How Covid-19 Changed the Resale Market

Secondhand fashion platforms like Poshmark, Depop and Thredup are seeing high demand during the pandemic. But will it last?

Louis Shapero was a casual user of the resale platform Depop before the pandemic. But with retail shut down across Europe and North America, his once-sleepy online storefront is suddenly buzzing.

The 22-year-old British university student says he’s handled dozens of sales for Stone Island sweatshirts, Van X  Supreme sneakers and other streetwear items in the last three weeks, more than he logged in the previous six months. He’s doing some shopping as well on the platform, which targets Gen Z with its Instagram-like feed of used clothes and accessories.
Shapero isn’t the only Depop seller who’s red hot right now. The platform says US sales are up 150 percent from the same time last year in mid-April, and have doubled in the UK. At Poshmark, a rival resale site where sellers tend to list low-price fashion from brands like Anthropologie and Kate Spade, the third week of April was the company’s best ever in terms of sales.
Resale sites are coming out big winners as the pandemic plunges the economy into a deep recession. They will have their pick of inventory, as brands look to shift clothes that went unsold during lockdowns. Soaring unemployment is good for the secondhand market too: analysts predict the newly jobless will turn to sites like Thredup and Rebag to clean out their closets for extra cash. And consumers, stuck at home and worried about their finances, may have stopped buying new clothes, but they’re still hunting for bargains online.
“We aren’t going out drinking or clubbing but still have leisure time,” said Shapero. “People are now just spending money on clothes instead of going out.”

People are now just spending money on clothes instead of going out.

Shoppers aren’t quite as eager to splurge on used luxury goods, even at a discount. The RealReal, which sells $700 Louis Vuitton bags and $350 Prada pumps, saw sales plunge 40 percent the week of April 8, according to data compiled by Earnest Research, which monitors consumer spending habits. The company’s stock is down 22 percent since late February.
Some expect secondhand luxury to take off as well, particularly if a deep recession forces even wealthy consumers to watch their spending. Vestiaire Collective, a luxury reseller with a mostly European clientele, saw sales jump 20 percent in late April, and Rebag sold more handbags in late April than it did over Black Friday. At StockX, which sells sneakers that can cost thousands of dollars, sales were up 75 percent the week of April 15 compared with last year, according to Earnest, though the average price of sneakers sold decreased.

“[Resale sites] are better off than retail, and they are way better off than department stores,” said Sonia Lapinsky, a managing director in AlixPartners’ retail practice. “This crisis will completely change shopping behaviours, and when every dollar counts, resale will be far more attractive.”
New Opportunities
Before the pandemic hit, the resale market was on track to double from $24 billion in 2019 to $51 billion by 2024, according to a report from Thredup and GlobalData, a retail analytics firm.
This growth may very well accelerate. The 2008 financial crisis paved the way for “flash sale” sites like Gilt and Rue La La, where the pairing of discounts and a ticking clock proved irresistible to shoppers. Resale sites, with their ever-changing assortment, offer that same combination, said Chris Ventry, vice president of business solutions firm SSA & Company and a former Gilt Groupe executive.
Resale sites also add a feeling of community to the equation. Platforms like Poshmark and Depop allow buyers and sellers to comment on each other’s listings and send direct messages (though Depop has also struggled with predatory messaging aimed at younger users). Fans have created Facebook groups to talk about their secondhand finds, while sneaker resale drama fills forums on Reddit.

This crisis will completely change shopping behaviors, and when every dollar counts, resale will be far more attractive.

“These shopping platforms are social networks,” said Andrea Szasz, principal at global consulting firm Kearney. “Flash sale sites hooked consumers with scarcity and newness, but the needs of consumers today is that sense of community in the digital world.”
On April 29, Poshmark added a short video feature similar to Instagram Stories. The platform moved up the launch from later this year in response to the platform’s surging activity.

Related Articles: Counterfeit Fashion-Manufacturers Now Making Counterfeit Masks

Poshmark's new feature, Stories. | Photo: Courtesy

In the luxury market, a recession could steer fashion back toward a more muted aesthetic, analysts say. Shoppers could end up selling the ostentatious and logo-heavy items they purchased in better times.
Sasha Skoda, head of women's merchandising at The RealReal said searches for classic jewellery, such as Cartier earrings and gold necklaces, are up 40 percent and 72 percent, respectively, over the last month, as “people gravitate toward classic investment pieces.”

Sales for investment watches like the Patek Philippe Nautilus and Rolex Daytona are up on the watch resale site Chrono24, said chief executive Tim Stracke.
Resale and the Excess Inventory Problem
Many brands offload their inventory to resale sites, whether it’s luxury labels at The RealReal or Adidas dropping product on StockX. Gap, Abercrombie & Fitch, Madewell and J.C. Penney have partnered with Thredup too. Still, they often see resale as competing with new clothing in their own stores.
That attitude seems to be shifting out of necessity, with entire spring collections gathering dust in warehouses and stores. Poshmark’s Chandra said his company is in discussions with large brands about creating wholesale lines that would be sold by professional Poshmark sellers.
Depop Chief Operating Officer Dominic Rose said Depop is building a wholesale platform for brands to sell on the site too. Come mid-May, brands can start selling directly to Depop sellers.
New Challenges
As masks and social distancing become ingrained habits, consumers might become warier of allowing used clothing to be shipped to their homes.
“As the crisis goes on, concerns will be about what people touched, and this could create social resistance towards used products,” said Szasz.

