As fast fashion continues to go out of fashion and retailers remain under the microscope for ethical and sustainable business practices, the apparel industry will need to shift how it thinks about returned and secondhand clothing. If a recommerce solution is not on your radar, it should be. Here’s why.

Driven by sites like Poshmark, ThredUp, and the RealReal, the apparel resale market is outpacing the primary and becoming the go to fashion staple for socially-conscious Millennials and Gen Z. Consider this: these two generations are likely to spend more money with their favorite retailers if those retailers sell secondhand apparel or have an environmentally conscious way of dealing with returned and excess stock. This clear shift in consumer behavior is putting pressure on retailers to have sustainable business practices and implement recommerce solutions for their returned and excess merchandise.

Let’s take a look at some of the recommerce solutions available depending on your goals (revenue boost; brand loyalty; brand protection; offset loss; operational efficiency).

Returned, Inspected, Resold To Consumer via Private Label Site

Brands like REI and Taylor Stitch have launched online, private-label sites to resell used, repaired, or rebuilt items to consumers. All the items have been inspected and are sold at a discounted, set price; in most cases demand is greater than supply and items sell out quickly.

By having their own recommerce sites, these retailers are able to manage - and dominate - their brand’s own resale market. The marketing, quality and channel control, and the ability to capture previously untapped revenue, is a huge win; not to mention the positive brand image and loyalty that is established.

3rd Party Resale Marketplaces

Secondhand sites like Poshmark, ThredUp, and The RealReal are driving a secondary market ecosystem of selling and buying, but in a polished and trendy environment. What’s more, they are serving as small-business incubators: what began as someone selling a handbag out of her closet has shifted into a full-time reselling business (and with it, a need for consistent merchandise to resell).

You can take advantage of this growing apparel reseller community by leveraging or creating a sales channel that caters and markets - on your terms - to this specific buyer group. This might include selling via a B2B recommerce marketplace that connects your returned and excess merchandise directly to fashion resellers.

A Customized B2B Online Auction Marketplace

Many retailers are opting to build their own B2B marketplaces in order to auction bulk quantities of returned and excess merchandise to business buyers around the country. From salvage and discount store owners to online sellers to mom-and-pop shops, refurbishers and exporters, a robust buyer base exists for just about every product regardless of condition. What’s nice about an online auction channel is that it makes it just as easy to sell to a thousand business buyers as it does to five jobbers. More buyers generate more demand: this pushes prices up and allows for a faster sales cycle.

A marketplace also enables a consistent auction cadence: you can list every week (versus letting inventory pile up in your warehouse until the end of the season). Nine of the top 10 U.S. retailers are currently using their own private auction sites to sell excess merchandise directly to their own specific and approved buyer base.

Obviously a direct-to-consumer resale site (like what REI and Taylor Stitch are doing) is best for channel control and brand protection; that said, there are plenty of ways to avoid channel conflict if you choose to go the B2B marketplace route. For example, set specific restrictions on your buyers; this could include: mandating all items be delabled prior to resale, excluding resale on 3rd party sites, establishing geographical limitations, setting remarketing rules, and selling only to exporters.

Contemplating a recommerce solution is one thing but let’s look at what it actually takes to implement and drive a recommerce program.

Dedicate Resources: Given the complexities involved in running a recommerce business it’s important to put a strong team in charge. This might include having a project manager to oversee all aspects; one who can build the program, get it going, and continue to evolve it. As this area of the business becomes more prevalent, you should think about building out a dedicated team to support on an ongoing basis.

Outsource If Need Be: Partnering with service providers who specialize in returns management and remarketing can smooth the process for retailers and brands. The operational aspects of processing, sorting, and listing items for resale can be complex and not necessarily the core competency of the retailer. This is especially true if you resell via a B2B online auction marketplace platform: knowing how to best assemble inventory as well as how to target, drive, and sustain the right buyers will substantially increase pricing and velocity. In this case you should look for a vendor that has online marketplace expertise.

As the stigma of used fades and secondhand becomes in vogue, it’s time for retailers to jump on the recommerce bandwagon. A win for your brand and a win for the environment.

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Howard Rosenberg
Howard Rosenberg is CEO and co-founder of B-Stock, the world’s largest marketplace for returned, excess, and other liquidation inventory. Nine of the top 10 U.S. retailers, among hundreds of others, are leveraging B-Stock’s technology and service offerings to sell billions of dollars in consumer returned and excess inventory directly into the secondary market.