Buying and selling secondhand fashion is already a mainstream activity, with research from BoF Insights revealing that over half of consumers in major Western markets like France, Germany, the US and the UK have shopped resale before. And there’s room to grow: BoF Insights projects that in the US alone, the secondhand fashion market could increase from an estimated $27 billion in 2020 to $67 billion by 2025.
However, despite resale’s momentum, profitability has so far been elusive, even for the largest platforms in the space, such as The RealReal, ThredUp and Poshmark. None of the three, which are the only publicly listed resale platforms in the US, were profitable as of the fourth quarter of 2021.
On the latest BoF LIVE, BoF chief correspondent Lauren Sherman, senior retail correspondent Cathaleen Chen and Diana Lee, BoF Insights director of research and analysis, discuss resale’s pursuit of profitability in an increasingly competitive field. The BoF LIVE panellists discussed the wave of new players in the space, while noting the increasing number of brands and retailers that are turning to resale-as-a-service (RaaS) providers to help them launch their own resale channels.
Resale platforms have heretofore focussed on growth rather than profitability, including investing in technology, marketing and improving the consumer experience in order to appeal to both sellers and buyers. However, Vestiaire Collective’s recent acquisition of Tradesy may signal a new era in the development of the resale sector where profitability takes priority. This could see platforms consolidate operations, inventory or consumer bases for economies of scale and to prepare incumbents for intensifying competition.
“The key to growth is to look beyond just acquiring new customers but also encouraging existing customers to sell and buy more,” said Lee.
This BoF Live is made in partnership with PayPal.
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