in

Why Fashion Resale Startups Are the Biggest Trend This Holiday Season

Second-hand clothing companies are being bought up by larger rivals, as conventional retailers face supply chain shortages over the peak holiday shopping season. 

Established companies such as Urban Outfitters have recently been mired in controversy about shipping delays, with customers warned of waits of up to three months for vital Christmas gift purchases to eventually arrive. The resale industry is expected to grow 11 times faster than the wider retail clothing sector in the period to 2025, according to GlobalData, due in part to customer concerns about fast fashion and COVID-hit supplies. This makes the second-hand industry very attractive to investors, hoping to cut out a length of the potential $76.4 billion resale market cloth by 2025. 

Poshmark, the peer-to-peer platform sewing up transactions at a 20% commission, made its first acquisition in December 2021 of second-hand sneaker authentication startup Suede One. This 2020-founded US business uses AI machine learning to calculate a price for your used kicks. Poshmark aims to implement Suede One’s trainer technology as part of its Posh Protect guarantee, which promises a complete refund for any item that fails to match up to its listed description. AI could also take some pressure off Poshmark’s human-heavy Posh Authenticate service, which will still offer free authentication by a dedicated team of luxury experts for hauls of $500+.

Clothing resale companies rely on volume growth to turn a profit in an industry known for its unreliable inventory and miniscule margins. Urban Outfitters’ Chief Technology Officer David Hayne told Reuters: “this is a volume play. In a peer-to-peer marketplace model, scale is much more possible and there’s much more potential to do it quickly, because the platform is not the arbiter of supply.” Mid-size newly-listed corporations like Poshmark or ThredUp can use subsuming their smaller resale rivals as an easy way to scale their operations. For example, ThredUp’s acquisition of European thrift platform Remix Global stitched-up a path to European expansion. Urban Outfitters has attempted to launch their own peer-to-peer resale platform, UO MRKT, following the 20% commission model proved by Poshmark. However, UO’s attempt to needle their way into the 16-30’s fashion market is dwarfed by the success of Gen-Z resale darling Depop, which sold to craft giant Etsy for a stylish $1.6 billion. Acquiring successful startups Is patently a much savvier way for larger companies to expand into new fashion frontiers. 

The supply-chain challenges facing larger corporations could therefore mean Christmas is coming early for startups. Richard Branson-backed resale platform Tradesy, which raised $67 million in a funding round just this year, expects shortages of new apparel to translate into strong holiday sales, with consumers unable to find what they need from conventional retailers. Big firms tied up in supply line binds are offering startups success, wrapped in a big red Christmas bow. 

Purina Unleashes Pet Startup Funding

Low Emission Bus Startups Put Eco Concerns in the Driving Seat