The Resale Edit: Is It Marketing Or Business Model Innovation?

Oct 11, 2022 · 5m 50s
The Resale Edit: Is It Marketing Or Business Model Innovation?
Description

The best piece of the week was @Joel Makower’s, “How to Greenwash Like a Pro.” It’s worth a read. While it is satire, Joel’s larger points play out across the...

show more
The best piece of the week was @Joel Makower’s, “How to Greenwash Like a Pro.” It’s worth a read. While it is satire, Joel’s larger points play out across the resale news this week. We are witnessing an industry that continues to accelerate around a customer shift to buying used, look no further than the Poshmark deal. This in turn creates a competitive environment with independent marketplaces, as seen in @Forbes “Battle Of Luxury Resale Business Models.” All of this places more pressure on brands to protect their brand equity and own their customers' experience. It's also a good reminder that jumping on the circular bandwagon with marketing isn’t a substitution for required innovation.

Let’s start with the Poshmark deal. Bloomberg covered the Poshmark acquisition by Naver, a leading South Korean e-comm platform. I see this as a win for @Manish_Chandra, a pioneer in the resale space, and Poshmark’s investors and the industry. The deal priced POSH at 3.4X their 2022 revenue, a 34% premium to the past 30-day volume-weighted trading average and ahead of more asset-heavy competitors.

Other public resale companies such as The Real Real (TRR) and Thredup stock prices were up following the announcement as @Olivia Rockeman points out in her Bloomberg article as an indication of additional M&A activity. While that would surprise me, I view this as opportunistic rather than industry maturity and consolidation.

The competition will continue to heat up as more independent retailers such as Vestaire, StockX, and even Goodwill were in the news. As the Sourcing Journal covered, StockX expansion into additional luxury categories will set up more direct competition with The RealReal and Vestaire.

Forbes published a piece on Reflant vs The RealReal. The column rightly pointed out that brands supported by B2B players such as Reflaunt will add pressure to Independent marketplaces such as The RealReal. These marketplaces trade on premium brands with little to no value back to the brand. Where I found the article a bit off, was in the competitive match-up as players such as StockX and Vestiaire are far more competitive for The RealReal than Reflant, at least today.

Goodwill joins the premium resale market along with brands such as Gucci, Hermes, and Louis Vuitton. I don’t view this as true competition for these competitive independent marketplaces such as StockX as Goodwill lacks the investment in areas such as SEO and dynamic pricing necessary to truly compete here. Goodwill’s announcement of the program targets its aim, “to provide professional training, job placement, youth mentorship, and more to local communities.” This is what Goodwill does best and I believe this move will create more opportunities for them here. It will also create additional places for branded products to show up, making resale innovation and strategy more important for brands.

Jimmy Choo, Sando, and DÔEN all launched resale programs. Jimmy Choo launched as a ‘partnership’ with The RealReal which similar to other deals with independent marketplaces is more of a marketing partnership. Brands may gain traffic and earned media but in the end, they are not building a more circular model to stay in touch and own their customer experience.

French brands, Sando and DÔEN launched as branded experiences with B2B providers, Archive and Treet respectively. Sando’s storefront experience is appealing, although as with other recent launches the inventory is a bit sparse (about 75 items listed). The challenge with low inventory is first-time customers won’t likely find relevant items and may not quickly return. Ideally, inventory for resale will continue to come from customers via accessible programs such as mail-in and trade-in programs. The DÔEN experience was high-end and as WWD pointed out, certainly wins the ‘best pun award’ titled, ‘Hand Me Dôen.’ The DÔEN experience was not as clear in terms of how the program works but it appears the program is starting with always on trade-in and pop-up flash sales.

Resale activity continues to intensify, as there will only be room for a few independent marketplace winners. This makes it more important for brands to have a resale strategy and plan that protects their brand equity and allows them to monetize the full value of the items they design and produce. Some of the programs we saw this week are intermediate steps but fall short of the innovation we need to shift the model–maybe they had an early draft of Joel’s article.

The So What:
-Brands face more headwinds as competition intensifies within the independent resale marketplaces as more of their product will show up for sale in more places

-Don’t confuse marketing activity with innovation that ultimately is necessary to service a new way customers are shopping for preloved items

Subscribe to The Resale Edit at www.trove.com/blog
show less
Information
Author Trove Inc.
Organization Samantha Dersarkissian
Website -
Tags

Looks like you don't have any active episode

Browse Spreaker Catalogue to discover great new content

Current

Podcast Cover

Looks like you don't have any episodes in your queue

Browse Spreaker Catalogue to discover great new content

Next Up

Episode Cover Episode Cover

It's so quiet here...

Time to discover new episodes!

Discover
Your Library
Search