The surge of secondhand: 4 ways resellers can reach more customers
thredUP’s 2022 report shows secondhand goods market to see rapid expansion
Resale is big business. thredUp, an online secondhand clothing retailer, called it a “global phenomenon” in its 2022 Resale Report, released May 17.
The numbers agree: thredUP, which conducts annual surveys of consumers and retailers with the help of retail analytics firm GlobalData, pegged the worth of the global secondhand apparel market in 2021 at $96 billion. By 2026, they say the market will be worth $218 billion.
Now in its 10th year, the Resale Report tracks steady growth over the past decade — and the pandemic only accelerated the trend. thredUP and GlobalData predict the resale industry will expand three times faster than the overall global apparel market by 2026, with North America’s growth expected to be around eight times faster.
“We are still in the very beginning of this trend, but the acceleration of resale adoption is a positive signal with enormous benefits for the planet,” says James Reinhart, co-founder and CEO of thredUP, in the report.
The latest surveys indicate the U.S. secondhand apparel market (defined as resale and traditional thrift and donation) expanded by 58 per cent in 2021, the highest increase in five years.
The value of the U.S. market alone will more than double by 2026 to $82 billion — that’s a six per cent increase over previously published projections of $77 billion by 2025.
How can a reseller use these findings to inform their business goals? Let’s break it down below.
Note: Most of the data speaks directly to the U.S. secondhand clothing market, and not to the overall secondhand market unless otherwise noted — but it remains excellent context for what’s happening in the overall marketplace even if you sell decor or furniture. We do not have comparable statistics available for Canada.
Brands enter the market
Fashion and decor companies in the “firsthand” fashion world are increasingly seeing the value of resale.
The market, once dominated by independent resellers, dealers and third-party buy-and-sell online marketplaces, is now shared by a rising number of retail brands that want in on what they see as a largely untapped revenue stream.
thredUP reports the number of U.S- based brands that operate their own resale marketplace increased 275 per cent in 2021 over the prior year, from eight to 30.
Luxury and mid-market brands alike are testing out resale concepts, including Oscar de La Renta, Urban Outfitters and Restoration Hardware. (thredUP, which now offers a resale-as-a-service platform to brands in addition to maintaining its own closet-resale business, is tracking this in more detail via the Recommerce 100 index, a benchmarking tool released Apr. 21 that will annually monitor resale adoption among brands.)
In a survey of 50 U.S. fashion executives, potential revenue came third after sustainability and customer acquisition as the primary reason for considering resale, according to the 2022 Resale Report.
Three out of four retail execs say they either already offer or are open to offering secondhand items to their customers. And of those who have already instituted a resale platform, 88 per cent said it is indeed helping to drive new revenue.
The upward trajectory of resale is in stark contrast to what is happening to traditional retail.
The report estimates that over the next decade, products from department stores, value chains and mid-priced specialty stores will make up less of a consumer’s closet — a combined 39 per cent of “closet share” in 2021, compared to 58 per cent in 2011 and a projected 29 per cent in 2031.
Some of that closet share will yield to secondhand, which will account for 18 per cent of the total retail market by 2031 (in 2021, it was nine per cent, and in 2011, it was four per cent).
As a result, independent resellers should anticipate more retailers to close in on resale opportunities, and be ready to co-exist in the space with larger brands looking to lure customers back to resell goods via their own “official” channels.
Companies may incentivize their customers to use their resale platforms by offering discounts on purchases or other freebies.
Resellers can prepare for the shift by working on their value proposition now. Word of mouth goes a long way — 54 per cent of thredUP survey respondents who bought their first secondhand item in 2021 say they go out of their way to tell people they are wearing secondhand.
Consumer appetite for secondhand grows
While the number of brands involved in resale is increasing, so too is the number of independent sellers, making for a more saturated market overall. In a survey of 3,500 U.S. adult consumers, thredUP estimates that there were 73 million total sellers in the U.S. in 2021.
The company anticipates there will be 195 million in coming years based on the current rate of market growth.
thredUp found that 57 per cent of consumers in 2021 resold garments, whether as one-offs from their closets or from repeat reselling. Would-be sellers abound: about half of the people who said they had never resold apparel indicated they would be willing to try.
General consumer interest mirrors what’s happening in the selling landscape. Ninety-three per cent of survey respondents say they’re open to shopping for secondhand products (including decor, furniture and fashion), up from 86 per cent in 2020.
On top of that, buying habits are changing. Younger generations are considering not just the longevity of an item, but its future resale viability before purchase.
Nearly half (46%) of Gen Zs and Millennials surveyed say they consider the resale value of an apparel item before purchasing new. Over one-fifth of Gen Zs said they would pay more for clothing they know they can resell.
And in many cases, secondhand is coming first. Almost half of Gen Zs and Millennials surveyed are spending more of their apparel budget on secondhand than they were five years ago.
Sixty-two per cent of that cohort says they look for an item secondhand before purchasing new, compared to 41 per cent of consumers overall.
