3 Reasons Brands Should Own Their Resale Channels
There are some brands that pave the way for innovation in e-commerce and inspire change through the industry as a whole. For years, Nike has been a market leader for rethinking direct-to-consumer (D-to-C) approaches — first by ditching Amazon.com and other major retailers, and more recently through its refurbished sneaker resale program. The brand's actions often dictate where retail is headed.
In this case, Nike’s actions open up a new conversation around brands taking ownership of their secondary market and how e-commerce will evolve to solve it. Digital channels are ideally suited to innovate consignment, revenue share, quality assurance and authentication. If successful, owning the secondary market can allow brands to keep tabs on their merchandise and reputation while gaining access to a wealth of consumer data, all the while curtailing their impact on the environment by reducing waste.
1. Retaining Brand Control
Digital consignment shopping among Gen Z and millennial customers is skyrocketing with the popularity of new platforms like Depop and The RealReal. As these marketplaces grow, brands are facing a new phenomenon where they're forced to compete with products they already sold through traditional channels. This is especially counterintuitive for the brands that best maintain their resale value.
In an e-commerce environment where brand reputation and experience are everything, this lack of control can end up hurting a brand in more ways than one. On some platforms, shoppers have no way of verifying a product’s authenticity, meaning they could purchase a counterfeit and not even know it.
Luxury brands inherently have more value at resale, and that has created a big business for counterfeiters and other grey market entrepreneurs. For a manufacturer to truly control their entire brand experience, it can and should look for ways to host a resale engine through its own website. Customer records and emerging technology like NFTs and RFIDs help validate product that was previously purchased through the site. The brand then connects buyers and sellers in a safe environment that helps premium products retain more value.
2. Building Out Data
Every sale that a brand makes is a chance to gather customer data and turn a one-time buyer into a repeat purchaser. This same philosophy applies to consignment buyers and sellers. Without owned channels for selling consignment goods, shoppers are turning to third-party resale platforms to search for that rare pair of limited-edition Nikes, or the Coach handbag from last year’s collection.
It’s safe to assume that these deal-finders are a major segment within a brand’s established fan base. And just because their first brand purchase is a thrifted one doesn't mean that their next purchase won’t be full-priced. A full-priced customer is also more likely to rationalize a premium purchase if there's the potential to apply some of that investment to the next season. With this strategy, a brand can utilize shopper data to improve conversion rates among existing customers and appeal to new aspirational shoppers without needing to rely on discounts or other liquidation strategies that hurt the brand. At the same time, a brand can gain data from interacting with consignment sellers — e.g., renewing a connection with past shoppers and providing unmatched credibility. This win-win partnership backs up the shopper's investment and contributes to higher resale prices, or even aftermarket appreciation in the value of rare or unique items.
3. Embracing Sustainability
The growth of “recommerce” opportunities also reflects a larger trend in the industry: a growing consumer concern for sustainability and distaste for fast-fashion. With these priorities in mind, brands are making a commitment to reduce waste where they can. Some companies have already taken up the charge. The North Face, for example, has not only launched a store for refurbished apparel, but also accepts clothing donations from any brand, passing those items on to a partner charity.
Providing shoppers with a more sustainable option through the resale of pre-owned items creates a huge opportunity to improve relationships with consumers, build perceived value for the brand and products, and grow loyalty through a commitment to sustainability. Owning a consignment platform can show that a brand cares where its products end up after they leave the retail floor. It benefits everyone to see products find a second life with another passionate fan of the brand, rather than end up in a landfill.
With customer loyalty, data, branding and sustainability all major considerations in retail today, the move to brand-owned consignment is a logical next step in the evolution of e-commerce. As Nike and others begin to make the jump, it’s time for more brands to decide how they can make an impact in resale.
Dan Brewster is senior vice president of marketing at Scalefast, a new generation global e-commerce solution.