HPR - Fashion Resale - Ep 1
[00:00:00] Barry O'Kane: Hello and welcome back to Happy Porch Radio, the circular technology podcast. I'm Barry.
[00:00:10] Emily Swaddle: Hi, everyone. I'm Emily. Welcome back.
[00:00:12] Barry O'Kane: Over the last three seasons, we've explored and heard so many amazing stories about circular innovation from entrepreneurs, from researchers, consultants, and more.
[00:00:21] Emily Swaddle: And what is the one thing that we say at the end of almost every single episode, Barry, you usually say, actually, we wish we had more time to dive in.
[00:00:30] Barry O'Kane: I always want to geek out more. And so this time we've decided to indulge that curiosity and take the time to explore some big questions from some of our favourite circular topics. First up is the role of digital technology in fashion resale.
[00:00:45] Emily Swaddle: Yes, over the next three episodes we're going to be exploring the world of recommerce.
Taking a look at the big picture today, how it could look in the future, the role that tech is playing in this growing sector, and investigating the circular impact of clothing resale.
[00:01:00] Barry O'Kane: To help us explore this story, we've got guests from across the industry, but we'd also love your input. So if you work in the sector or you're curious, or you have questions, comments, or ideas, please reach out.
We'll include as many as we can in the third episode. Email us on [email protected].
[00:01:15] Emily Swaddle: And if all goes well with this mini series deep dive. We'll be back with another bunch of episodes on a different circular topic very soon.
So Barry, why start with fashion resale?
[00:01:29] Barry O'Kane: From a circular economy perspective, recommerce and resale is one of the core strategies. Reuse. We want to keep goods in use at their highest possible value for as long as possible. We've put all this material and all this energy into creating fashion. Instead of just using it once or not using it, resale allows us to explore ways for maximizing the value from those goods.
And from a technology perspective, we know that technology has, and is, and will have a huge impact on fashion recommerce in every way. And so it's a really interesting topic to explore the overlap between circularity, the role of technology, and where resale fits in the broader system.
[00:02:13] Emily Swaddle: Yeah, and recommerce isn't just limited to fashion, obviously, but fashion is what we'll be focusing on for the next few episodes.
[00:02:20] Barry O'Kane: The fashion industry is huge and continues to grow. To pick one stat, 100 billion garments are produced annually.
[00:02:27] Emily Swaddle: A hundred billion is a huge number. It's a huge number in isolation. It's a ridiculous number when you think there's only eight billion people in the world. And I bet those hundred billion garments aren't distributed evenly between those eight billion people.
The problems inherent to the fashion industry are huge, whether that's greenhouse gas emissions, resource use, waste. There are also a huge number of social issues with this linear model, whether that's in the production phase or also in that waste phase of like where we're shipping off our unwanted garments to.
So when we're talking about solutions, fashion industry feels like a good place to start.
[00:03:08] Barry O'Kane: However, there's growing interest in buying and selling preloved clothes and accessories. The resale and recommerce sector is growing roughly three times as fast as the fashion industry overall.
[00:03:20] Emily Swaddle: And recommerce might not be a word that you're familiar with.
There are actually many terms used for this industry. Second hand, pre loved, resale, vintage, thrift, recommerce . Essentially, we're talking about anything that has been bought, used, and is now being sold again.
[00:03:39] Barry O'Kane: In these episodes we'll be focusing on recommerce and not on some of the connected and related topics.
So we won't be talking about logistics and transport and delivery, tracking of items and their use. We also won't be looking at related business models such as rental or sharing. Hopefully we'll explore those in future explorations.
[00:03:58] Emily Swaddle: So what do you hope to get from this three episode exploration, Barry?
[00:04:03] Barry O'Kane: So one thing is we actually want to do what we always said we would do and dig a little bit deeper into one area. But I think I also want to ask some tough questions. So our starting assumptions are that recommerce in fashion will help with some of the problems we described. The recommerce will be positive in terms of production and consumption and therefore waste, that it could potentially have an impact on some of the social and supply chain issues we mentioned. And it can help us rethink the whole fashion industry.
