The Economist - USA (2021-12-18)

44 Holiday specials TheEconomistDecember18th 2021

thesellerswhoshipstuffintoberesold.

The boredom of covid­19 lockdowns may have

boostedresalebygivingpeopletimetoclearouttheir

wardrobesandbrowsesecond­handfashiononline.

AccordingtoestimatesfromGlobalDatalastyearsaw

over33mnewbuyersand36mnewsellersofoldgarb.

Theideathatclothingisfora season,notforever,is

evenclearerinthepeer­to­peerrentalmarket.Eshita

Kabra­DaviessetupByRotation,a wardrobe­swapping

app,in2019.Itallowsuserstolistitemsavailableto

borrow.Thefeeisusuallyaround5%ofa garment’sre­

tailpriceperday.Dressestendtoberentedforthreeor

fourdays,towearovera weekend,ortotakeonholi­

day.MsKabra­Davieswasinspiredbytryingoutan

Americanservicethatrentedgarmentsitowned,only

tobedisappointedwhentheselectionfeltoutdated.“I

actuallywanttoborrowtheoutfitsthatwomenare

wearingonInstagramrightnow,”shesays.“Thatwas

whenI thoughtweshouldjustletpeopleshare.”

Withrentingoutclothes,aswithallowingstrang­

ersintoyourcarorhome,comestheworrythatthey

willruinyourprizepossessions.ByRotationallows

lenderstobillborrowersextraifa hemisrippedora

dressstained(itstepsinif ownerandborrowercannot

agree).Butmishaps,especiallyonesrequiringinter­

vention, arerare,saysMs Kabra­Davies.Andrental

yieldscanquicklyaddup.Somefrequentlenderswith

bigwardrobesmakeupto£2,500($3,300)permonth.

Clothingisnottheonlyhigh­valuedurablegood

beingsharedfora fee.FatLlama,a Britishplatform,al­

lowspeopletorentoutanything(fancycameraequip­

mentdoeswell).Indeed,theideaofrentingoutdura­

ble,ordurable­ish,goodsmakessuchsensethatitis

surprisingthatitdidnottakeoffbefore.Inthecaseof

clothingthatmaybebecauseperceptionsneededto

shift.Onlyclosefriendscouldhavebeenaskedforthe

loanofa jacketordress—andeventhentheymightnot

shareyourtaste,orindeedvitalstatistics.

Theverythoughtthatanitemmightberentedout

orresoldinthefuturechangeshowconsumersap­

proachbuyingitinthefirstplace.MsWainwrightof

TheRealRealsaysthatmostofitsusersregularlyshop

atposhdepartmentstores.Itsproprietarysurveysfind

thatthey“arestartingtocheckTheRealRealfirsttosee

howa luxuryitemretainsvalueonthesecondarymar­

ketbeforemakingprimarymarketpurchases”.Thatis,

theyaremore likelytobuy high­qualitygarments,

knowingthatatleastpartofthecostmayberecouped.

Thebiggestshift inperception,however,is not

amongpeoplewhosellorrenttheirclothing,butatthe

otherendofthedeal.A pollin 2016 byGlobalData

found that45%ofadultshad boughtsecond­hand

clothing,orsaidtheywouldconsiderdoingso.That

shareisnow86%.Influencersdocumenttripstochar­

ityshopsandshowofftheirpurchases.Adecadeago

wearingsecond­handclotheswasuncool,andteens

hungoutinAbercrombie&FitchorJackWills. Strolla

hipster neighbourhood today—Williamsburg in

Brooklyn,say—andpassers­bywillhaveboughttheir

outfits in thrift stores like Goodwill and Housing

Works,orcuratedshopslikeAwokeVintage.

Inthiswaytheshifttowardssecond­handfashion

isself­reinforcing,withfashiontasteschangingbe­

cause...well, because fashion tastes have changed.

Onceatrendsetterwearssomething,othersseekto

emulatethelook.Themorepeopleselltheiroldstuff,

thecoolerwearingit becomes,too.n

net made it possible to have your lawn sale on eBay.” 

