The Resale Edit: We can’t expect business model change from brands that don’t make money on resale

There are high expectations for resale as pointed out by The Guardian. Next-generation customers will seek out pre-owned items that will allow the fashion industry to automatically transform a 100+ year-old linear model into a circular model. This will not happen in a straight path, nor will it happen overnight. Today, we live in the wild west, where it’s hard to distinguish the positive forward momentum from the PR plays.

The Fast Company article, ‘We buy too many clothes. Can fashion’s secondhand boom change that?’ really brings this point home. The piece starts by asking the question, despite all the resale news, “why the boom in resale isn’t putting a dent in new clothing sales.” This would be like asking, despite all the eCommerce websites in 2002, why hasn’t commerce changed? eCommerce has changed commerce, and resale will change new clothing production, but business model change on this scale takes time.

What is more relevant is how brands are approaching the change. Fast Company spoke with Patagonia’s @Asha Agrawal and Madewell’s @Liz Hershfield. Agrawal points out that Patagonia must ensure that its resale platform makes money because this will allow the company to reduce the number of new products it produces while remaining a thriving business. “[Worn Wear is] already a profitable business for us. So now, it’s just about scaling this business proposition, which will allow us to cut back on our net new production.”

In contrast, Fast Company points out that most resale platforms don’t generate revenue for brands, including ThredUp and Recurate, which helped launch resale sites for Mara Hoffman, Steve Madden, and Outerknown. Madewell’s Hershfield states, “We weren’t looking at profitability, but we want to break even financially. We do this to ensure we’re meeting our sustainability goals.”

Madewell’s Forever (their resale partnership with ThredUP) is indeed good in many ways, including keeping items in use and driving customer expectations for resale. But because Madewell doesn’t have a business model to make money on selling pre-owned items, Madewell isn’t set up to shift its business away from a linear model. This and many other brand resale programs work in a philanthropy model rather than a business model change.

The importance of a profitable business model extends beyond sustainability as more brand items are sold everywhere. EXPRESS Pre Loved, powered by LXR, quietly added 150+ luxury products to its online storefront, including Gucci, Chanel, and Louis Vuitton. EXPRESS makes it easy for their customers to shop across new and pre-owned as part of their marketplace program, including shared cart, which only 25% of brands offer today. All of this works for EXPRESS but not for the brands they now sell. The obvious risk here is that brands who never choose to sell to EXPRESS have zero control on how their items are priced, merchandise, or authenticated.

Chloe made news this week by announcing it would digitally label all pieces by 2025, starting with a 20-piece capsule collection this year. As WWD reports, this part isn’t new news, as many brands do this today across their full range of products. This is an essential strategy for the authenticity and future value of their products.

What was more interesting, was the splashy headlines such as Vogues,