The Recommerce Revolution
Although once mostly limited to tiny local consignment and secondhand shops, fashion and apparel recommerce today includes a range of digitally native companies offering resale, rental, upcycling and/or subscription models. Each of these business models can extend the useful life of apparel and increase the average number of times an item is worn, helping cut down on waste and the amount of clothing that ends up in landfills while generating new or additional revenues for retailers and brands.
Resale marketplace thredUP, relying on research from GlobalData, estimated in 2019 that the secondhand apparel market will grow to $51 billion by 2023. The recommerce market already encompasses players in every sector and category. In the luxury segment, major recommerce names include The RealReal, Rebag, Tradesy, and Rent the Runway. American Eagle, Ann Taylor and Urban Outfitters are among the traditional specialty retailers now offering fashion rental to their customers. Even legacy department stores such as Macy’s and J.C. Penney provide items for resale in stores through their respective partnerships with thredUP.
However, retailers offering recommerce options — whether they’re the owner of a small secondhand shop, a luxury rental marketplace, or a traditional department store — need insights on what apparel and accessory items consumers are most willing to buy secondhand or rent, as well as what they’re willing to pay for them. To accurately gauge what shoppers will pay to rent a particular designer’s dresses or buy a pair of previously owned jeans from a luxury brand, retailers need to gather consumer input, apply predictive analytics to the data, and test various pricing strategies.
Younger Shoppers Are Driving Growth in Recommerce …
The rise of recommerce is largely being driven by millennials and Gen Zers, who have become more mindful and knowledgeable about the impacts of fast fashion and their consumption habits overall. Many younger shoppers are eager to support retailers and brands that show a commitment to sustainability, and they see companies that offer clothing resale or rental as being more aligned with their core values. According to thredUP's research, shoppers ages 18–37 are turning to secondhand sales of apparel 2.5 times faster than older shoppers are.
A recent First Insight consumer survey revealed a number of insights into how consumers of different demographic profiles perceive and participate in the recommerce market. First of all, 59 percent of those surveyed said they're noticing more recommerce options across retail, and 56 percent said that they buy secondhand or used goods. Some 47 percent of respondents said they purchased upcycled products, described as items made by reusing discarded objects or materials to create a product of higher quality or perceived value than the original.
Meanwhile, 40 percent of respondents said they use resale/consignment models like The RealReal, thredUP, Poshmark, and Tradesy, while 20 percent said they use subscription models such as Stitch Fix, Le Tote, and Birchbox. Among those who buy secondhand, nearly 28 percent said they buy used products in-store vs. about 15 percent online, indicating room for growth in online resale.
… and They’re Willing to Pay a Premium for Sustainable Products
The survey found that millennials and Gen Zers were the most likely to say they make purchase decisions based on their personal, social and environmental values and principles. Younger survey respondents were also the most likely to say they prefer to buy from sustainable brands and the most willing to pay more for sustainable products, with 68 percent of millennials and 73 percent of Gen Zers surveyed saying they would pay more for such products vs. 55 percent of Gen Xers, 42 percent of baby boomers and 50 percent of silent generation respondents.
Overall, 56 percent of respondents across all generations said they're willing to pay more for sustainable products, and 37 percent are willing to spend an additional 10 percent or more for them. When asked why they choose to buy from sustainable brands and presented with a list of answers, respondents chose quality most often (43 percent), followed by concern for the environment (39 percent), value (36 percent), brand authenticity (23 percent), ethics (17 percent) and craftsmanship (16 percent).
An Excellent Complement to Traditional Retail
Fashion recommerce complements traditional retail. It appeals to younger, digitally native shoppers; allows retailers and brands to engage with customers in new ways; and lets shoppers experiment and take some chances with their wardrobes without having to worry about paying full price for an item they might not wear more than once. It extends the useful life of clothing and accessories, cutting waste and slowing landfill rates.
Recommerce companies of all sizes and types can apply data-driven insights derived from customer input to optimize pricing and product assortment. Furthermore, predictive analytics based on voice-of-customer data can even inform marketing decisions, helping recommerce operators know whether to offer promotions, coupons or loyalty rewards of some kind to customers.
Jim Shea is chief commercial officer for First Insight, the leading customer-centric merchandising platform used by retailers and brands worldwide.
Jim Shea is chief commercial officer for First Insight, the leading customer-centric merchandising platform used by retailers and brands worldwide. Jim’s role spans all market- and customer-facing functions, including strategy, marketing, product management and business development.
Jim has held CMO and general management roles in multiple industries, including medical devices, research laboratory products, telecommunications and enterprise software. Jim has also been a driving force behind the IPOs of two venture/private equity-backed companies. At First Insight, Jim is excited about the opportunity to transform the retail industry through enabling better product decision making through data and analytics.
Jim holds a MBA from Stanford University and a BS in Electrical Engineering from the University of Notre Dame.