So that's one of the big questions. How accurate is that assumption? And another assumption is that recommerce is economically viable and it's practical. And I'd love to explore some of those challenges. And then crucially, from my point of view, from our point of view with the podcast, what role does technology play in all of that?
Is technology playing a positive role in helping us change fashion for the better? Is it helping the business and practical goals? Or is technology actually making things worse? And then it would be fun to explore the future. Where is recommerce going and what role can technology play in that?
[00:05:05] Emily Swaddle: Nice.
[00:05:05] Barry O'Kane: What about you, Emily?
[00:05:06] Emily Swaddle: Yeah, I'm excited about all those things too, particularly dreaming up a future where we're doing this really well and everything's running super smoothly. That's really exciting. Personally, I As a user of these models and platforms, I kind of feel invested in this, like I've always been curious about the actual impact of this sort of behavioral change that we're seeing.
So I'm excited to look at the situation as it stands, address some of these issues, and then, as you say, dream about a wonderful future of what this could be, fulfilling its potential.
[00:05:43] Barry O'Kane: Without further ado, let's jump in.
[00:05:47] Emily Swaddle: The philosophy behind recommerce is nothing new. For as long as we've had clothes, we've passed them on, or we've sold them on, or we've reused them.
It's funny, actually, to think that these days, thrifting or buying reused clothes is almost like a counterculture. Whereas that has been the norm for the majority of human existence. And actually, it's just this recent period where we've had this, like, abundance of production and resources. And that abundance is kind of the strange part.
[00:06:20] Barry O'Kane: Yes, and for I guess the last 100 years or more, we've built up this very linear process, this very optimized, this very powerful process of production. In fashion, that means a supply chain that stretches across the planet and that's built on identity and brands and the thrill of shopping and maximizing the linear flow of those materials to the absolute ridiculous extreme, ridiculous in my opinion.
But we shouldn't be looking back with rose tinted glasses. It's not like we want to go back to the 1800s or something. Modern technology and the modern economy has brought us huge benefits and great things. But what we need to do now is start to rethink all of that and push back against those negatives.
And from the fashion resale point of view, what has changed most recently is we're moving from just the charity shop in the high street to potentially, in addition, mainstream online, very digital and very growing fashion recommerce. And the obvious driver for that is technology. And so given all of that, can we make recommerce part of a broader circular economy solution to those problems which are built into our current, very optimized, linear model of fashion?
[00:07:30] Emily Swaddle: I do still love a good charity shop on the high street, but you're right, Barry, there's this whole like online ecosystem of recommerce that exists today. And within it, there are various different models, many companies offering different solutions. We wanted to get a sort of big picture look at this industry.
So we spoke with Cynthia Power, an expert at helping apparel companies navigate and operationalize resale through her company, Molte Volte. She's also the co host of the Untangling Circularity podcast.
[00:08:02] Cynthia Power: I think that recommerce is alive and well. I think that it's actually becoming more of a sophisticated kind of industry and it's got so much going on.
So you have peer to peer marketplaces like Poshmark and Depop. You have third party marketplaces like ThredUp who are gathering clothes and selling them. You have branded recommerce where you have brands actually creating their own resale experience for their customers. There's just quite a nice breadth of options and different types of businesses within recommerce.
So to me, that points to it, it is continuing to grow as its own little segment of, you know, an industry. And it, you know, it's continuing to kind of refine and you have many different software providers that are offering slightly different things, which can be confusing, but is also, I think, reflective of the kind of varied and nuanced needs of different brands.
We saw like a huge kind of explosion of new businesses and new software providers and lots of people getting into the space for the first time. And it was kind of this like first wave. And I think now it's much more subtle of like, okay, so maybe as a brand or a marketplace has been doing this for a year or two or a few years.
And now they're wondering, you know, should we add on this type of service or it's those smaller questions. And it's kind of learning what works with the business models. What doesn't, how can they make enough revenue? So to me, that's, that's really healthy and is exciting that it's kind of becoming more nuanced.