Depop sales are up during Covid-19. | Source: Courtesy

Peer-to-peer platforms like Poshmark have a dedicated landing page that addresses sanitary concerns during the coronavirus pandemic, pointing them to the Centers for Disease Control and Prevention’s guidance, which says it's safe to receive packages.
Consignment sites, which store and ship sellers’ items, can sanitise products directly, a potential selling point to customers. But they risk having to shut down warehouses if workers are exposed to the coronavirus. The RealReal had to close storefronts where sellers could have items appraised in person, and cited “limited warehouse operations” as a problem in the first quarter. Thredup is about a month behind in processing inventory due to low staffing at its warehouses, said chief executive James Reinhart.
Both consignment and peer-to-peer sites also need reliable shipping methods, which have become harder to secure with hundreds of millions of people shopping more online while under lockdown.
“This specific health crisis has brought vulnerabilities in the system,” said Poshmark’s Chandra. “We’re keeping an eye on logistics.”
Some resale start-ups operate at a loss, and could struggle to take advantage of the flood of merchandise hitting the market. Warehouses and appraisers are expensive, and margins on used goods are thin. StockX laid off over 100 employees earlier in April and is shifting “from a growth-focused mentality to one rooted in operational efficiency.”
“Many don’t have the working capital to make that kind of product acquisition,” Ventry said.
Resale sites also aren’t the only ones offering deep discounts. Fashion brands and retailers are increasingly resorting to sales, and the deals will only get better if the economy worsens further. More brands are launching resale on their own, including Patagonia, Eileen Fisher and Nordstrom.
“The competitive advantage resale has will be less when we come out of this,” Ventry said. “If everything is on sale, customers will surely go to retail first.”
Editor's note: This article was revised on 30 April, 2020 to reflect that searches for Cartier earrings and gold necklaces are up on The RealReal, not sales.
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Counterfeit Fashion-Manufacturers Now Making Counterfeit Masks

Christian Dior, Chanel, Gucci, Givenchy and Prada are among some of the most well-known names temporarily pivoting away from making (some of their) high fashion garments and revenue-boosting fragrances in order to manufacture hand sanitizers and face masks, as shortages continue to plague medical professionals and other individuals across the globe. These luxury brands are not the only ones whose factories are churning out relatively out of the ordinary products in light of the continued spread of COVID-19, though. Counterfeiters are working overtime in response to the sweeping health pandemic, as well.

In response to a spike in demand for protective masks as the COVID-19 virus continues to impact individuals on a worldwide basis, claiming tens of thousands of lives in the process, “hundreds of thousands of counterfeit medical masks are being peddled,” and such fake masks are being made “in unsterile sweatshops previously used to make phony handbags or designer jeans.” According to a lengthy report from the Independent, counterfeit-manufacturers are looking to bank on rising need for surgical and high-tech respirator masks and the large-scale shortage of them by saturating the market with black market alternatives that look a whole lot like the real thing.
From manufacturing products and even packaging that bears the counterfeit trademarks of “well-known medical supply companies” like Minnesota-based conglomerate 3M to carefully mimicking the certification stamps and documents that commonly come with these goods (such as the “CE” stamp that indicates that the mask is “approved by the European Economic Area for safety, health, and environmental protection standards”), these unauthorized products look perfectly legitimate. However, recent seizures by law enforcement agencies tell a different story: the global market is rife with counterfeit masks.

Related Article: Can Coronavirus Live On Clothes? Your Fashion Questions, Answered

The Independent’s Borzou Daragahi reports that the “fake masks may pose a threat to the wellbeing of [their wearers] because they are not made with the correct materials or in sterile environments.” Unlike their authentic counterparts, counterfeit alternatives are not being made from the National Institute for Occupational Safety and Health-approved textiles used by 3M, which are precisely what enable its respirator masks to boast a “95 percent or greater filtration efficiency” against solid and liquid particles, such as the ones that transmit the COVID-19 virus.
So, while many of these batches of counterfeit masks may be coming from factories formerly used to make fake Dior handbags or imitation Gucci sneakers, the stakes are quite a bit higher when it comes to counterfeit face masks, which is why law enforcement agencies say they are focused in cracking down on the marked proliferation of such products.
In a release dated March 11, Interpol revealed that counterfeit facemasks, substandard hand sanitizers and unauthorized antiviral medications were all seized under Operation Pangea XIII, an Interpol-led effort that saw “police, customs and health regulatory authorities from 90 countries take part in collective action against the illicit online sale of various medicines and medical products.” The Lyon, France-based organization stated that it had seized “more than 34,000 counterfeit and substandard masks,” among other products, and warned that this is merely “the tip of the iceberg for this new trend in counterfeiting.”
More recently, Turkish police seized 1 million masks and arrested five people in a raid last week on a sweatshop making unauthorized medical supplies in Istanbul, a move that comes on the heels of Chinese officials disposing of more than $1 million worth of substandard masks that had been imported from Turky, which boasts a $2 billion medical supply manufacturing sector.
All the while, U.S. Customs and Border Protection has been on high alert after its agents intercepted shipments at Los Angeles International Airport and at Chicago’s O’Hare International Airport in March containing counterfeit COVID-19 test kits, which had been shipped from the United Kingdom. Both U.S. Customs and the Federal Bureau of Investigation have issued warnings that the health care products, in particular, are at an increased potential for fraudulent activity in light of the global health pandemic.
As Jay Kennedy, an Assistant Professor of Criminal Justice at Michigan State University, wrote earlier this month, “Counterfeiters have long preyed upon consumer vulnerability in order to make a quick profit, and the current coronavirus crisis will likely be no different, except instead of the usual names – such as Louis Vuitton, Nike and Rolex – being among the hardest hit by counterfeiters, the primary targets will likely be 3M and other medical goods suppliers.

Can Coronavirus Live On Clothes? Your Fashion Questions, Answered

 

The coronavirus pandemic continues to significantly affect the lives of people across the globe. Major events are cancelled or postponed, travel is restricted, employees are work remotely, and face masks have become a part of our daily wardrobe. And while many grapple with disruptions to their everyday routine, some coronavirus patients suffer far worst fates as hospital beds fill up and the death toll rises.

A lot remains unknown about the virus, specifically when it comes to one of the mainstays of daily life: your clothing. Can coronavirus live on clothes? How about shoes? Is it safe to rent clothing or shop online? Here’s what experts are saying:

Can coronavirus live on clothes? If so, for how long?

Information on whether coronavirus can live on any surface is still unclear, but there are a few reassuring things to remember. Harvard Health says the disease is more likely to survive on a hard surface than a soft surface like fabric. Smoother surfaces, like patent leather, may be safer to wear. The length of time that coronavirus can live is also still under speculation. The World Health Organization estimates the lifetime of the disease is between a few hours and a few days.
Saralyn Mark, American Medical Women’s Association leader and Senior Medical Advisor to HHS, tells Bustle it’s best to practice good clothing hygiene. “If one is living with a person who is vulnerable — age, pre-existing conditions — it may be worthwhile to change clothing once inside your home and wash items.” She recommends washing clothing in detergent in hot water, and washing surfaces with alcohol-based products.

