The resale market is growing quickly as consumers become more mindful of sustainable practices. According to a recent report from RLA member ThredUp and research and analytics firm GlobalData, secondhand apparel sales are expected to reach $70 billion by 2027, from sales of $44 billion in 2023.

In 2022, 52% of all consumers shopped secondhand apparel, according to the report, and in particular, two in five items in Gen Z's closet are secondhand. Gen Z is defined by the U.S. Census Bureau as those born between 1997 and 2013.

Sustainability practices are among the reasons for this growing trend. Retailers are also embracing resales as a means to mitigate the cost of returns and serve as a new revenue stream. Returns management is also being included in more retailers' Environmental, Social, and Governance (ESG) reports to help measure such impacts as carbon emissions.

ThredUp notes in its report that buying and wearing secondhand clothing instead of new reduces carbon emissions by an average of 25%.

Besides the sustainability benefits of secondhand retail, many retailers are still faced with excess inventory from 2022 supply chain disruptions and are working these inventories down while being more cautious in adding new inventory.

"What we're seeing now is the opposite of growth problems: 'How can I effectively manage my inventory because I can't afford to have excess inventory on shelves?'" said Jonathan Poma, Loop Returns' co-founder and chief executive officer in a Bloomberg interview.

ThredUp, RealReal, and other similar businesses offer online resale platforms for such retailers as J. Crew, H&M, Hanna Andersson, and 11 Honoré, as well as for individuals and traditional consignment and/or thrift stores.

J. Crew's initiative "J. Crew Always" includes a resale program powered by ThredUp's Resale-as-a-Service and a program to sell vintage fashions in stores.

H&M is also partnering with ThredUp's Resale-as-a-Service. "We need to take responsibility for the impact fashion has on the climate and the environment. Circular business models can help us reduce and limit this negative impact while continuing to deliver fashion and style for our customers. With the launch of our first resale model in the US market, we're taking the next big step in that direction," Abigail Kammerzell, Head of Sustainability, H&M North America, said in a statement.

ThredUp and RealReal act similarly to 3PLs in that they may receive retailers' returns, disposition the items, pick, pack, and ship orders. They also handle retailer-branded website setups.

FloorFound is a similar online platform but focused on furniture. Besides offering website setups, FloorFound operates five dedicated centers with ½ million square feet of reprocessing space. The processing centers are equipped to consolidate returns, receive returned or trade-in items directly from consumers, and bulk transfers from warehouses or other collection points. Team members carefully inspect and grade every item and repair and refurbish items as needed.

Using these types of solutions to manage returns can help protect the brand by ensuring items are authentic versus counterfeit. These solutions can also help protect a brand's reputation by mitigating counterfeits and keeping the returns and the pricing structure in the hands of the retailer.

According to consulting firm BCG, the secondhand market is worth three to five percent of the overall apparel, footwear, and accessories sector and could grow to as much as 40%, depending on macroeconomic conditions.

A note of caution for retailers and brands — their resales may compete against their promotions as consumers look for bargains, particularly in today's uncertain environment.

Tony Sciarrotta is Executive Director of the Reverse Logistics Association. The RLA offers various tools, white-papers, and monthly webinars that provide best practices in managing reverse logistics.

This article originally appeared in the May/June, 2023 issue of PARCEL.