[00:09:35] Barry O'Kane: So Cynthia outlined three broad modes of resale there. Peer to peer, which includes the big platforms, the Ebays and Craigslist and Facebook Marketplace, as well as many of the newer fashion specific platforms. And then there's managed marketplaces, which is where the platform takes an active role collecting and delivering and authenticating and validating the items.
And then there's brand owned, which is where the brands themselves, often in partnership with a resale technology provider, have resale happening under their own branding, their own identity. All slightly different with different benefits and different challenges and each one is a slightly different approach or a different model but to the same basic end goal.
[00:10:15] Emily Swaddle: Yeah, all driving towards the end goal of recommerce essentially. We are going to look at four main stakeholders invested in recommerce. First of all, you've got the resale platforms and the technology providers themselves. Then there's the apparel brands, obviously there's the customers, and there's also the wider planet and its citizens.
In the rest of this episode, we're going to explore the opportunities for each of the latter three. Brands. Customers. Planet. We want to look at the particular motivations that might be driving the resale boom and what challenges these viewpoints present. Because if we want resale to grow and we want it to be the solution that we all hope it can be, we need to be getting it right when it comes to the needs of all of those stakeholders.
[00:11:03] Barry O'Kane: Okay, let's start with fashion brands. Why might they get involved in this space? As Cynthia highlights, their motivations might be different in different cases.
[00:11:12] Cynthia Power: You could look at that through the lens of what are their pain points, a brand's pain points, and what are they trying to solve for, right? So like, if you have a brand that's saying, well, this year our strategy is really about efficiency and maybe we're replatforming our, our warehouse, you know, resale is a great place to leverage warehouse damages and like that corner of your warehouse.
That you have all this stuff that you can't sell anywhere else. And you could say, all right, we'll have a resale program. That starting with that is really about getting us as a company to like a super efficient place where we, we feel confident that we're, we have a stream for everything that comes back to us.
A stream and a process and a monetizable process, or you could have a company that's saying, well, we want to like build our customer loyalty and we really want to work on customer acquisition. And then, you know, you could go peer to peer first. And I think that's great, especially for loyalty and acquisition.
So I think that every brand will have the way that they want to interact with the product that they've already made and already sold. I believe the best thing to do is to figure out how to have that conversation with your customers so that you can benefit from all of that loyalty and those touch points with your customers. And I feel like the brands that haven't gotten involved in reseller circularity yet, I'm kind of like, don't you want them to come to you and ask you this and ask you that. And, and have you be one of their trusted brands that they keep coming back to, like that is a loyal customer.
So I see that opportunity. I think more and more brands will see that opportunity. And I think it's just, there isn't one size fits all about like what every brand should do.
[00:12:51] Emily Swaddle: For brands, there are lots of potential benefits here. Yes, it might be about creating a more efficient business. It might also be about generating a whole new revenue stream.
And it might be about improving their environmental and social responsibility, whether that's to meet shareholder demands or to appeal to customers who value that. What is interesting is that Cynthia highlights that a huge part of a brand's identity is tied up in their relationship with their customers.
And resale offers brands the opportunity to strengthen and deepen that relationship. We also spoke with Andy Ruben on this point. Andy is the founder of Trove, a tech provider that helps brands set up their own resale programs. They've worked with the likes of Patagonia, Lululemon, Levi's, Canada Goose, big names, big names.
But before he got into that, he actually founded a peer to peer marketplace called Yerdle. In our conversation, he explained to us what was so attractive about the brand owned approach, so much so that it led him to completely switch the model that he was working with.
[00:13:55] Andy Ruben: We realized at a certain point in that journey that brands had such an advantage when a brand would own this business themselves, because a brand could essentially use resale like a channel.
In other words, increase loyalty and customer acquisition, revenue, brand protection. And so the inevitability of living in a world where more of the items that we get come from other people. Brands have both risk in that, in other words, being able to continue to uphold the brand, and they have opportunity when they think about owning that secondary sale.
So it would be a natural extension of what a brand would want to do to be a better brand. Just good business.