Can coronavirus live on shoes?

Dr. Joseph Allen, professor of exposure assessment science at the Harvard School of Public Health and author of Healthy Buildings, says most people don’t need to be concerned about transporting the virus via shoes.
“The general public shouldn’t be worried about tracking the virus in on the bottom of their shoes,” Allen explains.
Still, it’s good practice to take your shoes off at the door when you’re home. For those in healthcare who may be exposed to an infectious person who’s shedding the virus — which can land on their pants or top of the shoes — it’s advisable to leave your work clothes and shoes outside when you get home.
“It’s also really important not to forget all of the other important public health advice out there,” Allen says. “Like frequently washing your hands, covering your cough, keeping a six-foot buffer from others, and wearing a mask in public.”

Where to buy face masks?

There are plenty of places to buy cloth face masks online, many of which are donating all or a portion of sales to coronavirus relief efforts. You can also flex your DIY skills by making one at home using a few household items like an old T-shirt, scissors, and string. It’s easier than you think, it requires little to no effort, and it’s a more sustainable approach.

Can coronavirus survive the laundry?

Currently, there’s conflicting information about whether the coronavirus can be killed at a certain temperature or if it can survive through a laundry wash. To be on the safe side, wash items in hot water when possible. You should also consider wiping down your washer and dryer with a disinfectant.
“People can practice infection control through basic hygiene,” Mark says. “Wash surfaces with alcohol-based products — at least 60% — and clothing in detergent in hot water.”
If you don’t have your own in-unit washer and dryer — which is especially common in major cities — you should take extra precautions when heading to your building’s laundry room or laundromat. Experts recommend wearing gloves and sanitizing all of the shared spaces you might use. You may also want to dry your clothes on high heat and for a little longer than usual.

What are the benefits of hand washing clothes versus machine washing?

“Unless you invest in a high-end washing machine and dryer, hand washing is the best method of cleaning for your delicate items,” advises Katie Brown, owner of Rytina Fine Cleaners in Sacramento. “By hand washing, one can control those extremely damaging conditions that break down fibers — i.e. heat, mechanical cycles, etc. — therefore prolonging the lifespan of the garments.”

How often should I wash PJs and sweats, even if I only wear them inside?

Dr. Joshua Zeichner, director of cosmetic and clinical research in dermatology at Mount Sinai Hospital in New York City, explains that the closer fabrics come to directly touching your skin, the more frequently they should be washed.
“If you are sweating heavily from exercise or you are not showering as often as you should, the garments may become soiled more easily,” Zeichner says. “Undergarments should be changed and washed daily, ideally so should your sweatpants. Especially in the areas between the legs and in the groin, sweatpants may become contaminated with microorganisms, including yeast and bacteria.”

How do I protect myself from coronavirus when shopping?

Some good news: For the most part, you should feel free to shop away. The likelihood that a person can infect a package — and that the infection will last through the shipping process long enough to infect the recipient of the package — is relatively low.
“The biggest risk from shopping is going to come from interaction with other people, not the product,” says Brian Labus, assistant professor at the University of Nevada Las Vegas School of Public Health. “If you minimize direct contact, you will reduce your risk of disease. As it is a rapidly changing situation, there may be numerous changes in recommendations as to how we go about our day-to-day lives, and that will include our shopping behaviors.”

Can you get coronavirus from packages?

All official government sources estimate the risk of infection via a package is low, even if an infected person has handled it.
“By the time products reach your store shelves, it has usually been a few weeks since they were manufactured,” Labus explains. “The virus might be able to survive a few days given the right environment, but it will be long dead by the time you purchase that product. Even if something you order online is shipped to you the next day, it has been sitting in a warehouse somewhere long enough for the virus to die.”

Can coronavirus be spread through renting clothes?

In a statement provided to Bustle, the clothing rental service Nuuly explained how it’s working to ensure the safety of its customer base.
“Even before the coronavirus, we have had precautions in place when handling newly returned and therefore unwashed garments and bags,” the statement read. “During the receiving and unpacking process, our employees have always worn gloves and we have fully stocked our fulfillment center with hand sanitizing stations. Additionally, one of our areas of expertise at Nuuly is cleaning and sanitizing clothing.”
The company also uses both wet and dry cleaning for all of its garments and bags to eliminate dirt and germs, and it sends everything through a steam tunnel at 250 degrees. “The end result: clothing that is clean, free of germs or bacteria, and safe for the next consumer to use,” Nuuly said.
Another player in the rental space, Armoire, is doing the same.
“All Armoire clothing is cleaned and sanitized prior to shipping,” says the company’s founder and CEO, Ambika Singh. “We use both wet and dry methods for cleaning, and utilize a steam process, which heats to 250 degrees. We are also doubling down on our standards and quality control around shipping.”
According to Singh, Armoire hasn’t seen major changes in customer usage yet. “As the situation evolves and more people are working from home, that could change,” she says. “We would like to urge our customers to keep supporting the services you rely on normally. Your support of small businesses matters.”

How are retailers dealing with coronavirus?

Retailers are taking the spread of coronavirus day by day, but they are in a critical position: supplying the public with much-needed everyday items. Walmart, known for its response to Hurricane Katrina, has pledged to remain open as long as possible. The retail giant wants the ability to provide necessary materials to those who need them like antibacterial soap, food, water, disinfectants, among other items.
Target released a statement informing customers it would be increasing the inventory of priority products (disinfectant, hand soap, toilet paper, etc.) and cleaning times to every 30 minutes in accordance with CDC recommendations.
Several retailers, including Nike, Lululemon, and Aritzia, have closed stores due to the coronavirus, but their e-commerce sites are still running.
Luxury brands aren’t faring as well as the big box brands. Brands like Burberry are experiencing closures all over China — where the outbreak began — that have affected global supply and demand. COVID-19 will likely have consequences for the luxury space for years to come.
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The sneaker collection of every woman's dreams: Meet the uber stylish 24-year-old with a running shoe closet worth more than $58,500 - but she's never shown her face

An up-and-coming Danish Instagram star owns what is arguably the coolest collection of sneakers on earth, but despite posting daily pictures of her remarkable wardrobe, she's never shown her face on social media.

