One retailer’s supply chain woes is a reseller’s gain.
The apparel sector (in an analysis of online U.S. retail) is top-of-the-pile for out-of-stocks leading into the holidays, according to Adobe Analytics’ October digital economy index report.
More than a little opportunistic, resellers — among them peer-to-peer platforms like Grailed, consignors like Fashionphile and ThredUp and re-commerce players like Trove — are gearing up for how holiday entanglements could benefit their own businesses.
And what happens next could accelerate the category’s already-growing set of consumers.
Not all resale business models are the same in how they prepare for holiday. While resale “holiday” typically trails that of retail with sales spikes well into February due to bad gifting and returns, in the midst of fashion’s near-term supply crisis — resellers are speaking up.
Incentivizing Cyber Sellers
At the mercy of its power sellers, peer-to-peer resale sites like Grailed are strategic in their holiday messaging.
“We don’t really have to ‘gear up,’” Arun Gupta, founder and chief executive officer of luxury resale platform Grailed, told WWD. “What we do instead is [amplify] seller education. We have sellers making $500,000, $1 million a year, $1.5 million a year, and we want to tell them ‘Hey, this is how you take advantage of the holiday shopping season. Here’s how you communicate to your buyers, here’s how you price your items, do price drops. Here’s how you do merchandising. Here’s when you post items for sale.’”
Gupta thinks of Grailed more as a “facilitator” and incentivizer focused on getting its millions of listings sold. And to do it, Grailed is launching a Cyber Weekend campaign, which trails Black Friday and falls on Nov. 29 this year.
“The challenge that we have is if we were Saks, or any retailer, we could just drop 10 percent across the board. Grailed doesn’t set the prices…so whether [sellers] choose to take advantage of sales season or Cyber Weekend is up to them. It’s up to us to illustrate to them [the benefits].”
Calling it a dovetail effect to “aggregate demand,” Gupta said Grailed is offering up new buyer incentives like a $25,000 wardrobe allowance for a year full of outfits from Grailed or $10,000 of free merchandise simply by signing up and making a purchase. “We’re doing that to bring all these buyers to our site for our sellers. Then on the other side of that, we’re telling sellers how to take advantage of demand.”
Sellers are encouraged to drop prices by upward of 40 percent across luxury, streetwear, sneakers and vintage items. Gupta said brands like Fear of God, Gucci, Aimé Leon Dore, Rick Owens, Theory, Nike, Off-White and Rude are favorites for holiday.
Without providing specific sales, Grailed anticipates an 9 percent growth in this fourth quarter compared to the same time last year. Last year, the company operated its sister-site Heroine, which is now absorbed into its existing business, as WWD reported.
“Who knows, honestly,” Gupta continued. “This has been such a weird year and people are finally shopping again after pulling back a little, and with supply chain issues, this could be a crazy Q4. [Resale] is coming more into the mainstream consciousness.”
Site-wide Price Drops
Where product is consigned, the reseller gets more freedom in how it runs its holiday show.
Online consignment and thrift store ThredUp is also playing a pricing game, offering up 35 percent off discount codes left and right (for orders less than $150) while axing prices on holiday dresses, puffers, designer bags, cashmere, trenchcoats and other seasonal merchandise.
ThredUp founder James Reinhart, said during the company’s earnings call Monday, “We have chosen to strategically lower prices in order to engage as many customers as possible during a time when consumers are feeling price pressure in many other parts of their life.” The company touts a 35,000-strong brand Rolodex, and localized inventory sourcing for its U.S. business (leveraged by its easy-to-use Clean Out Kit).
But while there’s no problem keeping shelves stocked, consignors like ThredUp could wind up in a bind with potential sellers expecting reasonable, quick pay-out for goods consigned.
Last December, ThredUp issued a company blog statement that it was “experiencing longer than usual processing times due to high volume and reduced staff in our distribution centers.”
Over the past week, customer reviews for ThredUp on consumer rating platform Trustpilot are casting doubts on the ease of selling with reviewers reporting two-, three- and even six-month turnaround times for receiving/processing Clean Out Kits.
“Do not expect to earn any money. At the time I submitted my cleanout bag, they said it was a three-month turnaround time, and it’s been four months and the processing date keeps getting pushed back. They will not prioritize seasonality of items,” wrote one reviewer Andrea, on Monday.
That same day, the publicly traded company reported $63.3 million in revenue over the third quarter of 2021, 35 percent growth over last year. In the earnings call, Reinhart said bag processing times (for Clean Out Kits) are around 12 weeks, on average, across its distribution network.
“I mean I think there’s a lot of bluster out there around the supply chain markets — or the supply chain in the traditional apparel markets,” Reinhart said. “I think in a normal quarter we might see some tailwind from that. But again, I think in our prepared remarks, the fourth quarter typically is not our strongest quarter because of the way gift giving trends around the holidays kind of play out.
“So I don’t think that we’re counting on benefiting from some macro trend at the moment. But I think if that — if the supply chain challenges persist into the first quarter and the second quarter next year then, yes, I could imagine us benefiting from some of those macro tailwinds.”
Copping Ultra-luxury ‘Must-Haves’
Before you can cop your must-have bag — the reseller wants to.
Yet another luxury pre-owned purveyor (which buys, sells and consigns luxury handbags and accessories), Fashionphile is doubling up on inventory, buying twice the amount purchased this time last year. Although estimates were not given, the site reported stocking 15,000 items in 2019.
“Our supply doesn’t come to us via cargo ships. It comes direct from individual closets to us. While many of our brands are dealing with significant supply chain issues, our inventory is coming in only faster and in larger quantities as we gain awareness,” said Sarah Davis, founder and president of Fashionphile.
“We’re not only getting ready for holiday, but we’re just keeping up with demand for our selling services as well as demand for the product we are selling,” she added.
Luxury resale was growing four-times the rate of luxury goods in 2019, according to data from Boston Consulting Group and Altagamma in its True-Luxury Global Consumer Insights Study.
Davis said Fashionphile anticipated 100 percent year-over-year growth over holiday, “but we are already beating our projections with over triple-digit growth. The perfect storm of supply chain challenges and a more conscious customer are going to be huge for resale this year.”
Resale Compared to E-commerce
“The supply chain delays are going to stick around for a while,” said Andy Ruben, founder of Trove. “The significance of this can’t be overstated, and they’re across every partner we work with.”
Trove works with Lululemon, Patagonia, Eileen Fisher and Nordstrom, among others. In a push for sustainability, Trove recently released a resale displacement calculator showing environmental savings of resale at the point of sale (showing, on average, 43 percent carbon saved in buying used).
With used goods, the argument is that a product “doesn’t have to come from overseas and doesn’t have to be produced,” said Ruben, calling it a “bright spot” for retailers and a shift he likened to e-commerce. “The customer adoption is far greater and the supply chain disruption are both tailwinds to what’s happening here.…If people weren’t running before [to resale], they’re running right now.
“If we look back on e-commerce — e-commerce is bigger and bigger every holiday because e-commerce is the right future. It has been for a decade and a half. Holiday is a moment where that shines and then the next holiday is a moment where that shines, and the next one,” Ruben said. Putting it back into the context of resale, he added: “It’s a combination of multiple things that make this holiday a big holiday for resale, and the next holiday an even bigger holiday…but probably supply chain disruption is the most unique new one.”
Ruben reflected back on the broader picture: “It’s interesting that a year ago there was nowhere to sell the things that existed and now, there’s nowhere to get the things and plenty of customers to buy them.”