Digital Resale Platforms Gain Traction as All Consumers Hunt for Better, Cheaper Stuff

As consumers’ budgetary pressures prompt them to seek lower-priced options, many digital resale platforms are seeing growth, but eCommerce has a long way to go when it comes to driving penetration in secondhand retail.

Discussing the opportunity that the category presents, Depop owner Etsy shared on its most recent earnings call that as the resale marketplace’s performance has improved, there is room for growth going forward.

“The U.S. is a large opportunity for Depop, with the resale market forecasted to be over $40 billion by 2027, growing nine times faster than the broader retail clothing sector,” Etsy CEO Josh Silverman said.

Digital consignment and thrift store ThredUp noted in its fourth-quarter and full-year 2023 earnings results reported Monday (March 4) that in the quarter, it saw a 14% year-over-year increase in revenue and a 17% increase in the number of orders.

Plus, eBay shared in its latest earnings report that amid a 2% year-over-year revenue rise in the fourth quarter, it is seeing its luxury offerings perform well as consumers seek lower-cost ways to buy the items they want.

“One of the unique values of eBay is that we offer great values on the marketplace,” CEO Jamie Iannone said. “So, I think the reason that our refurbished business, for example, is so strong, our luxury business is so strong, is that even in challenging times, people are looking for a value on the marketplace.”

Granted, not all digital resale marketplaces are seeing this kind of growth. As competition in the space makes it harder to secure consumers’ loyalty, and as ongoing cost challenges force businesses to rethink their investments, some are making changes.

The RealReal shared on a call with analysts Thursday (Feb. 29) discussing its fourth-quarter and full-year 2023 earnings results that in the quarter, it saw total revenue fall by 10% year over year amid ongoing changes to the business, minimizing its owned inventory and focusing on consignment.

Plus, in the fall, Poshmark announced that it was shutting down much of its international business to pay greater attention to America’s reCommerce market.

Still, overall, demand for secondhand apparel is strong. PYMNTS Intelligence’s “Consumer Inflation Sentiment Report: Consumers Shop Secondhand Stores as Often as Other Retail,” which drew from a survey of more than 2,300 U.S. consumers in December, found that 43% of consumers bought a secondhand product in 2023. Clothing and accessories were the most common such purchase, with more than half of secondhand customers having made purchases in this category.

Yet resale marketplaces have a long way to go when it comes to capturing this demand. The report revealed that only 15% of those who purchased products secondhand during the year used resale marketplaces, and only 10% cited these as their most used channel. In contrast, 19% purchased from local marketplaces, stores or community events, and 12% listed this as their most used channel. Sixteen percent did so from social media platforms, with 11% listing this as the most-used option.

The growth in resale will likely only continue as consumers’ financial concerns remain. The PYMNTS Intelligence study “New Reality Check: The Paycheck-to-Paycheck Report: The Pessimism About Pay Rises Offsets the Effect of Falling Inflation,” which was based on a survey of more than 4,300 U.S. consumers, found that 83% were at least somewhat concerned about current and near-future economic conditions.

While stories of relative success such as Depop, ThredUp and eBay underscore the potential within the sector, challenges persist, as evidenced by the struggles of platforms such as The RealReal and Poshmark. As the industry continues to adapt to changing consumer preferences and competitive pressures, there remains an opportunity for growth.

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