Sally Javadi, an Iranian-born psychology graduate who lives in eastern Denmark, has a closet stacked from floor to ceiling with over 150 pairs of unique, colourful sneakers, collectively worth more than $58,500 (AUD).

Ms Javadi, 24, shares photos of her vibrant treasure trove on Instagram, and despite creating her account just one year ago, already boasts over 96,000 followers who are keen to keep up with her ever expanding collection.

'I've always had two sides of who I am, my sneaker obsession and my university psychology world. It's very contradictory, and that's why I haven't gone public with my face - it's sort of my brand now,' she told Daily Mail Australia.

Danish psychology graduate Sally Javadi (pictured) owns what is arguably the coolest collection of sneakers on earth, posting daily photos of her remarkable wardrobe on Instagram - but never showing her face

Her closet is stacked from floor to ceiling with over 150 pairs of unique, colourful sneakers, collectively worth more than $58,500 (AUD)

Sally's passion for quirky footwear runs deep.

She recently queued outside a store for five hours to get a sneaker in a specific colour, bringing her mother and sister along as company, but usually sources edgy pieces on US-based resale sites and consignment stores.

Her most expensive are a pair of brown, white and baby pink Travis Scott x Jordan 1s, a collaboration between the Texan rap superstar and footwear giant Nike which cost almost $3,000 (AUD).

Sally's passion for quirky footwear runs deep. sourcing edgy pieces on US-based resale sites and consignment stores

Her most expensive are a pair of brown, white and baby pink Travis Scott x Jordan 1s (pictured), which cost almost $3,000 (AUD)

Her favourite shoes are a colourfully mismatched pair of Nike Jordans, created by Iranian-American designer Melody Ehsani as a political statement against female oppression.

One shoe is orange, pink and red against a white background, while the other is green, blue and turquoise.

Both are adorned with a gold watch laced into the front panel and graffiti-style script which reads: 'If you knew what you had was rare, you would never waste it.'

Her favourite shoes are these colourfully mismatched pair of Nike Jordans created by Iranian-American designer Melody Ehsani as a political statement against female oppression

Both are adorned with a gold watch laced into the front panel and graffiti-style script which reads: 'If you knew what you had was rare, you would never waste it'

Although she owns a vast selection of sought-after pieces few collectors dare to dream of, Sally doesn't discriminate against simple classics.

'I love a simple pair of Nike Air Forces - they're my ultimate go-to sneakers,' she said of the globally popular all-white style, which cost roughly $150 (AUD).

Adidas Yung-1s - a modern take on chunky '90s sneakers - and Nike P-6000s - inspired by the divisive 'Dadcore' trend- are her other fail safe shoes, both of which retail at $150 (AUD).

'A classic can be just as good as a more expensive pair. It's not about the cost,' she said. oa here

How a fake car parts scam could cost drivers thousands

Luxury items aren't the only things that are counterfeited

Counterfeit spark plugs with the potential to destroy engines are at the centre of an automotive industry sting.

The Federal Chamber of Automotive Industries says 60 per cent of spark plugs bought through dodgy online sellers have been verified as fraudulent parts designed to fool consumers.
Expert recreations of packaging and part appearances mean people may not know parts are fake until cars stop working.
A spokesman for the FCAI says spark plugs sold as genuine Honda, Mazda or Toyota items have the potential to “melt and cause extreme engine damage”.

Mazda and Honda owners have been targeted by the scam. Source: Supplied

But representatives of those popular car brands said they had no record of fake spark plugs ruining engines in recent months.
The problematic parts follow a run of fake components seized in Australia including wheels that shatter when they hit a pothole, brake pads made of asbestos and oil filters that do not protect engines from damage.
Overseas examples include brake pads made from compressed grass.

 

Counterfeit spark plugs (right) can be indistinguishable from genuine items (left). Source: Supplied

Tony Weber, chief executive for the FCAI, says motorists and technicians should be careful when sourcing automotive parts.
“The best way to avoid a fake? Make certain your parts are purchased from the authorised dealer network,” Mr Weber said.
“We have experts examining the packaging and spark plugs and even they can barely tell the difference. You won’t know it’s a fake, until it’s too late.”

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Why Competitor Poshmark May Be The RealReal And ThredUp’s Best Friend In Exploding Resale Market

Investment analyst Michael Binetti, Credit Suisse, is out with a bold prediction: “We believe the secondhand/resale market could grow much faster in the near-term than the +mid-teens growth that industry sources project.”

As current projections stand, the combined digitally-native resale and the traditional, largely brick-and-mortar thrift/donation secondhand fashion market will reach $51 billion by 2023, according to ThredUp, a major player in the resale fashion market and the primary source of the industry’s data.
By 2023, the resale segment is expected to account for 45% of the secondhand apparel market’s sales or $23 billion, growing from a mere 25% ($7 billion) of the total $28 billion in 2019.
The RealReal, the recently made public luxury resale company, the privately-held ThredUp, and social commerce peer-to-peer marketplace Poshmark are the current resale leaders.




Dynamic growth in the online sales channel will be the main driver of growth, gaining twice as fast as thrift/donation or over 30% per year from 2019 to 2023. This will be thanks to consumers, most especially women, gaining awareness of the convenience of this new model as an alternative to giving bags of old clothes to Goodwill, Salvation Army or local thrift stores.
As mentioned, Credit Suisse’s Binette expects it to advance even faster, though he didn’t speculate just how much faster it will grow. However, he said, “We’ve networked extensively with management teams across the secondhand retail category and the most consistent comment we’ve heard is that the industry unanimously believes it is barely scratching the surface with the addressable market of consumers that would consider re-selling/consigning online.”