Once  Airbnb  and  Uber  had  propelled  the  idea  of  a

sharing economy into the mainstream, firms turning

used clothing into an asset class were not far behind.

As with accommodation and transport, not just resale

but rental was revolutionised. By Rotation and Rotaro

act  like  sharing­economy  apps  for  wardrobes.  Now,

whether  people  are  reselling  knick­knacks,  lending

out  old  clothes,  renting  a  spare  room  or  picking  up

passengers in their spare time, they are making better

use of their assets than before. 

In  2021  resold  clothing  fetched  around  $15bn,  up

from less than $1bn in 2013. A further $21bn was spent

on  garments  from  charity  and  thrift  shops.  The  total

spent  on  second­hand  garb,  some  $36bn,  is  slightly

bigger than the $30bn spent on “fast fashion” in shops

such as Zara or h&m. By 2025, according to GlobalData,

a research firm, the value of resold and thrifted cloth­

ing  will  climb  to  $77bn  as  resale  revenues  triple  to

$47bn  annually  and  charity­shop  revenues  climb  to

$30bn. Combined revenues will dwarf those from fast

fashion which are expected to grow to just $40bn.

Online  clothing  resellers’  business  models  vary.

The  RealReal  and  Vestiaire  Collective  target  higher­

end  fashion—think  Chanel  bags  and  Gucci  loafers.

They make selling easyby, for example, sending couri­

ers to collect items. But they are fussy about what they

take. The RealReal charges at least 20% of the sale pri­

ce (and as much as 60%). In return they stand between

buyers and sellers, setting or suggesting prices, orga­

nising  shipping  and  authenticating  garments  so  that

buyers can trust that their purchases are genuine. 

ThredUP also takes possession of items, but will ac­

cept  anything  a  seller  wants  to  get  rid  of,  from  high­

street fast­fashion brands through to designer labels,

before  sorting,  pricing  and  listing  items  that  pass  a

quality  inspection  (rejects  are  returned  or  recycled).

Users get paid a fraction of the sale price (as little as 5%

for  a  $5  item;  up  to  80%  for  those  that  sell  for  more

than $200). Others, such as Depop and Poshmark, are

peer­to­peer platforms. These allow users to list their

own items at a price of their choosing, but also leave

them to do the legwork and shipping. They take simple

flat­rate commissions: Depop’s is 10%; Poshmark 20%.

from bags to riches

All  are  now  firmly  established.  The  RealReal became

the  first  to  go  public  in  2019.  ThredUp  and  Posh­

mark listed in 2021. Depop, which was founded in Brit­

ain,  was  acquired  by  Etsy,  a  New  York­based  online

marketplace, in June. Vestiaire remains privately held.

Between  them  these  fashion  resellers  are  valued  at

around $8.4bn, a tiny fraction of the market capitalisa­

tion  of  the  fast­fashion  giants,  Inditex  (which  owns

Zara)  and  Hennes  and  Mauritz  (which  ownsh&m

along  with  &  Other  Stories,  cos and  Weekday),  of

$100bn and $30bn respectively. 

But retailers, too, have cottoned on to the idea that

old  clothes  can  sell.  ThredUP  works  with  high­street

brands  such  as  Madewell,  which  now  offer  used  (or

“preloved”)  items  alongside  new  stuff  in  stores

and online. Brands can customise what they take. “Ma­

dewell wanted to tell a particular story about denim,”

says James Reinhart, the co­founder of thredUP. Mer­

chandise and tech from thredUP lie behind the resale

arms  of  many  major  retailers,  such  as  Walmart.  The

proceeds  are  split  between  the  retailer,  thredUP  and

Thefashion

industry

probablyemits

morecarbon

thanaviation

orshipping

The total spent on

“fast-fashion” in 2021

$30BN

Thepredicted

globalspendon

second-hand

clothing by 2025

$77BN