From Gucci to Depop: The journey from e-commerce to re-commerce

assets/files/images/04_05_22/Aaron-Shapland.jpg

This article is brought to you by Retail Technology Review: From Gucci to Depop: The journey from e-commerce to re-commerce.

By Aaron Shapland, Digital Transformation Director, Ciklum. 

It’s been a turbulent yet transformative couple of years for fashion retail, with the pandemic disrupting in-store trading and accelerating the shift to e-commerce for most brands.

This has been coupled with rapidly evolving consumer priorities - such as younger demographics driving a focus on sustainable and second-hand fashion. These major shifts have opened new opportunities for digital players to quickly seize market share. To remain relevant, traditional fashion retailers must tailor their offering and invest in technology that will help them take on powerful and fast growing second-hand startups.

Research from the 2021 Resale Report showed that 33 million consumers bought second-hand apparel for the first time in 2020. Gen Z and millennials led the way, with 45% saying they refuse to buy from non-sustainable brands and retailers. As fast fashion purchases are replaced with thrifting, a shift that has been fueled by economic uncertainty, apps like Depop and Vinted have boomed.

With research by GlobalData showing that the fashion resale market is growing 11 times faster than traditional retail - and is expected to reach a $77 billion valuation in the next five years - now is the time for retailers to capitalise on this growing market.

Many brands are already taking the leap into the world of re-commerce - including Nike, Burberry, and Levi’s. Kering, which owns luxury brands like Gucci, Bottega Veneta and Alexander McQueen, recently acquired a stake in the Vestiaire Collective - a luxury second-hand platform that sources and authenticates pre-owned items, and was recently valued at $1.7 billion.

It’s clear that over the coming years there will be significant investment into the second-hand market. Fashion brands are expanding their relationship with customers to ‘own’ more of a product’s lifecycle - producing garments for sale, and then resale - allowing them to monetise a product’s journey over a longer period. 

By tapping into the blossoming resale market, fashion brands have the prime opportunity to expand and reinvent their relationship with customers while generating new revenue from existing goods - and the key to maximising this opportunity is a scalable technology foundation.. 

Choosing the best model for resale

There are two models which retailers can consider for their re-commerce offering. In the first model, retailers play a direct role by purchasing garments from their customers and selling them on - either online or in their bricks-and-mortar stores. However, for this to work, there needs to be an operating structure and physical infrastructure to collect, prepare and store used items before resale. 

In the second model, retailers play an indirect role by enabling peer-to-peer resale through a digital platform, thereby owning the customer experience and helping to build a strong, brand-oriented online community. It also means the retailer does not need to physically handle the items. 

With both models, retailers can offer customers the option of money for their preloved goods, or in the case of the first model, a higher value in store credit which can help encourage additional in-store spend whilst building loyalty with the brand.

Re-commerce in practice

Working with either of these models, legacy brands can power their resale offering in one of two ways:

  • Resale-as-a-Service and platform partnerships

Partnering with an existing resale platform allows legacy brands the opportunity to explore the resale marketplace without the investment in building their own platform. 

Gucci recently followed in the footsteps of Burberry to partner with TheRealReal - having already proved to be one of the most popular brands on the resale platform. The partnership allows Gucci to resell used products directly to customers through an environmentally sustainable - and more affordable - means, supporting the circular economy and ensuring that their items are available to all markets.

Alternatively, brands can partner with a resale-as-a-service company, which combines the physical store with e-commerce. Customers can enjoy trying on and seeing the items in real-life as part of the in-store experience, but with the actual purchase carried out online. Net-a-porter, COS, H&M and Harvey Nichols are just some of the brands working with RaaS tech businesses. 

  • Custom built platforms

To fully embrace the benefits of recommerce, some legacy brands are opting to build a bespoke platform fit for their business. This not only enables the technology to align fully with business requirements and operating model, but it gives brands complete control over the customer experience - including how to manage and leverage user data.   

While some businesses are working with technology partners to build out new platforms under a new brand name, others are introducing the opportunity for resale through their existing platforms and apps. Either way, brands have the competitive advantage in rolling out resale offerings, through existing customer bases, brand power and deep product insight. 

The future is circular

With increasing pressure on fashion brands by consumers to become more sustainable, recommerce is almost certainly set to be more than a trend. As fashion designer Stella McCartney said in a 2019 Vogue interview, “There’s $500 billion worth of waste in the fashion industry every year, and that, to me, is a business opportunity”.

Those fashion brands who support the circular economy and take responsibility for a product’s full lifecycle will ultimately be the winners in the long run. Investing in technology will allow fashion brands to ensure they can reach consumers anytime, anywhere while demonstrating their commitment to sustainability.

Add a Comment

No messages on this article yet

Editorial: +44 (0)1892 536363
Publisher: +44 (0)208 440 0372
Subscribe FREE to the weekly E-newsletter