Supply, not demand is the industry’s challenge

Increasingly, women are willing to give secondhand shopping a try, with ThredUp reporting the number of women who’ve purchased secondhand has grown from 44 million in 2017 to 56 million in 2018, roughly half of all adult women.
However, the linchpin for resale’s future is getting inside people’s closets and convincing them to turn over enough good-old stuff that online buyers will want.
After all, they have been filling their closets with off-price (Marshalls, TJ Maxx), fast fashion (Zara, H&M), value chain (Walmart, Target) clothing at an aggressive pace, but this isn’t the stuff that a vibrant resale market is made on. The ThredUp study, supplemented with data from Credit Suisse, estimates that about 35% of consumers’ closets in 2018 are accounted for by clothing from these three sources and their share has grown from 28% since 2008.
Instead, the stuff consumers are most likely to want to buy in resale is department store (14% share of closet in 2018) and other specialty retail (13%) brands, which they also may want to hold onto longer. Mid-priced fashion (Gap, J.Crew) that comprises 20% share of closet today may go for ThredUp or Poshmark, but not The RealReal.
It isn’t consumer demand that could hold the fashion resalers back. It’s getting their hands on enough stuff that their customers will want. As a result, each player’s consignment strategies are critical to their future success.

Getting real is The RealReal’s key consignment strategy

The RealReal identifies unlocking the ~$200 billion of luxury goods available in the U.S. for the resale market as its greatest market opportunity, as well its most critical challenge.
“The biggest obstacle to growth for REAL is acquiring the right level and types of supply,” writes Cowen’s Oliver Chen, in a report on a recent meeting with The RealReal’s CEO Julia Wainwright and CFO Matt Gustke.
“Management highlights it is more difficult to get someone to consign for the first time,” he explains, but adds that after their first consignment, The RealReal customers typically return two-to-three times a year.
With Gucci, Louis Vuitton, Chanel, Prada and Hermès its leading brands, The RealReal has found making face-to-face connections with wary luxury consumers critical to getting prime merchandise. So, it operates three stores, two in NYC and one on Melrose Avenue, Los Angeles, where well-heeled shoppers can come in and meet with authentication experts. Such personal connection raises their comfort level.
The RealReal also operates 11 locations nationwide for jewelry, watch and handbag valuations, plus the convenience of free “white glove” in-home consultation and pickup in 20 markets.
In a previous discussion with CEO Julie Wainwright, she shared that not only do the stores pave the way for better consignments, they also result in an order size twice as large as is typical online. “It is a marketing tactic and sales tactic and product acquisition tactic,” Wainwright said. “We find we get lots of high-quality consignments when we do pop-ups,” like one recently in Las Vegas.
The RealReal is approaching half a million buyers and if turning new RealReal buyers into consignors is its primary way to source new supply, it has a long runway.
According to the BCG-Altagamma True-Luxury survey among consumers who met a threshold of luxury spending (~$5,500 in past year), only half of the U.S. luxury consumers surveyed have participated in the secondhand market. Among the other half, 21% have sold and bought, 18% have purchased only and 11% have only sold.
The RealReal is still in the early days in tapping its potential market. “Resale drives a perpetual consumption cycle that fuels recurring consignments and purchases as it provides liquidity to consignors to purchase new and secondhand items – this should support solid GMV (gross merchandise value) growth over the long-term,” Chen writes.

ThredUp has it in the bag

ThredUp’s consignment strategy is literally in-the-bag with its “Clean Out Your Closet” service where a potential consigner requests a postage-paid Clean Out Kit to bag up unwanted items. These item can either be sold for cash or credit to use at Reformation or Polarn O. Pyret for childrenswear or donated to charity along with a $5 cash gift.



The company notes, however, that it is picky about what consignments it accepts: only items in pristine condition with no damage or alterations, including missing sizing information. Given those criteria, ThredUp reports it only retains about 40% of the items shipped for resale. The rejects can be returned to the sender for a small fee or donated to charity.
Right now, through October 20, ThredUp is hot on the trail for fall fashion, offering a 20% extra payout for seasonally-appropriate sweaters, coats, boots, overalls, jumpsuits and designer handbags. In-demand brands it is on the hunt for include Madewell, Patagonia, Lululemon, Everlane, Sorel, Eloquii and Torrid.
ThredUp is also crossing over into physical retail in new partnerships just announced with Macy’s and J.C. Penney. ThredUp departments will shortly open in 40 Macy’s and 30 J.C. Penney locations.
These locations will give consumers an extra dose of confidence and credibility to ThredUp when they first meet the brand there. No word that consignments will be accepted there, but one can imagine each department will have a stack of clean-out bags readily at hand.

Poshmark takes a do-It-yourself approach

Poshmark claims to be the No. 1 fashion buying and selling platform, with some 50 million sellers. A recent survey by Raymond James supports that claim, with 67% of women surveyed recognizing the Poshmark name, as compared with 44% who know ThredUp and 12% The RealReal.
But unlike ThredUp and The RealReal, Poshmark operates under a different business model. It doesn’t take possession of the clothing for sale. It works as a peer-to-peer marketplace where sellers list items and Poshmark takes a piece of the action once a sale is completed.
With its stripped-down business model, it gives sellers the tools to make sales, but also requires them to do the heavy lifting to photograph, describe, and price each item. Poshmark provides a prepaid shipping label when an item is bought, but the seller has to package it and take it to the post office to ship.
It also supports sellers with what it describes as virtual shopping parties where people gather on the app to enjoy selling events around a theme or brand. Success in fashion has given Poshmark confidence to branch out into home decor and housewares.

Awareness builds customers and consignors

To attract people to the circular fashion resale economy, both Credit Suisse’s Binetti and Cowen’s Chen identify building awareness of the potential of resale platforms like The RealReal, ThredUp and Poshmark is critical.
To create awareness, all three companies have taken to television to get the word out. In that Poshmark is the leader, running 14,872 spots in the last 30 days and ranking No. 311 in terms of overall advertising spending, according to ISpot.TV. ThredUp (2,674 airings and No. 839 in sending) and The RealReal (2,533 airings and No. 1,020 in spending) lag far behind.
And from that awareness, consignments grow. Signs are that American consumers are already lightening their load, as the ThredUp study reports consumers have reduced the number of items in their closets from 164 in 2017 to 136 in 2019. But that also means, they may have fewer choice items to pass along into the resale channel.
Ultimately Poshmark’s heavy-lifting in the awareness department may be a blessing for both ThredUp and The RealReal. After a few times a person does all the work on the back end to make a sale –or not make a sale if the price isn’t right or the description fails – my guess is that people looking to get in on the resale action may quickly turn to the frictionless and more convenient alternative that ThredUp and The RealReal offer.
Poshmark may open the door for customers to try online resale, but I bet that ThredUp and The RealReal will be the ones that will keep them around for the long haul and get the best pickings from their closets.

