In an article titled, ‘Secondhand Luxury: Opportunity or Threat’ BoF raises the question: what's the right path for brands? Buyback and then resell their own goods, or route them to resale sites, which give brands a cut of sales?

The growth of resale is all about brands... imagine shopping on The Real Real if none of the items were branded. Customers are shifting their behavior toward resale based on affording brands they otherwise could not access.

This in turn creates both threats and opportunities for brands themselves as BoF points out.

Historically, brands have been concerned about the cannibalization of new sales, a concern that a recent Boston Consulting Group (BCG) study found to be unfounded. BCG data shows that the secondary market actually stimulates sales of new luxury goods. Additionally, the study found 71% of buyers of pre-owned items tended to buy products and brands they could not afford new. This suggests that secondhand products widen the market for high-end brands and can serve as potential gateways for first-time buyers.

As The Sourcing Journal piece, ‘Take-Back Programs Are Gaining Steam. Do They Actually Work?’ pointed out, not all resale programs are based on profitable business models for trade-in. Trade-in models where brands only benefit from gift cards are essentially marketing programs.

There are also risks for brands that solely rely on 3rd party marketplaces to maintain brand standards and authentication. WWD’s this week covered Vestiaire Collective’s offer to work with luxury brands to learn and train authenticators to spot details on the most sought-after items. Bloomberg Law went deeper into the increased risk to brand IP and commented that such partnerships may allow brands to participate in the product authentication process, which helps to prevent brand dilution while still enjoying the benefits of participating in the circular economy.

Brand IP is the ‘key to the castle’ for a brand. Brands should be wary about educating anyone beyond the obvious signs of fake products as they will lose control. As the Bloomberg article rightly points out, we will get to a point where brands will use technology to track and identify fraudulent items but we are 5+ years away. In the meanwhile, brands can be strategic about 3rd party marketplaces while making sure their long-term needs are being met as the secondary market grows.

A good example of this was The Real Real's partnership with 11 Honoré. @11 Honeré and visionary founder Patrick Herning have been pioneering a path to more inclusive sizing for luxury. The partnership with The Real Real will further this mission by adding some 430 styles of extended-size luxury items to its range of consigned goods and bring awareness to 11 Honeré.

It’s key for brands to realize the importance of their items in the secondary market as the market grows. In the end, there is no substitute for owning your future as a brand, and in this case, that involves engaging in the trade-in and resale of your products.

The So What

-There is no substitute for brands to stay close to their customers by buying back and reselling their items.

-Brands need to look after their own long-term interests including protecting their IP. Nobody will protect that other than the brand.

Resources:

Footwear News | How Trove’s New CEO Gayle Tait Is Helping Brands Like Allbirds & On to Resell Used Merchandise

Footwear News

After taking over as CEO of Trove, Gayle Tait is focused on creating ways to make the secondhand marketplace a more profitable business for retailers and brands. As the appetite to make a positive impact on the environment increases with consumers, retailers and brands like Allbirds and On are turning to Trove for a profitable way to scale their recommerce programs.

Apparel brands must note promising resale growth in...

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Date de publication : 1/11/2022 à 21:40:10