The Current State of the Resale Market
With its support for a circular economy, the appeal it holds for Gen Z consumers and the ability it has to elevate a product’s status, it’s little wonder the resale market has exploded.
And it’s only going up from here as a plethora of businesses from the boohoo Group to Balenciaga dabble in the second-hand space in order to compete with startups like The RealReal. By 2026, the resale industry is predicted to be worth $218bn.
Using the EDITED Market Intelligence platform, we unpack exclusive findings behind this thriving market.
- Despite the turbulent economic backdrop, overproduction and overconsumption are in overdrive. US fast fashion retailers are churning out 120% more individual styles weekly vs. 2020, underscoring the need for retailers to be investing in quality, as well as upcycling and repurposing existing goods instead of adding to the wasteful cycle of disposable fashion.
- Elevated prices can be accrued due to trending brands, collaborations, limited-edition items or artificial demand driven by bots. Products from luxury designers such as Hermès can be anywhere between 2,554%-5,308% more expensive than on its ecomm site, while popular sportswear labels like New Balance can experience a 71%-140% uplift.
- Meanwhile, customers can find more affordable items compared to shopping on a brand’s home site, appealing to Gen Z’s interest in accessibility and sustainability. The highest price for products by The North Face, Off-White, Diesel and more, come in cheaper across resale platforms.
- Success across resale is indicated by its rapid sell out levels. Most of the products stocked at Vestiaire Collective arrived online within the past three months and only 5% of products have been available for over 12 months. In comparison, between 25%-34% of listed products have been online for more than a year at traditional luxury stockists.
Does Resale Equal Circularity?
It’s been predicted that globally, we are expected to be discarding more than 134 million tonnes of textiles a year by 2030. The pandemic temporarily reduced the sheer volume of newness flooding the market at hyper-speed, yet, despite reports of a glut of inventory while consumers pull back on spending due to the looming cost of goods crisis, the fashion industry is still overproducing.
Fast fashion retailers are significant contributors. Across the US alone, EDITED found weekly new product drops online for men’s and women’s wear averaging over 47,000 individual styles. This doesn’t even take into consideration the breakdown of sizes or stock levels, indicating how astronomical true production levels are. And they continue to rise – this average is up 11% vs. 2021 and 120% vs. 2020.
Mounting pressure for fast fashion businesses to reduce their environmental footprint has resulted in resale and repair initiatives from major players, most recently Zara Pre-Owned and SHEIN Exchange. However, allowing customers to resell used goods won’t cancel out the impact of the enormous amounts of disposable products continuing to drop.
When businesses have so many products to sell, second-hand initiatives hardly make a dent in assortments. At smaller brands, the impact is more visible – 24% and 16% of Coach and Diesel’s products available online are preloved, courtesy of their respective Restored and Second Hand initiatives. Meanwhile, second-hand goods have less of a presence on large multi-brand e-tailers, lost against their significant offerings. Second-hand goods make up 3% of products stocked at FARFETCH and 1% at Selfridges.
Circularity is a fundamental cornerstone of sustainable fashion, yet against continued overproduction levels, resale alone won’t be the silver bullet. For more of a chance to keep products out of landfills, brands across every market sector have a responsibility to cut back on the number of goods manufactured and improve on quality to ensure they can actually be resold and last generations.
The Brands Increasing and Decreasing in Value
The stigma around second-hand fashion being unhygienic or uncool has dissolved with customers, particularly Gen Z who are proud of their thrifted finds. The resale market can also extend the hype for products and brands, increasing value and desirability. This is particularly apparent for trending brands and exclusive or limited-edition products or collaborations.
A known example is Telfar products. According to Rebag, the label has “an average value retention on the secondary market that exceeds all legacy brands, including Hermès,” with products worth nearly twice as much as their original price, particularly for collaborations with UGG, Eastpak and Moose Knuckles. The EDITED pricing suite backs up Rebag’s claim. The product with the highest price on Telfar’s (now sold out) site is its Large Shopping Bag retailing for $257, which depending on color, improved in value between 8%-132% across an aggregation of US resale platforms.
Applying this feature to analyze the most expensive products available on brands’ own sites vs. resale platforms sheds light on the markups and mark downs labels can experience. Hermès products still grow significantly grow in value compared to products available on its home sites. Its exit price points elevate 2,554% across US resale sites and 5,308% in the UK, driven by rare, exotic-skinned Birkin and Kelly bags, which can’t be purchased online. In the UK, the price of Gucci on resale sites can reach five times higher, with Tom Ford-era designs warranting steeper prices.
This phenomenon is not exclusive to luxury designers. Demand for sportswear brands also results in a considerable uptick. Prices for adidas products across resale sites are up between 1,329% and 2,586% compared to the highest price available on its site, driven by collectible items like the Kobe 2 USA Flag sneakers. Nike products can rise between 496% and 845% due to coveted SB Dunks and New Balance between 71%-140%, with Aimé Leon Dore x 550 styles commanding lavish price points.
Telfar at The Real Real & Aimé Leon Dore x 550 at Vinted
Elevated values could also be attributed to bots, which are now embedded within drop culture, targeting hyped releases to instantly buy and later resell for an inflated price. Retailers are taking measures to curb AI purchasing, which could lead to a decline in these exorbitant prices. Telfar implemented Captcha tests back in 2021 to ward off bots. Nike are now charging restocking fees, refusing refunds or suspending accounts of users suspected of being resellers or exceeding the set spending limits. Given the sphere of influence these brands have, other cult labels and sportswear players could be expected to follow suit.
At the other end of the scale, some popular brands don’t experience the same kind of markups. The highest resale price for products by Off-White is between 48%-61% lower than on its own site. Diesel, which is currently experiencing a revival, is 81%-91% cheaper. This could be due to a number of factors, such as the quality of the goods resold and demand for a product. However, this isn’t necessarily negative and could pay off in the long run. In the US, 70% of Gen Z consumers think brands should take more responsibility for fighting climate change, yet price is the defining factor in sustainable purchasing. The resale and second-hand market appeal to this cohort, who may want to buy into a brand’s clout more affordably, potentially securing future spending once they come into full financial power.
The Demand for Resale
While platforms like Depop experienced a post-pandemic slowdown, others are going from strength to strength. Order volumes from sneaker marketplace GOAT more than doubled in the last 12 months. The company also acquired resale platform Grailed to expand its womenswear offering. Poshmark’s revenue reportedly grew 14.45% as of Q4 2022.
The market’s success is also telling by rapid sell through rates, revealed by EDITED analyzing the age of stock it is currently holding compared to traditional ecommerce businesses. Across US sites, 69% of the products available at Vestiaire Collective are under three months old, while only 5% have been listed for over a year. At Mytheresa, 34% of products available have been online for over a year. While at Luisaviaroma, the average age of goods is between three and six months. Resale platforms may offer styles from the archives, but they usually sell through before they have the chance to go stale.
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