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Border Patrol seized fake NBA championship rings valued at $560,000

 The U.S. Customs and Border Protection agency busted a counterfeit shipment of National Basketball Association championship rings at Los Angeles International Airport. This crackdown comes before the sport’s pre-season start on Sept. 30.

 Photo credit Fox News

In a press release sent out Wednesday, the federal agency reported there were 28 rings seized that violated protected trademarks and designs for 11 NBA teams. The report also noted that if found genuine, the seized rings would have an approximate manufacturer suggested retail price of $560,000.

The discovery was made by U.S. CBP officers working in the airport’s cargo operations department. During an enforcement exam, the officers found the shipment had arrived from China and had a final destination in Arizona. 

 Photo Credit Fox News

“The rings were found inside of a wooden box, with the apparent intent to be sold as a collection,” the report elaborated. “The quantity and estimated MSRP value of counterfeit items seized are clear indications of the profits that are involved in the illegal trade of counterfeit NBA championship rings.”

This seizure valued at over half a million dollars comes at a time when businesses and the U.S. government are trying to curb intellectual property theft from china.

Fake baby products are everywhere—here's how to spot the difference

Counterfeit strollers, car seats, carriers and more put your child in serious danger—and the problem is more widespread than most parents realize. Here’s how to avoid buying a fake.

 

Counterfeit versions of this feeding mat are widely available and could put your baby at risk. Photo: Hip Mommies 

  Jayne Gregory* was pregnant with her first baby and perusing the booths at a downtown Toronto baby show this past spring when she noticed a table selling a product called Happy Mats—silicone placemats that double as plates and suction to the table or high-chair tray so little hands can’t knock them off. Gregory had heard of the mats and they sounded great, so she bought one.
What she didn’t know is that she hadn’t actually purchased a real Happy Mat; it was a knock off. “I just assumed it was the same one—I had no idea it might be something different,” says Gregory. How could she have known? The booth, which featured a number of brightly coloured teething toys, bibs and stuffies, looked totally legitimate. The seller was pleasant, and Gregory was, after all, at a large, reputable, big-city trade show.
It wasn’t until a few weeks later that she discovered through a random Facebook post about counterfeit baby products that she hadn’t bought the real Happy Mat, which is manufactured by a Colorado-based company called Ezpz, and distributed in Canada by Toronto company Hip Mommies. “My biggest concern is health and safety,” says Gregory. “There’s going to be food touching this, and I would be putting it in the dishwasher. What if the material breaks down?”
Hip Mommies owner Jennifer Chua says she often hears from parents who, unbeknownst to them, have purchased fake Ezpz mats. “They come to us saying the product doesn’t work well, and they want a refund,” she says. “I ask them where they bought it, and then I have to tell them they’ve bought a fake.”
Unfortunately, this problem isn’t limited to Ezpz mats. Fake baby products are now everywhere—both online and at bricks-and-mortar stores. And some of them could put kids in real danger.
“The counterfeit problem in Canada is massive,” says Lorne Lipkus, an intellectual property lawyer in Toronto. He says the value of counterfeit goods sold in Canada annually is in the tens of billions, and while no one is certain how much of that is baby products, it’s clear that many major baby-gear brands are affected. Infant-carrier maker Ergo, baby gear company Skip Hop and stroller manufacturer Maclaren, for example, all have pages on their websites about fakes.

How does this happen?
Counterfeiters are masters at replicating. They’ll make fake product websites that look just like the real ones, or advertise a product on a site like eBay, Amazon or AliExpress using images stolen from the real company. An image of Chua’s daughter appears on the authentic Ezpz mat packaging, and she says the picture is now being used around the world to sell fake mats.
Chua says scammers have even begun running real Ezpz ads on Facebook, but when users click it, they’re taken to an illegitimate site, and Lipkus says criminals are increasingly using social media to peddle their wares. “We’re seeing more and more where social media sites like Facebook or Instagram are being used to house the counterfeit operations,” he says.
Because the counterfeit problem is so rampant on Chinese e-commerce sites like Alibaba and AliExpress, it’s super easy for pretty much anyone to order a bunch of knock-offs and sell them at baby shows, in pop-up retail locations, on buy-and-sell websites like Kjiji and Craigslist, and even in mom-to-mom Facebook groups.
The dangers of fakes
Wearing a fake Kate Spade bag that you got on Canal St. in New York is one thing. Wearing your baby in a knock-off baby carrier is another. When a shady company fakes a name-brand product, there aren’t any checks and balances to ensure the item won’t put your kid in danger. Nobody is checking what material it is made of, how strong the product is, and what chemicals were used, whereas products that are imported legally must be declared with the government and can be subject to inspection. They would have to comply with Health Canada’s consumer product safety regulations, which address things like flammability, phthalates and for certain children’s items, choking and strangling hazards.
It’s important to note as well that companies who are legitimately importing from China will visit factories and develop relationships with manufacturers to ensure processes are acceptable. Distributors may also do some due diligence; Chua’s Hip Mommies, for example, reviews third-party safety testing reports for its products before it decides to distribute them.
On top of that, when you buy fakes—whether it’s baby gear or that Kate Spade bag—you may well be supporting bad people doing very bad things. “The factories in China that are making more than 80 percent of the counterfeits are often controlled by organized crime,” explains Lipkus. “They might be providing terrorist financing, and they often use slave and youth labour.” He says he’s had clients go into factories where kids as young as six years old are mixing dangerous chemicals. That can’t be worth a few dollars off the list price.
How to avoid buying a counterfeit baby product
While Lipkus says that every major store you can name has had a problem with counterfeit products, there are nonetheless ways you can protect yourself.
-If you’re looking to buy a specific product, visit the manufacturer’s website to see who is legally allowed to sell it. You’ll often find this under “authorized retailers/distributors” or “where to buy.” Both brick and mortar stores and online shops are usually listed.
-If you’re buying online from Amazon, click on the “sold by” link. It should list either the manufacturer itself, or the name of a distributor, which you can check to ensure it is authorized (see point above).
-Be skeptical if you notice poor descriptions of the product online, such as grammatical errors or other eyebrow-raising verbiage. For example, a fake Ezpz mat on Amazon.ca says the product is good for use on baby walkers, an item that’s illegal in Canada.
-Stick to well-known, well-established online retailers, and/or ones that also have brick and mortar locations. If you find a smaller online retailer that you’d like to shop from, do a bit of digging. Do they have a Contact Us page, and do people respond to your emails? Are their social media accounts active? Beware of websites that offer time-limited deals, or ‘only five left’ at a bargain price.
-If you’re buying in person from a store, baby show or market, inspect the product carefully. Does it look and feel well-made? Take a close look at the packaging, as counterfeiters often use flimsy plastic and leave off key details. You may also see spelling and grammatical errors.
-Be careful when buying from buy-and-sell websites or off Facebook. If someone advertises that they have a limited number of an item at a great price, those could be knock-offs. Similarly, if someone in a neighbourhood group says they have 14 baby carriers available, it’s worth wondering why any one person would have so many carriers.
What to do if you discover your item is fake
Start with the retailer who sold you the item and request a refund. It’s possible they, too, have been duped, and may readily offer you a refund. If that doesn’t work, call your credit card company. Most protect against fraud, so if you’ve used your card to buy an item that turns out to be counterfeit, you may be able to get your money back. Lipkus also recommends informing the Canadian Anti-Fraud Centre as well as the police (using the non-emergency line). It’s an extra step, but if nobody reports these things, it can never be stopped. Once the matter is resolved, destroy the item. If it’s not safe for your baby, it’s not safe for anybody else’s either.
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Amazon Admits to Having a Counterfeiting Problem

