Branded resale is a nuanced balancing act. Here is how.
Neelkamal Biswas, Co-founder, Circlestack
🚀𝑊𝑎𝑛𝑡 𝑡𝑜 𝑎𝑑𝑑 𝑎 𝑓𝑎𝑠𝑡 𝑔𝑟𝑜𝑤𝑖𝑛𝑔 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑐ℎ𝑎𝑛𝑛𝑒𝑙 & 𝑎𝑐𝑞𝑢𝑖𝑟𝑒 𝐺𝑒𝑛 𝑍? ❤️𝐷𝑟𝑖𝑣𝑒 𝑙𝑜𝑦𝑎𝑙𝑡𝑦 & 𝑖𝑛𝑐𝑟𝑒𝑚𝑒𝑛𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 𝑓𝑟𝑜𝑚 𝑒𝑥𝑖𝑠𝑡𝑖𝑛𝑔 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠? 🍀𝐴𝑙𝑙 𝑤ℎ𝑖𝑙𝑒 𝑟𝑒𝑑𝑢𝑐𝑖𝑛𝑔 𝑠𝑐𝑜𝑝𝑒 3 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠?
𝑊𝑒𝑙𝑙, 𝐵𝑟𝑎𝑛𝑑𝑒𝑑 𝑅𝑒𝑠𝑎𝑙𝑒 𝑖𝑠 𝑦𝑜𝑢𝑟 𝑎𝑛𝑠𝑤𝑒𝑟!
Needless to say, this is a grossly simplified soundbite of the branded resale value proposition. The reality, as often, is a lot more nuanced.
So let’s dig in and see how much of this holds water
🙋𝐃𝐨𝐞𝐬 𝐚 𝐛𝐫𝐚𝐧𝐝𝐞𝐝 𝐫𝐞𝐬𝐚𝐥𝐞 𝐩𝐫𝐨𝐠𝐫𝐚𝐦 𝐝𝐫𝐢𝐯𝐞 𝐢𝐧𝐜𝐫𝐞𝐦𝐞𝐧𝐭𝐚𝐥 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 𝐟𝐨𝐫 𝐛𝐫𝐚𝐧𝐝𝐬?
There is no doubt the overall secondhand market is growing manyfold faster than retail. However, the impact of a branded resale program on revenue depends on many factors.
(i) Awareness of the program. Depends on the Brand’s marketing efforts such as visibility on the main website. For instance, only 1 out 3 brands include content about their resale program on their homepage or promote their resale program through social media.
(ii) Supply of used products. Building inventory is hard as the inventory is sitting in people’s closets. It requires frictionless trade-in channels for customers to easily ship back (or physically return in stores) their used goods and get compensated fairly and quickly. It requires reverse logistics & operations capability to authenticate, check condition & refurbish. Which is where the different resale service providers come into play - Trove being the leading example and circlestack being the latest :)
(iii) Demand for used products. Products which are durable, high quality and with timeless designs retain value best. Such products have high latent demand in the resale market vs. low priced fast fashion products on the other end of the spectrum. For example, some of the hottest resale products as per ThredUp’s 2023 resale report are Fjällräven Backpacks, Patagonia Vests, Dr. Martens plc Boots.
(iv) Scale of the program. Whether your resale program is a single retail store accepting & retailing used goods vs. a fully integrated omni-channel experience across a brand’s online and offline footprint e.g. you can trade-in your used lululemon gear in 390 of its 446 US stores.
❓But what about some real growth numbers?
Surprisingly, I was unable to find reliable estimates. Some back of the envelope math based on listings vs. new product sales indicate an impact of ~1% for leading brands with resale programs. A more promising insight was of the New York brand, M.M.Lafluer which boosted annual revenue by 3% from their resale program.
✅ Bottomline: Will starting a resale program for your brand 2x your revenue? Probably not. But with the correct program design and execution, it has the potential to drive significant & meaningful revenue growth over the long term.
And acquiring GenZ, sustainability & all that other stuff? Well stay tuned for more.
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