Before branded resale, third-party platforms like ThredUP, Vestiaire Collective, Poshmark and The RealReal dominated the pre-loved market — and fueled a global market value of $184 billion in 2022.
The explosion of resale created a widespread adoption of peer-to-peer (P2P) selling and buying, extending the life of garments and accessories and addressing a major consumer demand. But it also created a lot of turmoil for brands.
However, in February of last year, fashion news site Fashionista reported on how fashion house Oscar de la Renta looked at the third-party resale market represented their brand and came to find discouraging and conflicting results. The report states that the Oscar de la Renta team felt their representation in the marketplace was very poor as items were often misidentified and left a lingering question mark around the authenticity of their products sold in the marketplace. As a result, the fashion house launched its own resale site.
Fast forward a year later, and we’re now seeing more brands looking to take ownership of their brand in the resale sector by launching their own resale marketplace. But they’re also looking to connect with a new type of consumer that really has adopted this entirely new mindset when shopping for clothes — they’re leasing clothes, not financing. And premium brands realize that this mindset isn’t just a fad; it’s a new emergence that is here to stay and brands can be a part of it. More importantly, branded resale allows brands to be a constant part of the shopping conversation, not just a one-off, a sentiment PYMNTS CEO Karen Webster noted back in the beginning of 2022.
Last week, PYMNTS sat down to discuss these trends with the founder and executive chairman of Trove, Andy Ruben, and how branded recommerce solutions are making this new venture possible for brands.
To date, Trove has partnered with brands and retailers like lululemon, Patagonia, Eileen Fisher, Canada Goose, and, more recently, Carhartt to make it possible for consumers to sell and purchase brands they love directly on the brand’s site.
“Culture and shopping behaviors change, and this is a significant change. Premium brands benefit in this future because they make incredible pieces,” said Ruben. “The ability to stand behind those and stay in touch with every customer and be able to bring in new customers that might not have been able to afford their items before, but can in this way, is a bit of a no-brainer.”
Customers who buy preowned pieces tend to be 10 to 20 years younger, predominately Gen Z and millennials, tend to be 80% mobile and have less disposable income, Ruben said.
“They gravitate toward the brands that are the ones that are the hardest to access. So they naturally gravitate toward quality. They just aren’t often able to access that brand. And this allows brands to provide that access without degrading the quality that the brands are known for,” Ruben said.
And by giving those loyal customers more opportunities to interact with the premium brands they love, the brand ultimately wins because that’s a customer for life. “That’s where branded experiences are night and day different than finding the same item on eBay,” Ruben continued.
In fact, by adding resale, trade-in and more options to shop, brands can further their engagement with customers and build more loyalty with existing customers because of the heightened value add, according to Trove’s Brand Resale Index. It discusses how brand executives thinking about moving into the resale space can better understand how to engage with this new cohort of sustainable shoppers and how they can make the most impact.
A person can come into the store with the items they want to sell, get a gift card in return and use that gift card immediately to buy something new or pre-loved. But that experience is currently the biggest friction point — understanding how branded resale programs work. We all know how to shop, but the trade-in component is relatively new.
“Most people are still surprised when they learn that when you’re done wearing an item or when your child has outgrown their Patagonia jacket, you can just walk it back into a store and resell it. That’s a new behavior,” Ruben said.
The more seamless the user experience, the better the results and that’s where branded resale has a competitive advantage compared to third-party platforms, Ruben said. In the consumers’ eyes, brands do all the heavy lifting. At least that’s what it looks like, but Ruben notes that it’s Trove’s technology that does the work.
Trove operates like a return. For example, when an Arc’teryx bag is brought back into an Arc’teryx store for resale, the technology that Arc’teryx needs in its store allows them to identify the bag, price it, and distribute a gift card with a value that is determined based on product eligibility and condition. A gift card or credit is disbursed to encourage more engagements with that particular brand, in this case, Arc’teryx.
Trove’s technology enables brands to price that very same bag, knowing what that bag will sell for. Trove’s tech looks to brands and retailers’ parent and child SKUs to determine appropriate resale price points.
And on the other end of the system, Arc’teryx can now understand the exact condition of that bag, merchandise it in a way that it will keep the most value and then it ideally goes to someone else who will, in most cases, be a new customer. Ruben reveals that 65% of resale purchases are new customers for the brand, which continues to perpetuate the flywheel.
In terms of how Trove makes money, they have a software fee, but they also make money based on a per unit piece, which gives both parties a shared incentive to grow the program with a respected brand.
Ruben notes that the retail industry went from 30 brands with branded resale to over 130. While the increase is great, a brand’s overall motivation and dedication to the initiative will dictate the program’s success. That said, brands should ask themselves whether they are in it for the potential media coverage or seriously looking to grow the solution as a channel.
Ruben also calls out dedication to branded resale and the quality of the brand’s products: “If you’re not making money on the Arc’teryx jacket being sold a second and third time, you don’t really have a scalable proposition that can grow with the customer shift.”
Luxury was built on the idea that it’s not easily accessible. So, can launching a branded resale solution do more harm to its brand positioning?
“Tesla is happy to sell me a new model three. Or a used model s. They don’t care about that. They only care that I want to be in a Tesla,” Ruben said.
With that perspective, brands who opt into resale, like Canada Goose, see the lifelong connection as a bigger advantage and ultimately allows them to keep their brand premium.
“When you opt into Canada Goose, you’re part of Canada Goose. You’re part of the brand forever and that brand means something. There’s a reason that you wanted to associate with them in the first place,” Ruben said.
To further this sentiment, REI is a great case study. REI tells a story about why they started the COOP in the first place: to create access to quality gear at reasonable prices.
“When they think about this program, it’s a membership program. So, if you’re an REI member, you get to not only find your gear new like everybody else, but as an REI member, you get to hand back the size three bike your daughter is done using,” Ruben said. “You get to walk into a COOP, bring your bike, the bike gets sold to someone else, and you get to buy the next size bike for your daughter.”
Branded resale aims to change the consumer’s mindset before purchasing an item. Instead of buying something new, consumers should look at the shopping experience as if buying a car and ask, “Should I lease this coat? Or should I finance it?”
Simply put, “Let REI be REI,” said Ruben. Ruben has no plans to create a marketplace for brands as it’s a more-or-less complete contradiction to the Trove mission. While Trove aims to help brands extend the life of their garments, they also aim to help brands create long-lasting relationships with their customers.
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