On the 50th anniversary of Earth Day on April 22, 2021, thredUP, the world’s largest fashion resale platform partnered with Reebok to invite customers to trade in their second-hand clothes in exchange for 150 Reebok loyalty points. This and other such clean-out programs were part of thredUP’s sustainable initiatives offered during Earth Month. Reportedly, thredUP upcycled its 100 millionth item in 2019, displacing 870K tons of CO2. Not just Reebok, legacy brands Gap, Macy’s, and many others are plugging into thredUP’s Retail-as-a-service (RAAS) infrastructure to offer resale experiences for their customers.
The resale market, also known as ReCommerce, is booming. Resale platforms like thredUP have gone public since 2019, and resale start-ups are being acquired by established resale businesses. The growing interest in resale platforms is leading luxury brands to invest in their own resale channels. U.S.-based luxury store chain Nordstrom, and Swedish multinational conglomerate Ikea are also launching their own ReCommerce shopping units. According to CB Insights, with ReCommerce funding activity already having reached a record ~$6B in 2021, the second-hand apparel economy is projected to reach $64B by 2028.
Until recently, buying used apparel was more popular in the west. But ReCommerce has started picking up in India as well. Kiabza, the largest Indian ReCommerce thrift store for branded preowned fashion is riding on the craze of fashion-conscious millennials and Generation Z to own big brands at reduced prices that also happen to be sustainable alternatives to first-hand fashion that involves plastic microfibres, carbon-emission, and wastage of scarce water resources. Not just fashion, electronics, and jewellery resale will also see considerable growth in the retail landscape in 2022.
Resale or rental is part of the circular economy that involves sharing, leasing, reusing, repairing, renovating, and recycling existing materials and products. The pandemic has played its role in boosting the resale/rental industry for home office furniture, although sales of used garments picked up only after restrictions were lifted. Repair platforms are also becoming popular with brands buying back items needing minor repairs and repurposing them into something else such as used clothes to cushions or artwork. Refurbished electronic goods such as smartphones are also becoming extremely popular among consumers.
Authentication and traceability are crucial factors in ensuring customer trust in preowned products. Digital identity and blockchain technology are increasingly being used to solve this problem. The recommerce platform can scan the unique QR code of a used product that is linked to digital identity and directly authenticate it with the brand. With blockchain, the immutable ledger can record each change of ownership that can then be easily traced and verified.
Statista predicts that the global second-hand apparel market will rise to $77 billion by 2025, from just $11 billion in 2012. Price-consciousness and demand for sustainable brands will drive this growth, and more brands are likely to attract and retain customers by participating in an expanding circular economy. The initial hesitation to buy second-hand garments is countered by the logic that people try on clothes in shopping malls that others have tried on too. Also, don’t we use laundered bed sheets and towels at hotels?
Last but not least is the role that open banking can play in encouraging recommerce and the circular economy by analyzing the payment transaction data of customers. Banks and FIs can use these insights to advise customers on future spends such as refurbishing an old house vs buying a new one. Even customers who are not environmentally conscious can be motivated to take decisions that reduce their carbon emissions.
The way environmental pollution remains unabated, one hopes that very soon, ReCommerce will overtake the production of new goods in wholehearted support of the circular economy as the only way to save the earth.