The New Challenge For Fashion Brands: making apparel recommerce sustainable

The most shocking fact about the apparel industry is the heavy environmental impact it is having on our world: the global clothing and textile industry was responsible for nearly 100 million tons of waste in 2015 — a figure that could jump by at least 50% by 2030 [Global Fashion Agenda]; and, according to the Ellen Macarthur Foundation, “the equivalent of one garbage truck full of clothes is burned or dumped in a landfill every second.” And this is just one set of statistics amongst many for an industry that continues to grow year on year. The fact that the environmental impact is so large — and continues to grow — is shocking considering how aware we all are of the consequences of these types of behaviour.

But how do we reverse this deeply unsustainable trend? The World Economic Forum estimates that clothing production has roughly doubled in the last 20 years. And according to the Ellen McArthur Foundation, as people buy more new clothes, they wear them less — the average piece of clothing is worn 36% fewer times now than it was 15 years ago. Whilst brands implementing better management of production and inventory, and more sustainable manufacturing is one route, such a large problem requires a multi-pronged strategy in order to be successful. Recycling can help, but even this produces waste and requires large levels of energy and harmful chemicals to process the items. The best solution is for all of us to buy less, shrink our wardrobes and buy higher quality items that will last longer.

Easily said, but can it be done?

One answer is the growing recommerce market. Rather than throwing items out or leaving them to hang unworn in wardrobes, people are selling their used items on recommerce sites such as Depop, ThredUp or Vestiaire Collective. Etsy’s recent purchase of Depop for $1.6bn highlights the growth and potential of this business. Consumer recognition of our personal roles to play in shopping sustainably are already changing market dynamics and will only strengthen over time. Research firm Cowen says that in 2020 recommerce was 7% of the market, with expected growth to 14% by 2024, but I think people’s rapidly growing awareness of how fragile our ecosystem is, and the importance of leading more sustainable lives, means we will overshoot this estimate by a much larger degree, and in a quicker time frame.

And all the signs are there that this is true. It is no longer just marketplaces that are selling used items, but brands and even stores are getting in on the act too: Levi’s, Patagonia, Selfridges have all launched some form of secondary market storefront. And it is clear why. With the recommerce market growing, and brands promising to be more sustainable, they must embrace the trend and create an environment where they can produce less whilst continuing to grow. So if this is where the trend is heading: how do brands monetise recommerce in a scalable and profitable way?

Scaling Recommerce as a Business Model

There are a lot of factors in their favour. Reach is of course number one, but a big throttling factor to recommerce is consumers’ fear of counterfeit. It is a big enough challenge when looking for new items, but at least then you can rely on reputable sales platforms or brands’ own ecommerce sites. With recommerce or secondary markets, you are often purchasing on a peer-to-peer marketplace with nothing but blind trust that the item you are purchasing is in fact a genuine item. Brands can take a step into the market with this as their unique value: guaranteeing the authenticity of the item you are looking to buy. This could be on a self-branded recommerce store with the pitch to consumers that, to quote Trove CEO,Andy Ruben, “No-one can be Levi’s like Levi’s.” [Trove offers a service to brands to build whitelabeled recommerce operations.]

You can shrink your wardrobe and use the items that are in it to help pay towards new items by selling them back to the very brand that you originally bought them from. Or, if you are hoping to make a little more money, you can sell the garments yourself via a peer-to-peer marketplace. It is all starting to sound like the used car market where you can trade in at a dealership who will then sell on their own forecourt, or sell privately for a little more money but requiring more effort.

The recommerce market can only work with quality merchandise that can stand up to repeat wear and sale cycles. This favours quality brands and pushes out the fast-fashion, wear once and dispose brands. Quality over quantity — and recommerce can make quality more accessible to a broader audience.

But can brands make recommerce economically sustainable? To do so it must be simple, scalable and carry additional benefits beyond the revenue made from each item. Brands won’t have it all their own way either. The recommerce market is already fragmented and peer-to-peer marketplaces have made a place for themselves that they won’t give up easily. So can brands have some part to play in their products flowing through these marketplaces, too?

The answer to both questions is yes. To misquote Andy Ruben above: “No-one can tell it is Levi’s like Levi’s.” Brands can bring trust and assurance to the recommerce market, making it a safer place for shoppers, driving up demand and allowing higher price premiums for these certified items. And this is where brands can engage all aspects of the recommerce ecosystem: by offering authenticity services not just to their own marketplaces but also to peer-to-peer marketplaces.

Creating Apparel Items Born Digital

Digital identities — unique digital twins for every item produced by a brand — enable digital authentication. Brands are already deploying these services for the first hand market to enable customers to know they are buying authentic goods whilst creating a new channel for direct relationships with their customers. The ease with which digital authentication can happen and the level of transparency a traced digital identity gives to consumers helps build trust in brands and sellers — exactly the sort of trust and transparency that is needed for consumers to buy on recommerce sites.

If a buyer knows an item they are buying is genuine — not because the seller is telling them, but because the original brand is authenticating the item — the likelihood of the consumer buying increases significantly; not to mention that they may be willing to pay more for a guaranteed genuine item over one that is just claimed as such. Thus lifting the use of recommerce sites for both buyers and sellers and driving the circularity of fashion that is so critical to reducing its overall impact on the planet.

But why would brands support secondary marketplaces? If this works then won’t they be selling fewer new items, reducing their revenues whilst investing in the very technology that is making recommerce and digital authentication possible? It is a good question, but one that also has two good answers.

First, brands offering authentication as a service to the marketplaces (and their customers) can charge for this by providing valuable “extras” like, master product data or original catalogue imagery to improve the likelihood of a sale. And secondly, each item sold carries a digital identity to authenticate it. Through that digital identity brands create a direct channel to the new purchaser and the opportunity to tap into a whole new demographic to build brand equity never before possible.

It is a win-win-win-win situation. Brands access new customers and create new revenue streams from products that have already been produced. Marketplaces are able to build new levels of trust with existing customers and create a pool of new customers through the growing recommerce channel. Buyers receive better quality, genuine items, whilst sellers get an extra premium on their sale that encourages the whole cycle to spin faster and bigger. And finally — and back to the original point of this article — the planet is a little less abused by all of us, which has to be the biggest win of all.

I’d welcome your comments or questions related to anything above and please connect with me on LinkedIn or drop me a note at peter.james@evrythng.com.