Ecommerce Data Determines Fashion Designers' Brand Value In $14 Billion Used Clothing Market

Technology has turbocharged two frowzy old industries: sales of used fashion items and rentals of others. Price, data and convenience democratize yet another sector of the economy. JL

Christina Binkley reports in the Wall Street Journal:

The highest value is in designer handbags. The Hermès Birkin sells at 84% of its original retail price. Logos are popular among resale shoppers. Shoes are good retainers of value. Used Activewear items sell at roughly 48%, maternity dresses sell at about 39%, formal gowns, at 40%. Suits sell for only 16%. “Nobody tries to sell you a car without its liquidate-able resale value.” Buy the classics and supplement with trendy looks from a rental site.
Exactly what is the value of a twice-worn Dolce & Gabbana gown?
It is easier than ever to buy and sell used designer clothing, with the growth of resale sites such as Poshmark, ThredUP, Tradesy, The RealReal, Vestiaire Collective and others. But for women seeking to clear out their closets—or looking to buy a gently used handbag—it is hard to tell when the price is right. Kelley Blue Book will estimate the value of your Chevy, but for fashion, it is guess as guess can.
Yet clothing-resale sites are emerging as massive repositories of data on what items and brands people are searching for, which items sell, for how much, and how quickly. Tradesy, a Los Angeles-based resale site, recently delved into its data to figure out how much value different brands and kinds of products retain over time. The findings, culled from data on 2,237,644 items in Tradesy’s database over the past 36 months, shed light on what is selling—and perhaps on what is worth buying.
Now might be a good time to cull your workout clothes. Lululemon, in particular, is hot, with used items selling at roughly 71% of their original retail price on average. Shoppers are looking for fashionable workout gear. The catch: It is best if you didn’t actually work out in it. Activewear in general sells at 48%—but consumers prefer it in new or like-new condition.
Brands that aren’t easily found on sale, such as Louis Vuitton, Hermès and Chanel, maintain their value far better than frequently discounted labels such as Ralph Lauren and Calvin Klein. Dark colors—especially black—hold value better than light colors.
Ready to part with your maternity wardrobe? Maternity dresses sell at about 39% of their original retail price, holding their value better than any dress type other than formal gowns, at 40%. Gowns sell slowly, though, so if you are thinking of raising quick cash, your accessories and shoes may be more productive.
The women of J.P. Morgan, whose offices went business casual last week, may be ready to unload some business suits, but they won’t find a ready resale market. Suits sell slowly and hold their value miserably, selling for only about 16% of their original retail price—the worst of any clothing category.
The suit glut is a sign of our casual times. “There’s tons of supply and very little demand,” says Tradesy founder Tracy DiNunzio.
Fashion resale sites act like online consignment shops. Most charge the seller a commission—anywhere from 9% to 30%—and offer varying levels of service. The RealReal will send a buyer to some clients’ homes. ThredUP and MaterialWrld send a shipping bag to sellers to ship goods to the buyers. Most sites allow sellers to set prices, or accept a price set by the resale site. Tradesy allows sellers to handle their own listings and shipments, but it helps sellers set prices—based, it says, on its experience, as well as the way the sellers describe their items’ condition. The original retail prices are provided by the items’ sellers.
Resale sites specialize in different kinds of items. Designer-level site MaterialWrld won’t accept J. Crew or Zara products, while lower-priced Crossroads Trading lists those labels among its top-sellers. Consumers can read between the lines to find out what is selling. Poshmark lists “trending brands” on its home page, encouraging people to cull their closets. This week, they included Gucci, Tory Burch, Kate Spade and Juicy Couture. The RealReal discourages selling trousers.

The issue of value may move further to the forefront as the resale industry matures. The apparel resale market in 2015 reached an estimated $14 billion in revenue annually, according to ThredUP’s 2016 Resale Report. Those numbers exclude sales on eBay and Craigslist.
A survey by ThredUP last year found that more than half of respondents said they had made their first secondhand purchase online that year—many of them shifting from shopping at discount retailers. The potential for large numbers of new consumers has drawn venture capitalists, helping clothing resale sites to consolidate as they gobble up rivals like Bib+Tuck and ThreadFlip.
Tradesy, founded in 2012, last year purchased rival site Shop-Hers.com and just announced its latest round of venture funding.
Fashion retailers long had rocky relationships with resellers amid concerns about circulating fakes. But resale sites have grown more sophisticated about sussing out fakes, and retailers have noticed that the secondary market can give consumers another reason to buy expensive fashions. MaterialWrld works with more than 900 stores, showing new items alongside resale items and allowing consumers to shop both new and used.
Womenswear is the only kind of fashion to have much resale value. The market for used men’s fashion is nascent, and the secondary market in children’s clothing hasn’t developed much, though ThredUP does deal in children’s clothes.
“Nobody tries to sell you a car without knowing its liquidate-able resale value,” says Ms. DiNunzio of Tradesy. She advocates shopping for fashions with high resale value—and does so herself.
The highest retention of value in fashion is in designer-brand handbags. A used Chanel Le Boy bag sells for an average 86% of its original retail price, closely followed by the Hermès Birkin, at 84%, according to Tradesy’s data. The better the bag’s condition, the higher the price.
Weighing the purchase of a Louis Vuitton bag? It might be worth considering that the Neverfull model sells for 73% of its original price, compared with the Alma’s 44%.
Logos are particularly popular among resale shoppers. Logo-haters may be surprised to learn that their less-easily identified Vuitton Epi leather bags hold significantly less value than their monogram counterparts—selling for only about 34% of original retail price.
Shoes are also good retainers of value, with Chanel again leading the way. Those Christian Louboutins with the recognizable red sole are golden resellers, with used shoes selling for 64% of their original price. And with outerwear, Burberry BURBY 1.64 % is a hero, with those well-made, classic trench coats selling readily.
Brands that are edgy and on the rise with the fashion cognoscenti don’t resonate in the same way at resale.
Ms. DiNunzio shops these days with the help of her site’s data. “I don’t buy anything unless I know it’s going to retain 80% of its value,” she says of jewelry and accessories.
Clothing rarely retains that sort of value, but she has been betting on The Row and Victoria Beckham lately because the labels have been performing well on Tradesy and they display other qualities of top resellers: classic styling and high-quality manufacturing.
In October, she purchased a Victoria Beckham patchwork dress for $4,500 on Net-a-Porter and wore it often to a number of functions. It was the most she’d had ever spent on a dress, but her net cost came within her personal spending limits after she sold it this year for $3,050. Tradesy keeps 9% of the sales price as commission.
Given that, Ms. DiNunzio suggests a newfangled strategy for fashion investing. Buy the classics, she suggests, and supplement them with colorful trendy looks from a rental site.