image: Amazon

Amazon admits that it might have a problem with counterfeits. For the first time ever, the Seattle-based e-commerce giant made mention in its annual 10-K filing of the elephant on its platform: fakes. In a single line in the “risk factors” section of the yearly report it files with the U.S. Securities and Exchange Commission, the Jeff Bezos-owned company stated, “We may be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.” 

The arguably long-overdue admission comes amidst mounting criticism of and a growing number of lawsuits filed against the world’s largest e-commerce platform, most of which have accused Amazon of being “complicit” in the widespread sale of counterfeit goods on its site. These qualms have largely followed from Amazon’s 2014 move to enable China-based entities to sell directly to Amazon shoppers in the West, and in the process, growing its sales by a whopping 20 percent in a single year and enabling its total revenues to blaze past the $100 billion mark for the first time.

To date, Amazon-specific criticism has come from a multitude of sources, including this website, which questioned the merit of its “zero tolerance” policy when it comes to fakes in light of the fact that searches for things, such as “Fake Gucci” bags and “replica Birkin” bags, readily return results for counterfeit goods.

Independent sellers — forced to directly compete on Amazon’s marketplace with scammers who blatantly steal their intellectual property — have spoken out. Casey Hopkins, the founder of industrial design firm Elevation Lab, penned a highly-cited post on his website last year, calling out Amazon for directly profiting from the sale of fakes.

Brands also have not been shy about taking the $1 billion giant to task. Birkenstock, for instance, publicly cut off Amazon, not once, but twice, “terminating  [its] business relations with Amazon” in the U.S. and the European Union, due to Amazon’s alleged failure to commit to “proactively policing its site for counterfeits.”

Still yet, at least one trade group, the American Apparel & Footwear Association, has urged the U.S. Trade Representative to include Amazon’s international arms to its annual blacklist of “Notorious Markets,” asserting that its “members are growing increasingly frustrated with how [Amazon] protects their intellectual property.”

These complaints, among others, have coincided with legal action. Mercedes Benz’s parent company, Daimler AG, filed suit against Amazon in November 2017 on trademark infringement grounds, claiming that in additional to its problematic marketplace, Amazon’s model for labeling products as “Shipped from and sold by Amazon.com” amounts to a “fraudulent business act.” In particular, Daimler asserted that by using the “Shipped from and sold by Amazon.com” model,  “Amazon itself sells infringing items” and “capitalizes upon and profits from Daimler [and other brands’] reputation and goodwill.”

Less than a year after that legal battle was initiated, fashion brand Ella Moss filed a trademark infringement suit against Amazon, alleging that the giant launched a similarly-named private label, Ella Moon, with a similar aesthetic and lookalike designs  in an effort to confuse consumers and steal sales from Ella Moss.

All the while, Amazon’s PR team has been adamant that it “strictly prohibits the sale of counterfeit products and invest heavily – both funds and company energy – to ensure our policy against the sale of such products is followed.”  

According to CNBC, the newly-added acknowledgement of counterfeit goods in its 10-K filing “reflects Amazon’s increased concern over the counterfeit problem on its marketplace, as the words ‘counterfeit’ and ‘pirated’ were never mentioned in its annual filing before.”

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How small U.S. firms fight off floods of Chinese knockoffs

In this case, they are real. But many brands like sunglasses company 100% find themselves in an uphill battle against cheap knockoff products that come from China. (100%/Yahoo Finance)

Two months after the new model of sunglasses came out in May, knockoffs started popping up.

“It was amazing,” says Ludo Boinnard, CEO of 100%, a California-based eyewear company whose popularity has ballooned in the past year. “Two months!”

It was the second time this had happened. Just over two years before, the motocross-rooted company turned to cycling eyewear, and the fakes sprung up in early 2017.

For a small, up-and-coming company looking to gain market share — 100% has fewer than 30 employees in San Diego — there’s an aspect of flattery at seeing facsimiles, both branded with the company logo and unbranded, show up in the marketplace. But it’s also the source of stress.

“They just started to show up. It’s been just exponential; we used to see a lot of Oakley knockoffs but we never paid much attention because we were not in that world. Sometimes you’d see the Facebook and [Instagram] ads with the fake Oakleys,” said Boinnard. “Now, because we’re in the eyewear business, we’re more aware of what’s going on and it’s insane.”

Incidents like these have been going on for a long time, as domestic intellectual property (IP) is co-opted and duplicated with lesser materials abroad, either to be sold as cheap counterfeits, fraudulently, or as something of a generic.

