Why Luxury Brands Must Control Their Own Recommerce Channel

One big conversation at last week’s Shoptalk conference of retail and tech leaders focused on luxury recommerce and how to offer a branded luxury experience with pre-loved items. It’s not lost on the brands themselves that embracing recommerce is their biggest opportunity to capture and retain more Millennial and Gen Z consumers. These consumers demand more sustainable shopping options; however, the luxury brands have been slow to catch up with these new consumers and have given away recommerce market share to third party platforms such as The RealReal, Vestiaire Collective, and ThredUp.

At the same time, making money by selling pre-loved fashion, including luxury items, has proven to be elusive. Business of Fashion recently questioned whether resale can ever be profitable, prompted by the fact that publicly traded companies like The RealReal have yet to turn a profit. The first movers in markets are not always the winners at the end of the day. Along with increased competition in the resale space, the processing, authenticating, and listing thousands of unique items digitally is a significant impediment to profitably.

Resale Marketplaces Aren’t the Only Option for Luxury Players

One person who does believe that money can be made by branded luxury resale is Andy Ruben, Founder and CEO of Trove, which allows brands to reclaim control of their own pre-loved merchandise. He predicts that much of the increased competition within this sector will come directly from the luxury brands themselves. When we sat down together at Shoptalk, we discussed how branded recommerce is the future for luxury fashion. In fact, it’s the only way luxury brands like Dior, Louis Vuitton, and Valentino can control their intellectual property and retain this new luxury shopper.

Luxury brands used to be allergic to the idea of reselling pre-owned fashion but they have acknowledged the shift in consumers’ perception that the luxury experience today is no longer tied to the satisfaction of being the first owner of a product. High resale turnover and attractive prices, for both buyer and seller, indicates that the value of well cared for luxury goods do not distinctively erode over time. It makes perfect sense for luxury retailers to embrace new opportunities to keep these consumers within their own ecosystem. In fact, a recent report by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania confirms that 65% of American consumers prefer brand-operated resale over third-party platforms.

Technology Powering Resale For Luxury Fashion

How can these brands successfully offer more than one-off vintage pieces? If one considers the fact that third party platform Vestiaire Collective alone adds 140,000 new items to their online inventory each week, it becomes apparent that new technology is the key to drive success in the pre-loved categories. When an Hèrmes Himalaya Birkin is offered on Farfetch, that bag is one of one. But when it comes to reselling thousands of Burberry trench coats, digitizing the shopping experience to offer consumers a seamless & pleasant experience is more complicated. As Andy told me, the tech involved in being able not only to authenticate but also to merchandise “hundreds of thousands of snowflakes” is extremely complex.

The good news is that technology solutions can power resale as a channel for fashion and luxury brands. They reduce the complexity so that the brands can merchandise their assortments of pre-loved products into a coherent message for their customers. Trove’s technology enables brands to grow their businesses sustainably without increasing their carbon emissions and is working with brands including Patagonia, Lululemon, and REI to further that purpose.

By controlling their own resale channel, luxury brands will be able to offer their consumers a much richer and more authentic brand experience than any third party. Cultivating a deeper relationship with the consumer that goes beyond simply the transactional can be achieved by offering early access to new merchandise, incentivizing trade-in for new items, and other VIP perks. Moreover, the brands themselves will gain invaluable data and insights that will allow them to foster a much more loyal consumer for life.