Rediscovered truth: Stores could potentially be crucial in second-hand commerce
In the ever-evolving world of retail, resale is making a significant impact, upending the traditional model with its one-at-a-time, solitary, and unpredictable nature. This shift towards secondhand goods is not a fleeting trend, but a movement driven by consumer demand for value, perceived sustainability benefits, and the joy of discovery.
Henry Ford's ideas about high productivity and efficiency throughout the supply chain have left an indelible mark on most business sectors, including retail. This influence is evident in the resale industry, where companies are striving to streamline operations and reduce waste.
One of the key players in this space is ThredUp, a platform that has partnered with numerous prominent brands such as H&M, J. Crew, Francesca's, Kate Spade, American Eagle, and Target. Despite strong revenue growth, ThredUp, like many resale platforms, has faced challenges achieving consistent profitability, often due to high operational costs and investments in scaling.
Trove and Recurate, being smaller or newer players, have focused more on market expansion and technology development. Recurate works with brands like Michael Kors, 7 For All Mankind, Clare V., Juicy Couture, Apparis, Peak Design, and Moosejaw, while Trove's resale operating platform includes Canada Goose, Carhartt, On, Lululemon, Patagonia, REI, Levi's, Arc'teryx, and Allbirds.
The benefits for retailers extend beyond financial gains. Driving traffic to physical stores and attracting shoppers new to the brand are significant advantages. Localised resale also works environmentally and financially, according to Kuhlman.
The apparel segment dominates resale, with outdoor brands in particular leaning into renting or selling used gear. J. Crew, for instance, partners with ThredUp for online sales and has a team that handpicks and curates items for its J. Crew Vintage program.
ReCircled, another player in the resale market, has pivoted to focus on more lucrative and sustainable ways of reusing preowned clothing. They repurpose it into textiles for apparel manufacturers or composites used in building materials or home goods.
Despite healthy and growing demand for used goods, e-commerce players in the space have struggled to achieve profitability. However, Brett Heffes asserts that e-commerce in resale is profitable at certain price points.
The pandemic exposed retailers' vulnerabilities in managing secondhand retail, but it also highlighted the potential for resale to thrive. ThredUp, for example, is aiming for profitability this year on an adjusted EBITDA basis.
In conclusion, the resale market presents both challenges and opportunities for retailers. While achieving profitability can be elusive, the potential benefits, both financial and environmental, make it a compelling area for investment and innovation. As always, for the most accurate and up-to-date financial performance of these companies, it's recommended to consult their latest published financial statements, earnings reports, or credible business news sources.
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