[00:14:37] Barry O'Kane: So it's interesting that Andy considers a world in which resale is the norm to be inevitable. And we've seen this for years on some of the earliest peer to peer platforms. In that context, it does make sense for why they would want to get involved, either as a more active presence on some of these third party platforms, or through their own channels.
Even if they're not yet seeing the direct business benefits, they may be getting pressure from the press, from competition, and from their customers.
[00:15:03] Emily Swaddle: Yeah, and it sounds like getting on board with resale offers brands much more control over the lifecycle of their product. As well as over their relationship with their customers.
[00:15:15] Andy Ruben: When you're a brand, you've got a very specific point of view that needs to come through the integration, everything that you do. So of course, as a brand, say you are Carhartt as a global brand. Carhartt's very specific in the way that you're going to want to price, the condition grade, the description, the merchandising of pre owned items.
Of course, a Vestiaire, a ThredUP, a RealReal, an eBay model is going to be an eBay model, not a Carhartt model. So as a brand, an element of the technology, I think often gets glossed over is of course you can and should work with every third party marketplace. But the way that you really own your brand requires either the technology or ideally the partner who can allow you all the dials to make sure that every element of the used program is consistent with your brand.
[00:16:04] Barry O'Kane: What Andy's saying there is particularly true for luxury brands, those looking for exclusivity or brands with a strong identity and a strong presence.
[00:16:14] Emily Swaddle: I would definitely think highly of a brand if they had like their own buyback scheme or something like that.
Whatever their motivations might be, I know that in that case, I'll be getting their product, even though it might be a used version of their product. And in particular, I'll be getting their service. And, you know, maybe that's because I really trust their commerce platform or their customer support or I know I can get delivery updates, whatever it is.
It's really nice to know that you can have that.
[00:16:40] Barry O'Kane: From the brand's point of view, doing it themselves is more work. And that's why the resale as a service technology offerings exist to try and help brands make that better. Resale as a service is, I guess, exactly what it sounds like. Providing the technology and sometimes the supporting physical services, allowing a brand to start a buyback scheme and a resale program without necessarily needing to build everything in house from scratch.
And the brands also need it to have a strong commercial case. Otherwise they treat it as a sideshow, as a distraction. So having pilots and real data is really key for the brands before they can fully commit to this kind of recommerce. One of the other huge benefits of a resale program is allowing brands to really understand their market, their users. I don't like the word consumers. So let's talk a little bit about them.
[00:17:34] Emily Swaddle: There are pros and cons for users on all three of the different kinds of recommerce platform that we talked about. We're going to use the word users. As you said, Barry, you don't like the word consumer. I don't like it either.
Maybe buyers sometimes people use, maybe customer, but these people are using the platform, so let's call them users.
[00:17:53] Barry O'Kane: Yes, consumers is very linear thinking and demeaning and a horrible word, but even more so in recommerce, I'm not just buying the product, I'm engaging with maybe selling it or returning it to the brand or maybe I'm building a relationship with other users of the fashion that I am most passionate about. Maybe I'm building a loyalty and a relationship with a brand that I think is living my values. It's a much deeper, much broader community building aspect. And so consumers is just both horrible and technically wrong.
[00:18:25] Emily Swaddle: Yeah, it's incorrect. Great. So we're going to say users.
The first thing that comes to mind is the financial benefit that users have, that they can buy any kind of clothes and garments at a cheaper price. And what's more, if they're selling their own used garments, they can get a bit of money from that. So their financial benefits seem very clear.
[00:18:45] Barry O'Kane: And that's often the starting point or the sort of headline for getting involved in this.
I can maybe get hold of things that I like that I can't afford necessarily. at the top price, or maybe I can get involved and then resell it and then allow my wardrobe to evolve, hopefully without building huge waste or, or throwing a lot of money away.
[00:19:09] Emily Swaddle: I think there's also that kind of like thrill the, the excitement of finding something a bit different, you know?
And to me that's always like the joy of going to a charity shop or like a vintage shop or something, and finding a really unique item. And particularly if it's a bargain, you know, that's a rush. And you get the joy of knowing that it's not contributing to this destructive, linear way of doing things.
