Secondhand sales are booming 📈
Neelkamal Biswas, Co-founder, Circlestack
As per ThredUp’s latest recommerce report, the global secondhand market hit ~$177B in 2022 and is projected to nearly double to $350B by 2027. The secondhand market is also expected to outpace the overall retail market anywhere from 4x to 9x depending on which category you look at.
The takeaway is clear: recommerce is here to stay as people increasingly buy secondhand goods.
Recommerce ie. the buying and selling of used items has existed across time, cultures and countries. The explosive growth in the past decade or so has been driven by two key factors :
🌱 First, changing societal attitudes towards buying secondhand. In OfferUp's recommerce report, 3 out of 4 shoppers believe the stigma around secondhand shopping has reduced.
🏬 The second is the rise of online second hand resellers / marketplaces like Poshmark, ThredUp, Vinted, Depop etc. which have revolutionised resale by making it more accessible & improving the customer experience.
These companies can be broadly categorised under 2 business models. (a) P2P marketplaces where people can buy & sell used goods e.g. Vinted, Poshmark. And (b) online consignment stores which offer a more managed selling & buying experience for consumers by ensuring authenticity, quality, consistent pricing etc. e.g. The RealReal, ThredUp.
There are structural challenges though. The P2P model struggles with ensuring authenticity & quality while the high cost of processing hamstring the unit economics of the consignment model. Once upon IPO darlings such as Poshmark and The RealReal are now valued at a fraction of their peak valuation.
A third model and emerging trend is that of branded recommerce where companies operate their own resale business under their brand. This is often through 3rd party resale service providers like Trove. Some leading examples are Patagonia's Worn Wear and lululemon's Like New program in the US.
This model provides a higher degree of trust for consumers buying secondhand. And lets companies capture the growth from secondhand sales while differentiating on sustainability. Brands with resale programs see over 50% of resale customers are new to brand mitigating concerns over cannibalisation.
The bottomline is that we as a society are producing more than we need and more than the environment can afford. As per McKinsey & Company, the fashion industry in 2018 emitted more greenhouse gases than the entire economies of France, UK and Germany.
We need sustainable circular business models that provide value to the consumer, drive profits for the brand and minimize /reduce emissions.
Our curiosity to solve this challenge led Jishnu Surendran & me to start circlestack. We want to make it ridiculously easy & profitable for companies to run their resale business. This post was part 1 of our Branded Recommerce series so stay tuned.
What are your thoughts? Please share insights & observations in the comments!
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