Resale sites threaten off-price retailers

Dive Brief:

The online re-sale business is one of the fastest-growing e-commerce segments, according to new research from consulting firm Fung Global Retail & Technology emailed to Retail Dive. Clothing, shoes and accessories make up nearly half (49%) of total US resale sales, according to the report.
The total apparel resale market, both brick-and-mortar and digital, is expected to grow at a compounded annual growth rate of 13%, from $18 billion in 2016 to $33 billion in 2021, according to the report. The pace of growth of these “re-commerce” sites in the aggregate is 20 times that of the broader retail market and five times greater than off- price retailers, according to Fung Global.
Some 94% of American women say they rarely buy clothing without some discount attached, according to a ThredUP survey cited by Fung researchers. The resale site said that its average discount is 80% and that the average order saves its customers $177.

Dive Insight:

In addition to deals and an online treasure hunt atmosphere, these sites are aided by simple usability and security features. Sellers that enjoy strong customer reviews over many transactions do especially well, but in general the sites benefit from millennial penetration, desire for value and cost savings on branded merchandise, decluttering and environmental concerns, and interest from higher-income shoppers and male customers, according to the report. For example, about a third of luxury resale site The RealReal’s customers are millennials, the report said.

These sites seem to achieve a couple of things that e-commerce in general has struggled with — having an emotional pull and presenting a "treasure hunt" atmosphere, which is often cited as one reason for the success of off-price retail and dollar stores.

While eBay has long been a go-to place to treasure hunt for used goods, it lags behind many of these resale disruptors when it comes to mobile — and by its own pivot away from second-hand goods and auctions. Some 79% of ThreadUP’s sales are through mobile devices, according to the report. “Smaller mobile app platforms have been much more technologically innovative and are taking market share from pioneering digital secondhand marketplaces such as eBay and Craigslist,” according to the report.

Yet, about 30% of 18–24 year-olds have bought used goods in the past year, and 21% say they’ll shop resale in the future.

It isn't just legacy resale sites (or brick-and-mortar stalwarts like Goodwill) that stand to lose from the technical prowess and social media bent of such mobile-first companies, the report noted — off-price retailers could also begin to see an increasing number of their fans gravitate to them. “Online secondhand resellers could pose a competitive threat to off-price retailers such as TJX [Cos.], as both offer steep discounts on branded merchandise and provide a treasure hunt shopping experience,” according to the report.