Shein, H&M, and Zara... Resale? A Prelude of What's to Come

It’s been a week for resale.? First, fast-fashion giant Shein launched Shein Exchange , a peer-to-peer resale platform powered by Treet as reported by Forbes . Then, H&M launched their take on resale, Re:ware also peer-to-peer and powered by Reflaunt.? And finally, Zara announced plans to launch a resale site on November 3rd.

In understanding what just happened, let’s look at the incredible similarities across these three new entries into resale:?

1. Original items are incredibly cheap, making the resale as low as $1 on H&M’s site, not to mention their $7.99 flat-rate shipping. I simply don’t see the appeal or the economics for customers.
2. None of the three are expecting to make money (according to the companies themselves), basically sidelining any of these efforts to public relations and marketing cost centers.?
3. All three companies tout these efforts as game-changing shifts toward circular models that keep items in use longer, but I see no path here as these companies make billions on selling new items for cheap while losing money on these resale models.

What we are seeing is a combination of two shifts in the landscape.? The first is that Resale has become an essential part of brand sustainability efforts–got to have it.? The second is it has become increasingly straightforward to launch a resale platform. A decade ago it was eBay and now there are choices and innovations in the space.? I also applaud Treet and Reflaunt for building a business with large players.

However, as BoF reports, Shien, H+M, and Zara should not be claiming these programs as innovative moves toward a more sustainable future–they are not.? Shien, H&M, and Zara are replicating resale models designed for more premium brands.? This model will not work with the products these companies sell, they won’t make these companies money and hence won’t replace existing new production models.

Perhaps the most interesting part of the new launches is H&M’s approach of selling other brands that they do not sell new.? Brands such as Madewell, Abercrombie & Fitch, Banana Republic, and yes... Shien and Zara.? As I have shared before, expect more of this because it's just getting started.

This past week we saw Amazon partner with a marketplace seller, What Goes Around Comes Around, as reported in WWD and Glossy .? This resulted in Amazon listing more than 2,000 handbags from Louis Vuitton, Hermès, Chanel, Prada, and Gucci.? Walmart has listed thousands of luxury items for years with the past 2 years via marketplace sellers such as ThredUP.? There were over 1,000 Louis Vuitton items on Walmart.com at the time of this Resale Edit.?

Brands have always cared deeply about the channels and retailers that sell their products as it reflects on the brand and steals market share from legitimate channels. Luxury brands and their lawyers have fought the Gray Market where their brand items show up in Costco, Sam’s Club, or other discounters. This market is legal but against brand policy.

But this new reality is not the Gray Market. As customers are increasingly comfortable with buying used items, especially a brand they aspire to from a trusted party, these retailers will source pre-owned items from marketplace sellers.

This past week was one more indication that this reality isn’t a future risk, it’s here now and growing fast.? As we have seen across some of the best brands in the world, brands know who bought their products and win in buying them back.? Supply is key as the point of control allowing brands to either resell their items again or decide where and how the items they have made will be sold.

The So What

1. When creating a resale program ask this question… is this program set up to drive meaningful growth that doesn’t depend on a new production? If the answer is no, you are not likely creating a more circular future
2. It’s a strategic imperative for premium brands to control their items in the world today.? Otherwise, marketplace sellers will make use of these items to steal shares from you and dilute your brand over time???

Until Next Week,

Andy Ruben | Founder and Exec Chair of Trove

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Resources:

Retail Dive :Shein Jumps into resale

Retail Dive

Shein launched its resale program, Shein Exchange, in partnership with resale tech firm Treet after seeing its customers resell items on other online marketplaces. Although Shein Exchange is currently open to its US customers, Shein plans to expand the program globally within the next year.

Zara enters resale market value with Pre-owned service

The Guardian

Zara is dipping its toe into the resale market. Come November shoppers will be able to book repairs, sell, or donate their unwanted items from the retailer. Paula Ampuero, Head of Sustainability at Zara, said “At this stage, this platform is exclusively conceived as a tool to help customers extend the life of their clothing.”

The Business of Fashion : Fast Fashion’s Race Into Resale Has Yet to Shift its Core Business Model

BOF

Shein enters the resale market, but to many, it seems like performative marketing. With Shein coming out with 1,000 new cheap styles daily, many are wondering if they will even profit from a resale program. It seems as though they are just earning their “trendy green card” and improving their brand image for the masses as there is no current indication of plans to reduce the number of fast fashion items produced.

SHEIN enlists Treet for fashion resale platform launch

Retail Technology Innovation Hub

Shein Exchange, the retailer’s resale program, is now available for the first time through the Shein app. Over the past few years, the retailer has seen a desire for buying and selling used products from their customers on social media. The goal of Shein Exchange is to give their consumers access to resale as easily as buying something new on the site.

Zara boards fashion resale bandwagon

AIM Group

With 62% of Gen Z and Millennials looking to buy secondhand before purchasing new, it’s no surprise that Zara aims to introduce a recommerce aspect to their brand in the U.K. next month. With this addition, customers will be able to resale, repair, or donate Zara clothing via its website, app, or physical location.

Glossy Fashion Briefing: With the luxury resale launch, Amazon is selling Chanel and Hermes

Glossy

Amazon Luxury stores have an exclusive partnership with What Goes Around Comes Around, a 29-year-old luxury resale company known for carrying classic handbag brands like Hermès and Dior, and is now selling nearly 300 products on the platform. The goal of What Goes Around Comes Around is to make luxury accessible and working with Amazon allows them to balance exclusivity and availability while providing a safe encouraging place for all people to participate.

Forbes : Shein Launches Resale Platform And Aims To Shorten U.S. Delivery

Forbes

Chanel 4’s documentary exposed Shein’s low wages and long hours of workers in factories. In response Shein has launched a resale platform and has opened new distribution centers in the states, acquiring one in Indiana and planning to obtain one in Southern California as well, while it investigates oversea factory conditions. For customers, this means shorter delivery times.?

Neighbor Introduces End-to-End Recommerce Program For Outdoor Furniture With FloorFlood

MartechVibe

Outdoor furniture brand Neighbor is using the FloorFound platform to power its recommerce program. High demand has made this program an instant success with 80% of items selling within 30 days. FloorFound will oversee everything from pricing to returns and fulfillment.