[00:19:36] Barry O'Kane: I think that is the start of where the conversation should be going. We should be moving away from, and many of the marketplaces are and the brands are, moving away from, hey, it's cheap to there's this relationship with the clothing and the fashion that a recommerce allows to make much deeper. And that also allows us to think a little bit deeper about some of the challenges.
So the paradox of making something more efficient. What the paradox of potentially making it may feel good in terms of environmental or social impact is that then we just do it more. So if I buy lots and lots of stuff thinking, Oh, it's fine, I can just resell it, then that actually maybe we aren't helping with waste or the mass production and the problems with the linear economy. But if I'm in understanding and getting a little bit deeper into thinking about my wardrobe as a whole and that kind of thing, then it changes the conversation a bit.
[00:20:28] Emily Swaddle: I think it's interesting, right? Because if I weren't using secondhand, not everything I buy is second hand.
But when I buy something new, I really like to buy from a brand that I trust and that I, like, kind of agree with their ethics or values in some sense, right? When it comes to buying second hand, you kind of get the best of both worlds. Because you can buy a brand that you wouldn't necessarily buy from if you knew it was first hand, but you still get to have them whatever nice things they create as a brand.
And I think that, sort of, beating the, like, capitalist giants is not an uncommon driver. Open your TikTok and your whatever else the youngins are using these days. And it's all about the, sort of, second hand, vintage. And I think that, just anecdotally, from what I see in the world, there is a kind of generational shift towards these pre loved ways of doing things.
[00:21:20] Barry O'Kane: Interestingly, Cynthia points out that this may be more nuanced than it might first appear.
[00:21:25] Cynthia Power: I think I would say that while yes, they, people in their teens and twenties seem to have more awareness about like ethical production and, and fairness and all of that, but then you also read about how Gen Z also buys a lot of super fast fashion.
So my sense is that it's kind of both and, and that it's more about them at the highest level and other generations as well, just continuing to have a larger degree of acceptance of used product. It's almost like shopping online where like, I remember there was a shift when I just started buying things on Amazon.
Cause I was like, this is so easy. Not like super proud of that, but I think that's very common behavior pretty much everywhere. And I kind of feel the same about resale and used shopping is just that it's becoming another channel where people either they're already shopping in and they're continuing to kind of increase.
They realize like, Oh, you can find almost anything used. And so they do it more, look for it more, or maybe they haven't done it yet, but it's like the more they see everyone else just doing it on all of these platforms and you've got ThreadUP and Poshmark and everything else that you kind of realize like, Oh, am I like missing out on something that's actually pretty cool.
So I think that individual citizens are definitely driving this kind of continued uptake and interest in used. And when you see the yearly reports come out, I feel like that percentage of people who buy used just grows a little bit every year.
[00:22:52] Barry O'Kane: I think Cynthia sums that up really eloquently there. And also hints at tying that back to what we were saying about price being just one factor.
There's ease of use, there's the scale of the awareness, presenting recommerce in fashion as purely an ethical decision or purely a financial decision will only ever get it so far.
[00:23:16] Emily Swaddle: I agree, Barry, because it's like, this is trendy, right? Which is another reason people are doing it.
[00:23:20] Barry O'Kane: That's true, and it's growing fast.
But despite the benefits we described, and despite the rate of growth of pre loved and second hand recommerce, it's still a fraction of the overall fashion industry. Cynthia touched on the ridiculous growth of fast fashion there. So while more people each year are really using resale and engaging in resale, there's a lot of work to do to bring it further into the mainstream.
[00:23:43] Emily Swaddle: Yeah. And we talked about the benefits, which are real, the benefits for the user, but from the user perspective, there are also difficulties, you know, there's also issues with it. I mean, there's issues with buying online anyway, when it comes to clothing, maybe you're not sure of like the size or the color or the feel of it.
If you're buying online and it doesn't fit, can you return it? Will you return it? But then, when you've got the like, pre loved aspect folded into that, there are other issues that sit on top of it, you know, maybe it's a little bit more used, or a little bit more worn than you anticipated it would be, or maybe it's a bit more damaged than it was described to be.
