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.
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
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.”
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
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.
oa here
