Reverse commerce, or "recommerce" as it's commonly referred to, is the process of reselling used products to consumers who are willing to give items a second life.
Luxury and electronic resale has been around for sometime, and has been able to work online due to the high dollar amount and margins of the items, and relatively low volume, but an online discount thrift store hasn't always been feasible.
Through artificial intelligence and machine learning, Swap.com, an Illinois-based startup is utilizing these technologies to make reselling of discounted items work despite razor thing margins, leading the company to raise $32 million in venture capital funding.
The rise of fast fashion has prompted the question regarding the impact that apparel companies that are constantly churning out new products are having on the environment.
VF Corp VFC, a $12 billion gobal apparel and footwear company has stated its intent to shift towards from a linear to a circular business model through recommerce in an effort to become a leader in sustainability within the fashion industry.
“We need to make the second life of apparel second nature,” says Letitia Webster, VF Corporation’s vice president of global corporate sustainability said in a recent interview.
Benzinga was able to catch up with Swap.com's Chief Marketing Officer Rich Lesperance and its CEO and Co-FounderJuha Koponen for a look into the a thriving "recommerce" industry. Answers have been edited for length and clarity.
Benzinga: What is Swap.com?
Lesperance: Swap.com is the largest online consignment and thrift stores, with more than 2.3 million items for customers to choose from, which is nearly three times more inventory than the closest competition,
Benzinga: How fast is online consignment growing?
Lesperance: As an industry, we're only scratching the surface. There is a staggering amount of unused, pre-owned merchandise with an estimated value of more than one hundred billion dollars annually. And while there is a large demand for secondhand, the merchandise hasn't been moving mostly because there hasn’t been a practical nor convenient way to purchase these items online. With more than 30 percent of Americans shopping thrift and consignment stores each year, we have an incredible opportunity to make an impact.
Benzinga: You say the industry is growing. Can you quantify that at all?
Lesperance: Recent reports have shown that thrift industry, also known as “recommerce,” is valued between $15-18 billion.
Benzinga: What makes Swap.com different from Poshmark?
Lesperance: We’re the only online consignment shop that offers a selection for men, women and children. We’re focused on everyday items for everyone, whereas many of our competitors are heavily focused on high-end designer goods.
While we do have premium and designer brands in our inventory, our customers are looking for great quality gently worn clothing for their whole family at 80-90 percent off retail and they find it at Swap.com.
Benzinga: Ivanka Trump's brand is the No. 2 fastest-selling premium brand on the platform. Why do you think that is?
Lesperance: The secondhand marketplace continues to be a place to get coveted brands that are either no longer available or are harder to find at retail, which is the case for the Ivanka Trump brand. We have seen a similar response for Victoria Secret swimwear and the Merona brand from Target, which get a second life in the secondhand market when they are no longer available at retail.
Benzinga: Based on what you’re seeing when it comes to sales, why is Gap's GPS Old Navy a top volume brand?
Koponen: Unlike high-end consignment boutiques, our core customer is mainly looking for high-quality, casual clothing for work, school or everyday wear throughout the year. Old Navy is one of the largest clothing brands in the US (third in sales in 2015) and a great fit for Swap.com shoppers looking for a great value without sacrificing quality or style.
Additionally, secondhand shopping is perfect for kids, who outgrow their clothes before they wear them out. This explains why our list of the top 5 selling brands by value from 2017 are all kids brands, including Old Navy. Old Navy was also the No. 2 top-selling shoe brand.
Benzinga: Ralph Lauren Corp RL is a top performing premium brand on the platform, surprising considering the brand has been struggling over the past few years. What makes it thrive on the second hand market?
Lesperance: Ralph Lauren is a perfect brand for the secondhand market, providing the ideal intersection between classic style and quality. Their clothes don’t go out of style, giving them timeless appeal, and the quality delivers long wear. It is a brand shoppers know and trust and at 80-90 percent off average retail price, the value is definitely appealing to secondhand shoppers.
Benzinga: Why are Levi’s and Rock and Revival the top brands on Swap?
Lesperance: Premium denim is highly sought after in the secondhand market. As prices are 80-90 percent off retail, quality fashionable premium denim can become a much more affordable option for people who want the popular trendy brand but don’t want to pay the original high price ticket.
For example, Rock and Revival denim typically retails for around $150 to $200, but on our site you can get a pair for around $30. Another reason denim is popular secondhand is because of the cool factor that comes with having an authentic worn-in look. Believe it or not, we’ve done our research and have seen some people are willing to buy a pair of secondhand Levi's from before the 1980s for $8,000.
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