And if you're not buying direct from the brand, if it's not through a brand owned platform, it can be hard to check things like, well this says it's a size 12, but what does size 12 mean? Like, what is that in your brand sizing? And obviously you're not going to have multiples of things like you would on, on other online platforms.
It's like this one in this size, in this color, like it or not, boom. So yeah, there are issues.
[00:24:43] Barry O'Kane: And that's not even touching on things like authentication. Is it actually what it says it is that I'm being sold online?
[00:24:49] Emily Swaddle: Yeah, totally. And if you are a different kind of user, if you're putting your selling hat on.
Particularly on the peer to peer again, that can be a hassle, taking all the photos, uploading every item one by one. It's not always a smooth process using these platforms.
[00:25:06] Barry O'Kane: In many ways, that's the opportunity for the technology. Solving problems is what technology does. What we're seeing in the linear industry is all of those problems solved or optimized to the extreme over the last many decades.
What we're seeing at the moment in the recommerce industry is the beginnings of people trying to really deeply solve those problems. Some of the marketplaces are really working hard on making those easy on producing the quality on authenticating and et cetera. Overarching many of those problems is simple ease of use, making it simpler and easier to engage in recommerce.
And Cynthia talks a little bit about that.
[00:25:41] Cynthia Power: To bring Amazon up again, right? Like whenever I'm shopping Amazon, I'll always look and see, is there a refurb option? Is there one of those things? If you just scroll down a little bit further, it's like, and there's another seller that's selling this for 10 less, and it's still in the box, it's just been opened, right? I think that the more it is available to people in the places that they already shop is really important to kind of continuing customer interest and like uptake. On the supply side, I think that's maybe where we need to do a little more work and we need to make that easier.
And I think that's quite challenging, you know, many super sellers on these platforms that are selling, you know, hundreds and thousands of items. I know less individuals who are willing to really go in and list all of their new giveaways and everything. Like it's really, I think it's still quite a headache and it's hard to figure out how to get valuable things that people are done with and put them on the right platform and bring value back to that seller and to the platform that's selling it.
[00:26:42] Emily Swaddle: Yeah, I mean, that's the dream to have this be a really simple, smooth process, right? And then obviously from the brand own side, it's got to be such smooth integration.
As Cynthia said, with Amazon, you can literally be looking at one product and see whether you can get it new or used in exactly the same space. Like the barriers to purchasing and selling need to be really, really low. And at the minute, they're still kind of high, you know?
[00:27:05] Barry O'Kane: Yes. And that's why recommerce realistically is still a smaller part of the market.
It is growing though, and I think one of the reasons it's growing is some of those things are getting better. The technology, the providers of these things, the businesses who are looking at it, the brands who are implementing it, are all starting to look and see the opportunity in solving some of the problems we touched on.
Later in the series, we'll talk to some of the people who are working on technology to help with that. There's still lots of work to be done. Remember, we're trying to reinvent a linear economy, which is hugely optimized. So we're still in the learning phase.
[00:27:40] Emily Swaddle: Yeah, there is a lot of work to be done because ultimately, we want this to touch everyone.
We want this to impact the whole world so that it's absolutely global and changes on a planetary scale. We already mentioned in the intro some of the negative environmental and social effects of the current linear system. The assumption is that used has fewer negative impacts than new.
[00:28:04] Barry O'Kane: And that assumption is only true if the resale, the recommerce marketplace actually reduces production of brand new items, actually reduces the amount of material used, reduces the amount of waste, etc.
In the resale world, that is known as displacement. If we buy something used, we do not need to create from scratch the equivalent new thing. And this is really complex.
[00:28:29] Emily Swaddle: We spoke with friends of the show, Gerrard Fisher and Kristina Bull from QSA Partners, who you might remember we spoke to back in Season 7, Episode 3.
We spoke to them again for this episode because they've been doing some research with the recommerce platform Depop on exactly this question of displacement. In our conversation, Gerrard mentioned that the data on recommerce in general is patchy and it's really hard to collect.
