Why stores are vital for e-commerce retailers like Out&Back and Fashionphile

Resale, re-commerce, second-hand and thrift are all interchangeable names for a booming retail sector – the indecisive naming, both a sign of its youth and its potential. A recent survey published by ThredUp, a leader in resale, and conducted by GlobalData, a retail analytics firm, revealed an estimate that the second-hand retail market will do more than double by 2026 to $82 billion. Additionally, resale will grow 16 times faster than the overall apparel retail sector, with resale businesses accounting for 18% of the apparel industry by 2031.

Last week, Fashionphile, one of the first e-commerce retailers, opened a 60,000 square foot authentication center and showroom in New York. The location will house approximately 15,000 handbags and accessories, a photo studio and eight supply desks. In addition, it will serve as a point of contact for sellers to bring products in exchange for money. This opening follows a Madison Ave studio sale in 2018 and a 30,000 square foot location in Carlsbad, California. The company found that these physical locations not only act as a selling point, but in Carlsbad’s case, about 78% of customers walked away with something in hand.

It might seem counter-intuitive for an e-commerce reseller to open a seller-facing location, but like any other e-commerce brand, there’s a huge experiential benefit to having a physical touchpoint.

Stores solve the hurdle of shipping products, especially oversized items.

Consumers want to sell and buy used products, but selling by mail can be difficult enough to deter them. Most famous resale marketplaces require sellers to take photos, list their products, print labels, pack items, and bring the package to the post office. Additionally, many don’t get paid until the product is sold on the company’s site, which means a lot of work for the seller, with delayed or potentially zero return.

Out&Back, a one-stop shop for buying or selling new and used outdoor and adventure gear, recently announced an in-store hardgoods buyback pilot program at select Dick’s Sporting Goods and Public Lands stores in Pittsburgh and Denver. . After extensive research, the company “has come to the conclusion that a) there is too much friction in the mail-out process to entice some sellers to engage, and b) whatever people want selling is not profitable to ship,” shared founder and CEO, Barruch Ben-Zekry. “Thanks to our partnership with Dick’s and Public Lands, if a seller chooses to drop off their item in store, there’s no more shipping label to print, there’s no box to find, there’s no “There’s more packaging to do. Sellers can drop off their item in a friendly, welcoming and engaging location, and they get paid before they leave the store,” he added. sale, the company concluded that a store-in-store partnership would be a key acquisition channel for new sellers and simultaneously drive traffic to partner retailers.

A partnership makes sense for brands that don’t want the overhead and logistics of reselling. But for a juggernaut like Ikea, resale is more than manageable on its own. In 2021, Ikea launched its Buy Back and Resell service in the United States after a few successful pilots nationally and internationally. Notably, the first pilot in Pennsylvania was very successful, with 100% of product purchased being resold. These programs have been popular for some time in apparel retail, but they’re only just beginning to gain a foothold in the oversized product space, where stores play a more vital role.

Sellers get money in their wallets and retailers get traffic to their stores.

One attraction for stores is the immediate influx of cash for the seller. In the case of Out&Back and Fashionphile, the companies give consumers money in exchange for their used items, with no strings attached. However, most direct-to-consumer brands take the restricted route, ensuring consumer loyalty. For example, Patagonia and Levi’s give credit to sellers for a new purchase. But, ultimately, either option puts money in the buyer’s wallet.

And the benefit isn’t just for sellers. An increase in the number of sellers brings traffic and potential customers to a store, a benefit for partner retailers and brands that run their own resale programs.

It’s unclear what the resale market will look like in the future. Will independent reseller platforms like Thredup dominate? Will resale or direct-to-consumer brands create their own in-store programs? Or will there be broad partnerships between resale technology platforms and retailers? The blueprint for the sector has not yet been fully defined and will continue to evolve, but whatever lines the industry draws, physical stores will be part of it.