American boutique chain Francesca’s took a long time to get into the used clothing business.
The private equity retailer spent about a year looking at different resale models and talked to four potential partners before landing on ThredUp, a secondhand fashion site that also provides business-to-business brand resale services. Forever Francesca launched at the end of January.
“We knew we had to resell, but we wanted to do it in the most targeted and cost-effective way,” says Jan Parrish, Francesca’s chief marketing officer.
Brand resale is booming, and retailers from Shein and Canada Goose to Mara Hoffman and Balenciaga are adding some sort of second-hand merchandising to their stores or websites. But building a resale business from scratch is expensive and labor intensive. It is not easy to make a profit either. large resale-only platforms like The RealReal and ThredUp are operating in the red.
A parallel industry of white-label resale platforms has sprung up, handling much of the behind-the-scenes work. Some, like Archive, Treet, and Recurate, specialize in creating peer-to-peer services where brand customers buy and sell pre-owned pieces from each other. Others, including ThredUp and Trove, collect used items and create listings for sale.
Many charge a set-up fee and then take a percentage of each sale, although services like Trove that manage end-to-end logistics can be more expensive.
Ultimately, launching a resale service needs to have the same thought and focus that goes into designing a collection, according to Mimi Margalit, a retail strategy consultant and former head of DTC merchandising at Rebecca Minkoff.
“Reselling is merchandising,” Margalit said. “If you don’t choose the right experience, if you don’t choose the one that your customer finds most meaningful or resonates with the most, then it’s not really going to be the most successful.”
A sea of options
The first retailers to offer secondhand fashion created the business themselves (Urban Outfitters, for example, says it has stocked its stores with vintage clothing for nearly 40 years). When online resale took off in the late 2010s, Yerdle, now known as Trove, began creating used sites for brands like Patagonia, Eileen Fisher and REI.
Today, Trove has a lot of competition, from Recurate and Reflaunt to Archive and the Archivist. In Europe, Faume and Rebelle are two fashionable options. Most of these services demonstrate their ability to create customized platforms based on specific brand needs.
Net-a-Porter offers a personal concierge service through Reflaunt, where customers can ship or schedule home pickup for pre-owned designer pieces they’d like to sell. The luxury e-tailer then lists their items on 20 resale marketplaces, including The RealReal and eBay, offering a Net-a-Porter credit when the items sell. This model makes sense for Net-a-Porter because it understands that its affluent shoppers are more likely to be second-hand sellers than buyers.
Recurate and Archive offer both a partner-healthy model and a managed inventory model, where brands collect pre-owned products and ship them to sellers. The Archive also pairs some of its brands with third-party warehouse partners to collect, adjust, clean, repair (if necessary) and resell the products in the branded marketplace, such as The North Face.
Retailers can also outsource resale to large consumer-facing online resale platforms, including The RealReal and Vestiaire Collective, which accept surplus and returned products.
Managed vs. Peer-to-Peer
When shoe label Sarah Flint was looking to resell, it partnered with Archive to reduce labor and logistics costs.
“We just didn’t feel like we had the ability to handle the inventory,” Flint said.
On the other hand, peer-to-peer doesn’t make sense for every brand, especially premium labels that may want to identify, clean and photograph high-value archival pieces. Oscar de la Renta launched its curated resale channel, Encore, in 2021 to showcase vintage styles collected from boutiques and customers. Pieces are authenticated and repaired in house before they are cataloged by the Archives.
“Francesca ultimately rejected the peer-to-peer model because there was no guarantee that its customers would resell on their own,” Parish said, while ThredUp’s existing customer base and Francesca’s product supply are already a proof of concept. :
Some brands work on multiple resale platforms. Even after the label MMLaFleur launched its partner resale marketplace, MM Second Act, in 2021, it partnered with ThredUp to provide customers with free “clearance kits” to send in their pre-owned clothing, regardless of brand. : .
For many retailers, reselling is as much a marketing game as a primary source of revenue.
“How we use it is customer acquisition and retention,” says Sarah LaFleur, founder and CEO of MMLaFleur. “Right now, about 25 percent of Act Two’s customers are first-time customers. … We’ve actually seen them convert to full-price customers.”
Francesca Parish also counts resale costs as part of a retailer’s marketing budget. Being a cash-out option on ThredUp is a customer acquisition driver, he said, but it costs about half that of paid advertising channels like social media.
For the French brand Ba&sh, the most important feature for a reseller partner was to provide a seamless experience for customers and have a “good interface on the website,” says Desiree Thomas, CEO of Ba&sh North America. After reviewing three possible candidates in the US, Ba&sh ultimately chose the Archive and peer-to-peer model. In Europe, Ba&sh works with Faume, a managed resale marketplace.
“We wanted to make it as easy as possible for the customer,” Thomas said. “From a visual perspective, [Archive] is a user-friendly experience and direct buyer approach.”
There are significant differences in how resale services build their respective platforms. Archive and Treet, for example, create a mirror resale site separate from a brand’s core e-commerce experience, while Recurate allows brands to host their resale marketplace directly within their online stores. This means that when the main site gets a content update, the resale channel does too, so it’s always on-brand and minimizes additional brand maintenance, according to Margalit.
“At the end of the day, reselling is an extension of your brand perception,” he said. You’re introducing your brand through this experience, and you’re putting yourself in the hands of a software company that’s building a service for you.”