Peer-to-peer: the challenge facing retailers

Tony Mannix at GXO explains how retailers can embrace the second-hand market to thrive alongside peer-to-peer marketplaces

There is no denying the significant rise of ‘pre-loved’ fashion over recent years, with second hand purchases climbing to £1.2 billion in the UK alone. The market has been fuelled by the increasing need for both consumers and businesses to make more sustainable choices, but for some, the cost-of-living crisis is also encouraging them to consider how much they’re spending on their wardrobe.

Currently, platforms such as eBay, Vestiaire and Vinted are dominating the eCommerce space and are quickly becoming a one-stop shop when consumers are looking to buy a new piece for their wardrobe.  This is resulting in a scenario where consumers are shopping far less frequently with their favourite brand to find, for example, a new dress to wear for their friend’s wedding. Instead, they’re searching for a once-worn, quality label, from the likes of Vinted.

While this is positive from a sustainability perspective, it has created a pre-loved peer-to-peer market that traditional retailers are not directly part of. This means that brands are losing out on additional revenue and control of the quality of the items being sold. 

With the help of a partner, however, there is opportunity for retailers, to take control of their own pre-owned fashion channel, especially in terms of revenue building, finding new customers and building deeper relationships with existing customers. This will also be critical, in light of new legislation on the horizon that will encourage businesses to take more responsibility for pre-owned fashion.

The peer-to-peer commerce challenge

With the rise of peer-to-peer commerce, established retailers are having to consider how they can positively impact this trend, even though many of the products being sold on the current platforms do not go back in their supply chain directly. 

Brands lack control of the provenance of products listed on peer-to-peer marketplace sites, and equally, there is risk of counterfeit goods negatively impacting the credentials of a brand/retailer. This was clearly highlighted earlier this year when a US jury ruled in favour of Chanel to find that luxury reseller ‘What Goes Around Comes Around’ had sold counterfeit goods and implied affiliation with Chanel in its marketing.

The sustainability of the brand will also factor into this need to gain control. With the industry under pressure to reduce the number of garments going to landfill, no matter where the consumer buys their product, the onus will continue to be on brands and retailers to proactively think about their own sustainability commitments. 

A great opportunity

If a brand is to evolve alongside the desires of its customers, being part of the second-hand movement will be increasingly important. Research from ThreadUp, for example, found that more than half of the younger “Gen Z audience are more likely to shop with a brand that offers second-hand alongside new”. 

But how exactly can retailers do this and still retain control of their brand and the products being resold? 

With the right partner, retailers can embed sustainability into their brand and create a new revenue stream by extending the lifecycle of clothing through the re-sale of pre-loved items. This approach, when combined with repair, cleaning and restoration capabilities, will also help to attract new customers and highlight the value in buying direct from the brand, rather than third-party pre-loved platforms. 

In 2022, we started worked with the luxury children’s clothing brand, Polarn O. Pyret (PO.P), to create a fully integrated pre-loved solution. Customers can now register their trade-ins online, before sending the unwanted items to the returns distribution centre for processing and receiving vouchers to spend with the brand on new or other pre-loved stock. 

The extensive returns and rejuvenation service includes spot cleaning, steaming or even repair as needed to ensure each item is in the best condition so that it can be sold for the maximum resale value.

The clothing is placed into inventory and presented for resale on PO. P’s website alongside its current season stock, making it easy for customers to purchase new and second-hand clothing in the same order. The clever blending of new alongside pre-loved stock creates a single view of PO.P for the customers; the pre-loved stock and pre-loved customers are treated as core and are not directed to a secondary website. 

This approach was well received by PO.P customers, with a demand 10 times greater than initially anticipated. Over the last two years, the PO.P pre-loved operation has sold circa 95% of the clothing returned and has expanded PO.P’s customer base as 35%, these are pre-loved shoppers who are new to the brand.

Driving success

Not only has this approach enabled PO.P to capitalise on the demand for pre-loved clothing and reduce the number of its products in landfill or on second-hand sites, it has also improved customer loyalty and the brand’s ability to connect with its customers. This is vital for retailers who continue to operate in a competitive market; the different services the brand provides are attractive to a variety of audience groups. 

With many external factors, from the increased cost of living to more environmentally conscious shoppers, driving the increase of second-hand shopping, there are no signs of this market slowing down. It is time for retailers to define a strategy and approach to give their customers an experience and products they are currently searching for elsewhere, while adding value to the brand and promoting its sustainability credentials.

Failing to adapt to this change in consumer buying habits may mean that retailers will lose out to their competitors who do.

Tony Mannix is a Strategic Advisor – Retail Logistics at GXO

Main image courtesy of iStockPhoto.com and Vladimir Vladimirov