The fashion resale market has long been described as a disruptor in the retail industry, promising sustainability, affordability, and a life in the moment of luxury goods. .
Take Thredup, the online fashion store that has raised more than $ 430 million since its inception in 2009. Since it has been public in 2021, the company has not yet benefited, reporting a loss in Ebitda (earnings before interest, taxes , depreciation and amortization) of the loss of loss of loss of loss due to loss of loss of bitda loss (administered before interest, taxes, depreciation and amortization) $ 37. 5 million of $ 314 million in cash in cash His recent fiscal year (Thredup says (Thredup says he will report Ebitda’s benefit in the quarter that ends on December 31, 2024, from 3. 2% to 3. 7%, but has not yet registered its quarterly finances with the SEC).
The RealReal, another major player, has raised over $600 million since its founding in 2011. While it posted a rare profit of $5.4 million on $580 million in revenue in its most recent 12-month reporting period, four of its top executives took home a combined $9.15 million in 2023, not an encouraging sign to the financial market.
If you are not sure excited about the industry, not only.
Both were founded at a time when the risk capitalists invested in new high growth companies in the expectation that the scale would result in profitability.
It hasn’t worked out that way. The road to profitability in ecommerce resale appears to be different than first thought. But it’s not impossible.
Although large and inclusive resale models have had difficulties, niche players are demonstrating that the profitability in fashion resale is possible. Paniah such as the resale of files and the LEPRIX are drawing another course, one that prioritizes efficiency, specialization and strategic supply.
Earlier in the day, Archive Real announced that it had received $30 million in capital. The files are not yet public this transaction for the time being, when the market is aimed at profitability, means that the files are almost profitable.
Unlike Thredup or RealReal, Archive provides a mild liquor restaurant service platform for brands, allowing them to use their own used markets. CEO Emily Gittins told me that “brands are unlocking to be more by creating a price for everyone and that’s starting to be tested. “
As she explains, having brands involved in the resale of the products they produced has multiple advantages:
Marks such as Doc Maartens, North Face, New Balance, M. M. Lafleur, Sandro, Hanna Andersson, Fahety, BA & SH and others have already related the file to capitalize on this model.
The prize, some others that develop a good fortune history, have expanded their business in supplying second -hand products, basically in the auction market established through Japan for resale products. The corporate specializes in high -end brands such as Chanel, Hermès and Louis Vuitton and, according to the reports, obtained a benefit despite collecting $ 5. 5 million in general capital (through pitchbook) compared to Thredup and the royal, which raised more than $ 1 billion combined.
The LEPRIX style is a traditional arbitration case, buys in a market position and promoting another. Obstacles to the front (damage the luxury resale ecosystem of Japan and manage money well, give a defensible position and a position for growth.
The demanding situations faced through the mass market resale platforms are reduced to inefficiencies at scale. The same products cannot be stored, where the same products can be stored in bulk, the resale is based on administer, which requires individual authentication, prices and markets. The charge of processing a $ 100 article can be as higher as a $ 1,000 article, which makes higher price ticket categories much more viable.
Companies that in narrow, high-value product segments are seeing results. Several of them told me that they prioritize:
Unlike classic retail, where the source is abundant and the call is the challenge, resale operates the opposite: the customer’s call is high, but securing desirable actions is the restricted factor. Industry experts cite the same restriction: If they can locate more products than customers want, they would sell immediately.
Anyone who needs to succeed in resale will have to face the basic characteristics of the corporate that are in conflict:
On the positive side, consumers need it because the products are cheaper, they accumulate in their cabinets to be eliminated, it is a source of money and is more durable.
On the downside, it’s worth an umbrella on the maximum sold products that can be sold because they’ll have to be proportional to the new products. And there is a competitive market to buy desirable products so that the parts charge cannot be defeated too low.
Market operators will have to be very effective and margins will almost never be excessive, since external points exercise prices and prices.
Despite the difficulties of expanding resale companies in the classic retail mold, the customer’s interest in second -hand fashion is undeniable. The challenge for marketing and investors specialists is to reconsider the style to reflect a branch of second -hand products, but to expand to simplified. , profitable approaches that accommodate market realities.
Companies that recognize these dynamics and create advertising models about efficiency, specialization and strategic associations are in a position to succeed. While the resale continues to evolve, expect to see more innovation in this area, until the check than when it is well done, the secondary market is not only lasting for consumers, but also for companies.