The ongoing trade conflicts and back-and-forth tariffs with China have largely been about the President’s interest in closing the trade deficit, but intellectual property has also been at the forefront of U.S. complaints: China has been guilty of ripping off American tech in the past. (The U.S. has long said that theft of intellectual property, including copyrights, trademarks, patents, has cost American companies billions of dollars.) 

In the discussions of IP by China, the focus has often been on the theft of technology and electronics, often via foreign ownership restrictions that require U.S. companies to show their cards to China or a Chinese corporate partner if they want to operate there. But while a simple copy-paste for consumer goods like sunglasses may not pose the same security risks or enormous financial damage of a complex tech algorithm, it does significant damage to a company.

The potential harm to the company has a few layers. The simplest is that they take away business, as some people will buy the cheaper knock-off on eBay or China’s Ali Express for $25 instead of $150 from an authorized retailer. Many companies and brands suffer from this issue, from Ray-Ban to Gucci to Apple earpods.

Sometimes people know it’s a fake, but mistakenly believe they are getting the same product from the same factory simply with a different logo, or maybe the factory stayed open an extra day off-contract. (This is not the case for 100%, which sources from France and Italy only.)

But the fakes are sometimes sold at full price to unsuspecting consumers, which for sports sunglasses that require shatter-resistance, can cause serious injury. Other times, “people think they’re getting a deal,” said Boinnard. Unfortunately, the lower prices for knock-offs usually means that there isn’t a budget for R&D or safety testing.

“One of the first occurrences is one guy who called and said, ‘I’m very unhappy about your product, I was injured by it,’” said Boinnard. He sent photos of the cracked product and cuts of his forehead, and the company told the guy to send the product. It turned out to be fake. “He bought it full pop on a Chinese website,” said Boinnard.

In other instances, he said, people import fakes and sell them at events — at full price.

“They have the experience of touching and feeling it and saying ‘oh this product is crap,’ which hurts us at a different level,” he said.

A game of ‘Whac-a-mole’

For the most part, 100% contracts out the job of enforcing design patents and IP to Red Points, a firm based in Barcelona that has the technology to crawl the web for design infringement. The company told Yahoo Finance’s sister site TechCrunch that catches around 200,000 fake products for sale every month. Tools like reverse-image search help, as many listings use the company’s actual product photos.

“We have it automated and we have a clear message to all our distributors – if you find a link to a fake please send it and that email gets forwarded to Red Points,” said Boinnard. If there’s a question of legitimacy, the company does have to manually look through flagged products to make the final judgment, something that costs time and money. “It’s a whac-a-mole kind of business,” he said. 

Ethan Wolff-Mann

Senior Writer

Yahoo FinanceAugust 29, 2018

WeChat Being Used by Counterfeiters to Build up their Fraud Chain

Cashing in on the price difference between luxury goods sold in China and overseas, Daigou (代购) – aka. overseas purchasing agents – have long bought goods on behalf of consumers in China. But, as the Chinese government puts in place new measures to boost domestic spending, many luxury brands have lowered their prices in China, bringing them in line with global price points. Consequently, the role of a middleman like Daigou has been threatened, and a career as an overseas buyer has become increasingly unsustainable.
Now, the overseas purchasing business is evolving in a different, darker direction, coined “Daigou 2.0″. Targeting consumers who are looking for luxury goods at a steal, counterfeiters from China are now providing fake goods under the guise of authentic Daigou vendors.


According to an investigative report by the Chinese state media People’s Daily on August 7, which was trending on China’s social media platform Weibo, luxury goods counterfeiters employ a variety of techniques to disguise the true origin of their products, such as paying insiders for production batch codes to reprint onto packaging, giving consumers the illusion they will be able to verify the authenticity of the item
Another common trick, according to the People’s Daily report, is known as ‘gold plating (镀金)’, referring to a practice of shipping the counterfeits abroad first to obtain overseas shipping documents and entry certificates, in an attempt to prove the product has been bought overseas.
Earlier this year, Jiangsu policemen seized more than 80,000 pieces of counterfeit luxury makeup from WeChat vendors in the city of Suzhou, who had been creating products imitating brands like Dior, MAC and Fresh. The total worth of these products was more than 1.5 million USD (approx. 10 million RMB), according to the local police.
In Jiangsu’s case, the main suspect confessed to purchasing barrels of cheap fragrance from Guangdong province, bringing the manufacturing costs to only 15 cents (1 RMB) per 50 ml bottle of counterfeit perfume. These fake products are then labeled with luxury brands, and sold at upwards of 30USD (200RMB) per bottle, leaving room for a huge profit margin.
The presence of trusted Daigou agents in this process can add a layer of credibility to the counterfeiters. In turn, the high profitability offered from selling fake luxury goods has motivated many traditional Daigou agents to participate in this illegal business. In recent years, the livelihood of Daigou agents has been adversely affected, as the Chinese government implements measures such as lower import tariffs on luxury goods, encouraging international brands to lower their China prices.

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An overseas Chinese student, Li, who admits to helping to sell fake luxury goods on WeChat, told Jing Daily, “the profitability now is attractive, and it’s hard to recognize the difference between counterfeit and real goods.”
She continued, “we don’t handle the manufacturing process of any product, but deliver them to clients. We then keep a certain percentage of the profits from every client we bring in.”
The intimate nature of WeChat as a one-on-one private messaging tool now serves as a shortcut for counterfeiters to strike deals.
“There is a huge loophole in the current law enforcement for the punishment of WeChat vendors” commented one Weibo user. “Wait, I think I might have bought a counterfeit product,” said another, demonstrating the widespread distrust shoppers now have for buying luxury goods via WeChat.
Both luxury cosmetic brands and WeChat itself are taking actions to prevent counterfeiting. Many high-end cosmetic brands like Estée Lauder, SK-II, La Mer, and Sulwhasoo now offer to recycle their customers’ empty skincare bottles for small rewards, leaving less room for Daigou to collect empty packaging. WeChat also claims to have punished more than 72,000 vendors selling counterfeit goods and shut down 875 counterfeit-related mini-programs.
Tencent did not immediately respond to a request for comment.