we treat that one accordingly,” she said.

Against: Another program to operate

One of the biggest reasons brands are hesitant to get into resale Tait hears is because of staff capacity and limited bandwidth. Brands may be juggling a new website, a loyalty program or wholesale expansion — and adding a new category of sales on top of that can be intimating.

“When business is tough brands tend to go back to what they know,” she said.

LaFleur from M.M.LaFleur said an initial attempt to start resale in 2017 didn’t pan out as the brand couldn’t find an efficient plan for their inventory. “We found it logistically so challenging,” she said, which led to them becoming a client of Archive’s.

Getting into the channel often means having to hire a new vendor to operate it, an expense that may be holding some back as they prioritize other business decisions. A GlobalData survey of fashion retailers cited in ThredUp’s resale report found that nearly half of brands that don’t do resale said they would have to hire a third party to do it.

For: Driving acquisition and re-acquisition

A major incentive for brands that enter resale is the chance to tap new customers — especially at a moment when customer acquisition costs are soaring. Morgan from Filson said the lower price points of resale may appeal to younger shoppers, or those who can’t afford a full-priced new item. “The opportunity for our customers is to take some dollars off and update their wardrobe how they want,” he said.

Gittins from Archive said brands that work with the company find that about 50% of resale customers are new to the brand. Still, some customers will always prefer to buy new — but the resale program can benefit them too. “We find people are more likely to invest in a higher priced item when they know they have the option to resell it later,” she said.

At M.M. LaFleur, about 70% of people who sell via Second Act opt to get store credit for their sales. LaFleur said these sellers usually end up spending about three times the value of their store credit.

Against: Incentives and marketing to make it work

As with any new sales channel, success on a resale platform requires marketing and awareness. “Like anything else, if you create a retail channel, and don’t tell anybody about it, and don’t make it highly visible and accessible, it’s not going to work,” Griffin from Recurate said. “What it really comes down to is making sure that brands are consistently talking about marketing and driving awareness of these programs, to the point that a large portion of their customers knows that this is an option.”

Sometimes that looks like emailing prior customers to let them know about the service — like on the anniversary of when they brought the product. Other times, Recurate will set up automatic emails to be sent to people who bought a specific product when it is low in stock or sold out — letting them know there’s demand on the secondhand market.

LaFleur, CEO at M.M.LaFleur, said one of the key growth strategies for Second Act was aggressive marketing and visibility. It grew program revenue over 50% between 2022 and 2023, thanks to a new visible link on the homepage. More recently, M.M.LaFleur has attempted to grow its resale program by allowing people to trade in their items for a flat discount. This benefits those who don’t want to go through the process of listing an item themselves.

“We’re learning as we go,” she said.