Charity shops, jumble sales, antique markets, estate auctions – the practice of buying and selling pre-owned goods has been around for a long time. But for the 21st century shopper, rapid digitalisation has transformed the way we interact with the secondhand market, elevating it to something altogether more exciting.
From Facebook’s new classifieds marketplace to third party selling apps, the opportunities to buy and sell secondhand items are more varied than ever.As a result, a rich arena for investment and growth has been created – particularly for the technology that supports the industry.
“Funding is flowing into such online platform models,” says Fabiano Vallesi, who leads on next generation research and investment solutions at wealth management firm Julius Baer.
“There are attractive growth opportunities opening up in niche segments – online classifieds such as real estate, cars, general merchandise or jobs – which these companies can cover, as they are facilitating the matching of buyers and sellers in this specific segment. So that is the good thing; long term growth prospects for the industry is favourable.”
One sub-section of the resale market that has seen tremendous development in the last few years is clothing and accessories. Preloved fashion platform Vinted, which launched in Lithuania in 2008 and now operates across Europe, has 11m members and recently raised $27m (£21.8m) in investment.
In the US, one in every 50 women sells secondhand designer clothing items via luxury fashion marketplace Poshmark, with $3m of inventory uploaded every day via mobile phones.
Community retail platform Vestiaire Collective, which launched in 2009, is seeing 100,000 new members sign up each month. The brand currently employs 180 people across offices in Paris, New York, London, Berlin – with more planned in Milan and Madrid – including stylists who physically check 100% of the products that pass through the site to ensure strict quality control standards are met.
Founder and CEO, Sebastien Fabre, believes it is the opportunity to sell, as well as the chance to find discounted fashion items, that attracts people.
“The fashion industry is built on inspiration and creativity,” he says. “Both act as an emotional lift, delivering new seasons in boutiques at an incredible pace.
“The result of such an efficient engine is that last season products lie dormant in people’s wardrobes. I believe that people have understood the value of their wardrobe and that they understand that resale is part of a cycle where the money received from their products sold on resale platforms enables them to buy new season items in boutiques.”
In the UK, almost a third of clothing in people’s wardrobes – worth around £30bn – hasn’t been worn in over a year, according to a recent report by the Waste and Resources Action Programme (WRAP). This represents huge earning potential for individuals who can now easily access customers through resale platforms. In the US, Poshmark’s top sellers pull in over $500,000 in sales, with some members making a full-time living this way.
The resale industry also has an attractive sustainability angle. According to WRAP, in excess of 350,000 tonnes of clothes end up in landfills each year in the UK alone, so the opportunity to reduce waste by reselling is a big plus.
But perhaps the most important factor behind the growth of today’s resale market is the development of the technologies that underpin it, from cashless payments and machine learning algorithms to e-logistics solutions such as drone deliveries.
Millennials and Generation Z make up almost 60% of the global population. As digital natives, these consumers have facilitated the growth of the resale economy and will continue to do so.
“The digital natives will drive further adoption of digital commerce as these demographic cohorts exhibit strong adoption rates for new technologies and internet-enabled offerings,” says Vallesi. “Their increasing influence within the global consumer base will spur e-commerce adoption, penetration and growth as their incomes, wealth, and discretionary spending rise.”
But Vallesi points out that while barriers to entry within digital commerce are low, the potential for competition is high.
“To earn a competitive advantage these businesses have to build up a large network and heavily depend on the number of users accessing their sites. Online companies must continue to spend and innovate, in order to head off new entrants that offer innovative features.”
It is this combined focus, not only on the technology but on the community it builds, that will help brands achieve significant results.
Poshmark was launched as an iPhone app, and 90% of the platform’s orders are placed via mobile phones. But the digital marketplace also features all the elements of a social network.Founder and CEO Manish Chandra believes this is “absolutely essential to scale fashion discovery for today’s connected consumer”, as well as negating the old idea of secondhand being somehow second class.
“The shopping and selling experience on Poshmark is centred entirely around our community,” he says. “As a result, shoppers can interact with the people they are buying from on a more personal level. They can leave comments, ask questions, and see the style of the person they are shopping from, as opposed to simply going to a Goodwill and having no backstory on where an item of clothing came from.”
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