Will Resale Businesses Outlast E-Commerce?

The clothing resale market is bursting at the seams, growing 21 times faster than its traditional retail counterpart since 2016 – with no signs of slowing down.

In fact, it could be just the beginning of resale’s seemingly unceasing growth spurt. Experts predict the $24 billion industry will more than double in size over the next ten years, swelling to $64 billion by 2028.

At the same time, a significant number of traditional retail store closures and sinking sales figures has many big-box retailers and department stores re-thinking their business models.

What are the two biggest retail industry disruptors underscoring this seismic shift? The rise of e-commerce and resale.

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The e-commerce and resale segments have taken a great deal of market share from traditional retail, but each member of the industry-disrupting duo doesn’t pose a similar risk to one another.

Here’s why resale businesses are on pace for astronomical growth – and why e-commerce is not a threat:

Sizing up New Consumer Needs to Alter an Industry

Overtaking an industry isn’t as simple as being the “latest and greatest” to arrive onto the scene. Rooted in a broader cultural and consumer shift, the main driver catapulting some segments toward success is much more nuanced.

Newer brands or segments may cause a momentary stir, but mustering up some attention doesn’t always beget staying power. Instead, industry-disrupting forces are fueled by their unique ability to satisfy ever-changing consumer preferences, lifestyles and priorities.

E-commerce and resale succeeded where traditional retail failed because both the secondhand and online store segments filled a new consumer need.

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Fitting in with Fundamental Values: How Resale Does it Best

Resale concepts inherently fit in with new consumers’ core values and deeper morals.

By aligning with a more profound consumer ethos, the resale industry is positioned to appeal to consumers in an even more powerful and meaningful way than much of the online retail sector.

Particularly impactful is resale’s alignment with consumers’ strong concern for the environment, and its fulfillment of their overwhelming preference for eco-friendly businesses.

Millennials and Generation Z are more environmentally conscious than any other generational cohort, and the vast majority of them say sustainability is a top shopping priority.

The resale industry appeals to these consumers because it promotes recycling and sustainability, as it keeps billions of items out of landfills.

Resale concepts also discourage manufacturers from overproducing clothes and other consumer goods. This helps reduce air and water pollution, while circumventing many other environmental pitfalls caused by the fashion industry.

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And, despite three in four younger consumers saying they would pay more for eco-friendly brands, these cost-conscious shoppers still love a good bargain.

Coinciding with consumers’ inclination toward frugality, resale concepts offer a strong selection of brand names and quality items – with a significantly smaller price tag than traditional online or brick-and-mortar retailers can offer.

Avoiding the Amazonian E-Commerce Giant that Overtook Traditional Retail

The rise of e-commerce was an obstacle for traditional retailers, many of whom were forced to either adapt their concept or close their doors.

Changing consumer shopping habits were partially to blame. But, even more consequential, was the increased pressure big-box retailers felt from increased online competition – namely, Amazon.

Accounting for nearly half of U.S. e-commerce sales in 2018, the online retail giant poached a great deal of business from traditional retail stores. Yet, while Amazon became such a huge competitor in the online shopping sphere, its market share shouldn’t be overstated in overall retail ecosystem in which it controls just 5 percent of the total retail market.

Resale’s unique business model and key selling points put it in a completely different category than Amazon. When consumers want significantly lower-than-retail prices, from an entirely eco-friendly business, they turn to resale concepts – and Amazon doesn’t compete.

Brick-and-Mortar Resale Stores are No Worse for Wear

Additionally, while e-commerce has undeniably overtaken a chunk of the traditional retail marketplace, there will always be a place for brick-and-mortar. In fact, nearly three in four purchase decisions still take place in-store.

Brick-and-mortar resale businesses are especially immune to e-commerce’s potential challenges, because of their two-tiered business model and unique value proposition for sellers.

For those looking to resell their quality used items to a secondhand shop, brick-and-mortar concepts are much more efficient than online-only re-commerce concepts.

With a physical resale store concept, sellers can walk in any time and get cash or credit on the spot for their quality used items.

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Conversely, many re-commerce concepts require sellers to make an appointment with an appraiser, meet with them, get a price quote – and then pack up and ship the items to a warehouse.

Not only is this much less convenient for the seller, the whole process also takes a lot longer.

Brick-and-mortar resale stores offer sellers – the vast majority of whom are also customers themselves – a strong incentive that online-only resale concepts can’t replicate.

Moreover, many brick-and-mortar resale stores, like Music Go Round and Play It Again Sports, have added ecommerce channels to their existing businesses, allowing their franchisees to compete both in store and online and meet the customer wherever they want to shop. This unique platform allows these stores to flourish where their competitors continue to struggle with being truly omnichannel.

Where Resale Fits in, Stands Out and is Ready for Future Successes

Resale concepts are uniquely positioned to beat out any potential competitors both on and offline.

Traditional retailers and e-commerce sites can’t compete with resale businesses’ unmatched pricing and inherently sustainable business practices. And, even within the resale sector, online-only re-commerce sites will never replace brick-and-mortar or bricks-and-clicks resale businesses.

Because of resale’s strong appeal to modern consumers, in addition to its highly-differentiated business model, booming resale businesses are set for success in the evolving landscape.

If you’d like to learn more about franchise opportunities within the flourishing resale segment, start by filling out the Winmark franchise form.

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