how to convert resale into new sales

We have previously written about different branded resale business models, but we are betting on indirect monetisation as the winning resale business model. In short, yes you can earn money from resale, but you'll pretty much always make more money selling new (higher margins, higher prices).

So how exactly do you leverage resale to target new customers or retarget existing customers to return and shop new?

Customer Retention

A classic move in branded resale is to ask the customer to handover an old garment in exchange for some store credit which they can put towards their next purchase. The store credit is modest, positioned as a thank you rather than payment for the garment itself. For example, Eileen Fisher will give you $5 for each piece you give back.

The incentive to shop again is supercharged in a peer-to-peer resale model because of the higher economic incentive and data generated.

As there are fewer costs involved (no warehousing, cleaning, photographing), the customer can earn a much higher payout. This frees up a meaningful amount (items resell for ~50% of the cost of a new item) and gives credence to term 'investment piece' which lifts confidence for the consumer to shop again from your brand.

Peer-to-peer transactions generate a valuable trove of zero party and first party data including phone numbers, emails, alerts, saved item, comments and listing data. For example, just earlier today, we verified a listing on Longway Pre-Loved where the seller has written "Awesome pinstripe Longway Baggy Tie Pant, Size XL - Excellent Condition. Only selling to get a different size." There would be simply no way for our client to otherwise know their customer needs a different size, but through our retargeting tools, we can offer the right size as easily as it is to offer an exchange during the returns process.

Customer Acquisition

It's tough out there. Many brands haven’t fully recovered from the Facebook / iOS changes from a couple years back, it's a slow macroeconomic environment right now with retail sales in the US plodding along at best. And just to make the job even harder, we'd love to see the industry reduce overall production and make fewer, better garments to address sustainability issues.

How are you supposed to pry open a first-time customer's wallet to spend on quality pieces from a brand they've never purchased from before?

We find that adding pre-owned into the mix, or as an alternative to promos and discounts is a great way to go because this is exactly what customers are doing organically. Secondhand is a countercyclical trend, and right now, customers are flocking to thrift stores and online marketplaces like Poshmark, TheRealReal & depop to get their fix (1 in 3 apparel purchases last year were secondhand). Branded resale allows you to capture more of this wallet share and more importantly, retarget the customer to shop new after the secondhand transaction has been completed because they have now had the opportunity to experience and wear the clothes and see the quality for themselves.

It's important to note that unlike discounting new stock, lower prices for secondhand are attributed to the pre-owned condition, not because of lower product quality. In fact, the opposite is true. The ability for your items to be resold demonstrates the durability and value, making the customer to feel safer to shop your products new.

We do see variability in the uptick in customer acquisition from resale. Some factors include price point and brand awareness. For many of the smaller, independent labels we work with, we observe approx. 33% of pre-loved customers making their first purchase from the brand. For more popular brands like Kate Spade, an incredible 90% of pre-loved buyers are new customers.

Building Community

We would love to see brands and retailers step up and embrace playing matchmaker to bring together buyers and sellers. It's a deeply valuable role that no other party can fulfil in the circularity ecosystem. The original order history gives you the unique opportunity to link up unmet demand with unlisted supply by inviting your customers to easily list items they aren't wearing. A branded resale marketplace becomes the watercooler for customers to come together to trade, and then stay for a chat. Through our comments feature, we see customers exchange sizing/fit information to help others make the right purchase decision for their height and body type and see otherwise shy customers upload their own photos in order to sell.

We all know social proof plays a vital role in influencing consumer behaviour and building trust in a brand, but it can be hard to get. A peer-to-peer resale marketplace provides an ideal platform for customers to publicly comment and post photos because it unlocks financial value for them to do so (to make money through selling, or save money from buying pre-loved), which generates valuable social proof for your brand.

These are just some of the ways that resale can be leveraged to benefit your brand and core business of selling new - more to come!