The New Retail: Re-commerce Startups

What’s old is new again: the business model that will rule climate-conscious fashion in the 2020s

Fashion retailing has been upended by the coronavirus pandemic. Clothing was undergoing a seismic shift and the pandemic accelerated it. Consumers are buying fewer garments, and revenues contracted -35 to -39 percent in 2020. The fashion industry is expected to grow only 1 to 4 percent in 2021. Re-commerce — the selling of used or previously owned clothing — has emerged as a bright spot. thredUP, an online consignment and thrift store, projects that the resale market will reach $44B by 2029, totaling 17% of the entire apparel market. Coming international climate regulations will accelerate re-commerce.

Trove, formerly known as Yerdle, offers reuse e-commerce platforms for fashion brands to manage their resale market. The company offers a white label service for brands such as Patagonia, REI, and Eileen Fisher to enable customers to return used goods for store credit. Increasingly consumers value lower prices and reducing wasteful practices of the fashion industry. They are incentivizing brands to incorporate resale in their businesses. This is no easy task and company’s face significant barriers in setting up resale operations. For one, traditional Warehouse Management Systems (WMS) are designed to manage large quantities of identical items, not the single, unique items in re-commerce. Resale platforms must be designed to track individual items and account for general and conditional characteristics. They are built and optimized to receive, evaluate, photograph, and ship one-of-a-kind items. Expertise in cleaning, refurbishing, and repairing products are also required. Another difficulty is how to create a tracking mechanism that lives with the item — from design to consumer, and back again.

There are new players joining the resale space. In January, Nordstrom announced it would launch an online vintage shop with the resale platform Goodfair. Resale platforms also offer fashion companies opportunities to diversify. All products that are built to retain value — for example, kitchen goods and furniture — could become re-commerce candidates. Resale business models are unlocking new value for supply chain circularity and they are here to stay. A younger generation is excited about buying something used versus creating more stuff in the world.

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