To understand recommerce, it’s worth turning to a retail giant. In May 2020 Walmart announced an agreement with Thredup in order to promote a sustainable and second-hand shopping experience. This company seeks to sell “almost new” or “lightly used” clothing inventory through an e-commerce model. The figures of the company are very interesting, with annual revenues of 252 million dollars and a growth of 35%, it has managed to capture the attention of investors. The company accumulated an annual gross margin of 70 percent according to the reports delivered to the stock market of the American Union. What makes the partnership between Walmart and Thredup attractive is the almost 2 million active users per quarter. In addition, the company added recommerce agreements with Adidas, Crocs and Michael Stars.
The recommerce seeks to sell part of the “little used” or “almost new” inventory resulting from the consumer economy of the American Union. In Mexico the importation of used clothing is prohibited; however, in 2019 the SAT (in a single embargo) accumulated 49 tons of used clothing. It is possible to assume that the informal market is one of the most important in the region. But, in terms of clothing sales according to figures from Trendex North America in Mexico, 27 billion dollars were sold last year. That is, the need for used clothing could be resolved with the same internal demand.
The preference of users to buy second-hand clothing is on the rise in the United States. Results from the 2022 Statista Global Consumer Survey showed that clothing was the top item secondhand consumers bought in the 12 months to March 2022. Thirty percent of Americans bought secondhand clothing online or in physical stores.
From a consumer perspective, used clothing preference is tied to availability and inventory. According to a BCG study, 85 percent listed inventory as the top reason for buying used clothing. The opportunities in the market are varied. The market is beginning to diversify, it is not just about traditional channels, now sales through marketplaces are more common.
Younger generations are the main consumers
According to the most recent trend studies “The purchasing power of Generation Z and millennials, as well as their habits of experimenting with styles and fashion, is driving the popularity of second-hand fashion.” But it is also a resource utilization issue “sustainability has become a big priority for younger consumers when buying fashion products.”
Second-hand products from luxury brands are also on the rise. Net a Porter the luxury goods site recently launched a service for used clothing. With a partnership with Reflaunt The luxury goods site promotes a service to sell ready-to-wear items, shoes, bags and jewelry in exchange for NET-A-PORTER store credit or cash via bank transfer.
Brands have also participated in the phenomenon, it is not just about selling second-hand clothes. The tendency is to be partners in the recycling process. For example, Maxwell has teamed up with Blue Jeans Go Green (https://bluejeansgogreen.org/) and in exchange for a used pair of jeans you receive a discount for a new pair.
Other segments such as furniture and cars have gained important ground after the pandemic. In the United States in 2020 consumer spending on second-hand furniture and home goods increased by more than two billion dollars.
For firms seeking to offer more options to the consumer, the path of recommerce is an interesting option to grow with a face of sustainability and an idiosyncrasy compatible with the frugality of Generation Z.