You can see this in the sales numbers, which are growing in almost every corner of the secondhand market.
Online resale, which currently accounts for over $20 billion in sales in the U.S., is expected to make up 50 per cent of total secondhand sales in the country by 2024, with the balance coming from offline resale (i.e. markets and bricks-and-mortar vintage shops), and offline thrift and donation (i.e. charity shops and thrift stores). Online-based thrift and donation is expected to remain relatively flat.
What does all of this mean for the part-time or full-time reseller? Consumers are now selling into online marketplaces on an individual basis, using market value to determine their prices.
Their items may be listed at a price point that matches a seller’s, but is inflated because they don’t have the same overhead costs of running a shop (whether online or in person).
Any significant growth in this area, however, would rely on individual consumers having the wherewithal to continually list, and that’ll be what ends up separating the occasional sellers from those who do it as a steady stream of income.
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Join our communityInflation squeezes the sector
The secondhand goods market is by nature a price-conscious one. The thrill of scoring a good deal, of spending less money on brand-name items, and of finding quality goods at a lower price point have historically been drivers of consumer behaviour in the sector.
That hasn’t changed much, according to the 2022 Resale Report. The top reason given by consumers in every age group for shopping secondhand is to save money.
But inflation is squeezing the entire retail landscape — Canada’s current rate is 6.8 per cent compared to 2.2 per cent before the pandemic, in February 2020 — and secondhand is no exception.
Respondents to thredUP’s survey ranked apparel fifth in a list of sectors where they have noted price increases. Nearly half (44%) said they are cutting back on their overall apparel purchases as a result, but 25 per cent say they will consider buying more secondhand apparel if prices keep climbing.
Consumer values and consumer behaviour don’t align
thredUP’s report found that what consumers say does not necessarily align with what they do.
Almost three quarters (74%) of fast-fashion shoppers said they believe their consumption habits do have an impact on the environment, and half of the people who shop fast fashion say they know it has a negative impact on the environment.
But 72 per cent also said that they shop fast fashion because it’s good value for their dollar, and more than half (53%) said they choose it because it saves them time.
Nearly half of those shoppers admitted that fast fashion is a hard habit to break, and that they feel guilty for supporting it.
Four ways to reach more customers
Tip 1: Message the value your shop brings to customers over a big brand.
How to apply: Think about what your shop offers that a brand-based resale marketplace doesn’t, and work that messaging into one of your content pillars.
What sets your shop apart from a specialty store or a department store? Is it the product mix? The chance to shop small and support a local business? Your one-on-one customer service? Your product knowledge? Why should a customer shop with your business?
Tip 2: Consider new selling streams to diversify your audience and meet market demand.
How to apply: Vend at markets or start your own! Find new places to source. Ask your customers if they have items they would otherwise be taking to the donation bins to donate to your business, or to list on consignment.
And with online resale comprising half of the market within the next two years, research what’s involved in creating an online presence on a buy-and-sell marketplace, social media or website if you currently sell in person.
Here’s a list of resources to get started. Already have an online sales channel? Assess if it’s really working for you, and consider other options.
Tip 3: Think about how your products can help people during more financially challenging times.
How to apply: In your messaging, express the usefulness of an item. Highlight its multipurpose aspects — style it in different ways to show how your customer can get the most mileage out of their purchase.
Use Instagram Reels or TikToks to demonstrate some looks from traditional retail, alongside their cost vs. the cost for similar items in your shop. Focus more on everyday household items, workwear and activewear — the basics that people tend to keep buying even if they are scrimping on extras.
Tip 4: Take a page from the fast-fashion or fast-decor books.
How to apply: One-fifth of fast-fashion shoppers surveyed say they feel pressured to have the latest styles due to social media. So follow style influencers, fashion and decor magazines, and keep an eye on what they’re selling and what’s trendy. How can you emulate those looks using your inventory?
Shoppers value the immediacy of fast fashion — that feeling of having whatever you want available to you.
While that’s an aspect secondhand will never be able to compete on — since every item in a seller’s inventory is a SKU of one — you can stock a variety of sizes and styles, and keep a comprehensive online inventory tagged with keywords and searchable by filter to help your customers easily find what they need.
Another idea: Make like a fast-fashion retailer and start developing an email list to send regular promotions featuring your new arrivals. You’re taking all the photos to list your products anyway, so find other ways to use them in your marketing.
Consumers choose fast fashion for all kinds of reasons — affordability, ease, size availability and trends among them. Focusing on the quality and affordability of your items is one way to repudiate fast-fashion without having to guilt shoppers.
Highlight the positive benefits of buying secondhand instead of the negative impact of fast fashion, and you may reach more people.
How will you use the 2022 Resale Report’s insights for your shop? Let us know in the comments!
For more ways to grow your resale brand, check out our posts 15 Growth Hacks for Your Vintage-Selling Business and 5 Ways to Market Your Resale Business.
