John Gapper reports in the Financial Times:
70 per cent of the average American woman’s wardrobe is unused and technology has made it easier to exploit this asset: Poshmark has 2.5m adult users, who upload $4m of inventory for sale each day. Reselling has expanded from Ebay to dedicated US sites and apps such as ThredUp and Poshmark, which encourage users to offload unwanted and “gently worn” or “preloved” items.
If you want to meet a ruthless financial trader, here is my advice. Forget the City of London or Wall Street; simply walk upstairs, knock on a bedroom door and say hello to your teenager.To judge by the experiences of friends and acquaintances with their offspring, there is a fair chance that yours is a market veteran. His or her asset class is not fixed income, equities or commodities but clothes and shoes.You may wonder what they do on their phones all day. They could be idly spending time on Snapchat and Instagram with friends but they are equally likely to be monitoring their Ebay or Depop accounts, trading Supreme hoodies and Palace caps.Kids have always been traders, of course: badges, sweets, vinyl records. But there is something impressive, if rather unnerving, about the scale on which these operate, and their financial and technological acumen.Simon Beckerman, founder of Depop, a London-based trading app, tells of a friend whose 14-year-old daughter needed money to buy herself a pair of shoes. She saw a necklace on Ebay that she believed was too cheap, so she took a screenshot of it and placed her own advertisement for the same item at a higher price on Depop.When someone bid for the necklace on Depop she filled the order by buying it on Ebay and arranging for it to be sent directly to her Depop buyer. She made her shoe money by selling jewellery she had never worn and did not own: give that young woman a job in arbitrage trading at Goldman Sachs.Clothes trading is not confined to teenagers: it has become common among adults, especially women. Reselling has expanded from Ebay to dedicated US sites and apps such as ThredUp and Poshmark, which encourage users to offload unwanted and “gently worn” or “preloved” items. A surprising amount has not been worn at all: it was bought on a whim or was an unwanted gift. ThredUp estimates that 70 per cent of the average American woman’s wardrobe is unused and technology has made it easier to exploit this asset: Poshmark has 2.5m adult users, who upload $4m of inventory for sale each day.But teenagers differ from older generations in the native ease with which they buy and sell clothes, often displaying photos of themselves wearing items they have just bought in order to sell them. Apps such as Instagram and Depop have eroded the barrier between ownership and marketing.Teenage fashion is at the cutting edge of the trading boom — a subculture in which batches of clothes and shoes are bought mainly to make profits from reselling. The most liquid market is streetwear by skateboard brands such as Supreme and Palace, along with cult Adidas and Nike shoes.The key is the “drop” — a sales technique pioneered by Supreme, a brand founded in Manhattan in 1994 that has become a trendsetter in fashion and distribution. You will have encountered a drop if you have passed one of Supreme’s shops in Los Angeles, London, Paris and Japan and witnessed lines of (mostly) young men lining up to buy a new batch of items inside. Supreme produces seasonal collections but drops them gradually instead of releasing them all at once. It does not declare publicly what will be in its shops each week — aficionados must check blogs and closed Facebook groups such as The Basement to find out. All this is finely calculated to create a sense of scarcity — one hoodie sold for $150 in Supreme shops in December but fetched $1,000 at resale.Supreme’s influence is spreading. Nike this month launched a limited release of 46 boxed pairs of basketball shoes endorsed by LeBron James, the Cleveland Cavaliers player. They were sold to benefit his team’s foundation on StockX, a sports shoe trading site, where they sold for up to $11,000 per pair. The same styles went on retail sale this week for less than $200.Such tactics are starting to make the clothing industry work like the financial one: instead of prices being fixed by sellers, they are influenced by supply and demand on exchanges. Brands attempt to stimulate excitement by keeping a tight rein on supply, as fast fashion retailers such as H&M and Zara do with limited edition collections by well-known fashion designers.Do not feel sorry for the teenagers who are thus manipulated by brands. Those I know are capable of striking hard bargains. Unlike their parents, they were born into a world of liquid markets and price transparency: they know precisely what to spend.This view was reinforced this week by talking to two of them. One, a Supreme fan in London, is sceptical about its collaboration with Louis Vuitton. The fact that a rebellious brand is now popular with children from wealthy families also makes him wonder if it is drifting. The other, a 15-year-old veteran of shoe trading, spoke from her school bus in Brooklyn. She no longer believes in lining up outside shops for most drops, calculating that the resale profit is often no more than the minimum wage per hour of waiting.Who knows what they will be buying or selling by next year but one thing is clear: the kids will be all right.
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