The $47 billion resale market, the next hot spot for U.S. e-commerce?

With the booming resale market, both e-commerce sellers and traditional retailers are making plans in this market . Recently, the US retail giant Target announced a partnership with the well-known online resale platform ThredUp to enter the resale e-commerce market again. At the same time, e-commerce platforms such as Amazon and Walmart are also focusing on the resale market, hoping to get a piece of the pie.

Target enters resale market

According to US media reports , US retail giant Target is re-entering the second-hand market by partnering with resale company ThredUp .

Target recently announced that it launched a page on ThredUp in late March to sell women's and children's clothing and accessories, all of which are said to be from Target's inventory .

It is understood that ThredUp is one of the world's largest online resale platforms for women's and children's clothing, shoes and accessories. In the second half of last year , the company successfully acquired Remix, a well-known European clothing resale company, for US$28.5 million to expand its global resale business.

This isn't the first time Target has partnered with ThredUp. In 2015, Target launched a program with ThredUp that allowed shoppers to earn Target points by reselling gently used items to ThredUp. However, the program was shut down just six months after its launch.

A Target spokesperson said the company decided to work with ThredUp again to tap into customer interest in secondhand items . Target's new page on ThredUp's website features about 400,000 items for sale at discounts of up to 90 percent.

Some industry analysts said that Target's previous activities may have been canceled because they were a bit ahead of time . According to Jefferies, a well-known Wall Street investment bank , the size of the U.S. resale market was about $1 billion in 2015. In 2021, it has now reached about $15 billion and will grow further in the future .

ThredUp also has profit-sharing agreements with retailers such as Walmart and Madewell, which sell items from ThredUp on their own websites .

In addition to traditional retailers, e-commerce giants have also begun to make arrangements in the resale market.

Last year, Amazon launched the FBA grading and resale program (FBA   Grade and   Resell, a program that aims to provide more sales opportunities for returned merchandise or distressed inventory in warehouses.

After participating in the program, sellers can choose the new FBA program and assign it to the new process. Amazon will evaluate the condition of the goods and create product information for the seller. Sellers can set the price of the goods according to the conditions and manage them. According to the announcement at the time, Amazon will waive the FBA level and resale processing fees for all inventory in the future .

Before launching this plan, Amazon was exposed by the media in the UK that it destroyed a large amount of inventory every year, which caused controversy .

Resale market booming, US market to reach $47 billion

The reason why the resale market is so hot is closely related to the sustainable development consumption concept of the new generation of consumers, and is also affected by the shortage of commodity inventory caused by the disruption of the global supply chain.

According to eBay's second annual Recommerce report, consumers are turning to second-hand and refurbished goods due to shortages caused by the pandemic and supply chain disruptions. At the same time, the development of second-hand resale platforms has had a positive impact on promoting the sustainable development of the entire industry, especially at a time when millennials and Generation Z consumers are increasingly concerned about ecological and social issues, and are therefore more popular with millennials and Generation Z consumers.

Jefferies said the total U.S. resale market was $15 billion in 2021 and is expected to more than triple to $47 billion by 2025. In the second half of last year, the U.S. resale market saw a small peak, mainly due to commodity shortages caused by supply chain disruptions and a shift in consumer purchasing thinking toward sustainable development.

Meanwhile, in the European market, nearly 90 million Europeans will start buying second-hand products this year, a four-fold increase from 16 million last year. According to CBCommerce, the European resale market will double to 34 billion euros in the next four years.

Second-hand clothing resale market is the largest and is expected to surpass fast fashion

Through a survey of second-hand shoppers, it was found that there are many product categories that can be accepted by consumers in the resale market, including clothing, electronic products, furniture and household items, shoes, accessories, etc. Many people even buy holiday gifts from the resale market. Last year, nearly a quarter of Americans chose to select Christmas gifts and decorations from the resale market.

For sellers, what kind of resale products are more likely to be favored by buyers? Statistics show that if the product has the following characteristics, consumers are more likely to choose to buy this product: the product is newer ( 70%), the price is reasonable or even lower (66%), the product has new packaging (63%), the product has new labels (57%), and the actual size of the product is consistent with the description (52%).

But the most popular resale product category is secondhand clothing. According to GlobalData, the secondhand clothing industry is expected to grow 11 times faster than the entire apparel industry by 2025, with sales expected to reach US$7.6 billion.

ThredUp statistics also show that by 2029, the second-hand clothing e-commerce market is expected to reach US$44 billion, exceeding the sales generated by fast fashion brands such as Zara and H&M.

The CEO of ThredUp said that although consumers may be somewhat resistant to wearing clothes that have been worn by others, the target audience of this market is a group of young shoppers who are much more accepting of second-hand clothing than their "predecessors" . Therefore, the development of second-hand clothing is not a flash in the pan, but will become a permanent trend.

The development of the global economic situation and supply chain issues in 2021 played a decisive role in the development of the resale market. Many second-hand shoppers said that in 2022 they plan to buy and sell more things through the resale market.

Target's entry into the resale field with clothing shows the popularity of second-hand clothing. In fact, some professional clothing brands have also begun to take action.

Recently, yoga clothing brand Lululemon will launch a trade-in and resale event later this month , applicable products include leggings, tops and jackets . The event is supported by resale technology provider Trove . During the event, customers will be able to return Lululemon items they have previously worn and exchange them for gift cards. They can also purchase a range of second-hand items from the brand's website , which will be updated every day.

In fact, as early as last year, Adidas cooperated with ThredUp to launch its own resale plan. Similar to Lululemon, consumers can get Adidas mall points or coupons by selling second-hand clothing and sports equipment to Adidas. The recycled goods will be resold or reused.

The entry of giants and vertical retailers proves the potential of the clothing resale market.

Resale Market

USA

$47 billion