[00:28:54] Gerrard Fisher: Recommerce has been on a massive journey, hasn't it?
I think over the last few years, we've seen massive growth in online trading, whether that's officially through platforms like Vinted and Vestiaire, and there's many of them, or whether it's more casual, what we call peer to peer trading between people on Facebook or Instagram or TikTok. I mean, there's been a huge growth and it's really hard to understand how much exactly is going on because there's no real transparent data on volume of trade.
[00:29:24] Barry O'Kane: So as Gerrard explains, stats on recommerce, understanding the scale of recommerce is difficult. And even if we knew all the statistics for resale, displacement is still really hard to measure. Here's Kristina .
[00:29:36] Kristina Bull: I think on the point of displacement as well, there's certain aspects of the recommerce market that probably are driving displacement.
Some resale sites because of the price pointing, the way in which they are set up, you know, they are peer to peer, they're much more about the social aspect. I feel do have a higher displacement rate for some of the other platforms that might. Put the pricing of products at a lower value to kind of keep the trade moving and moving might not actually have a good displacement rate because, Oh, it's a fiver I'll buy three as opposed to, I really want that one item.
Therefore I will only buy that one item and that item will stop me from buying a new product.
[00:30:19] Emily Swaddle: Kristina's point here really makes sense to me, that displacement itself actually kind of depends on the product and the price of the product. You know, it's that balance between making sure second hand items are better value than buying new, because we said that financial incentives are a really big part of this, but also they can't be so cheap that they completely lose all their worth, because then it seems counterintuitive to what we're trying to do with the whole recommerce thing anyway.
Obviously, that depends a lot on the original quality of the garment. If the original item costs £7, not really got many places to go after that.
[00:30:56] Barry O'Kane: And I think this points at the key challenge with that question we started with. Does resale help solve some of these problems with the linear economy? And the answer is, as with all these things, complex and nuanced.
For me, one of the most interesting aspects to understand is aligning incentives. If a resale business, resale marketplace, is purely incentivized on bulk, on turning product, on selling as much as possible, well, we know the extreme of that. We end up with a super fast fashion and the craziness that happens there.
So how can we, within recommerce, align the incentive of reducing the horrendous impacts and still having successful viable businesses? Many questions there, but perhaps we should be rethinking products themselves as something that has more inherent value, not just for my one or two wears , but maybe for generations, but at least for some recommerce.
[00:31:53] Emily Swaddle: The problem still remains, Barry, that we don't actually know how much displacement is happening or is not happening. Gerrard pointed out that a lot of the time research on this relies on self reporting.
[00:32:03] Gerrard Fisher: So the original surveys, I think were done about 10 years ago by an organization called Wrap and they interviewed people, you know, having just made a purchase saying, you know, it's just going to stop you from buying a new one, but I think, you know, the risk of that approach is you've just bought a thing.
You've got that buzz of having just made a purchase. And so you're bound to say, yes, I'm going to wear this loads. More recently, we've done look back research, if you like. So, we've asked people, you know, over the last six months, have you purchased new stuff? They say, yes, we, can question them.
And, you know, then we ask about particular items or their last pre owned purchase. And so we then have very clear attachment to an item that they know they've bought and they can speak honestly about whether they have worn it, whether it has prevented them from buying anything. So, you know, if it's said, it's a winter coat. People aren't going to have rafts and rafts of winter coats, so it's highly likely it's displaced something. If it's a t -shirt, well, we've all got dozens of them. So it might have delayed a purchase, but not necessarily prevented one. And so we've developed this methodology of saying, is it likely to have completely replaced or only kind of delayed a purchase? And we attribute different levels of displacement.
[00:33:09] Barry O'Kane: So now we're getting to the real meat of the problem. And hinting at ways where we can actually gather better data to understand displacement. But it's not an easy thing to understand or to measure. For me, that raises the question, what role might technology play in improving the quality and quantity of data so that recommerce platforms can understand this and we can tie it back to that aligning of incentives?
[00:33:34] Emily Swaddle: Mmm. You talk about the data and the tech, Barry. And I'm thinking about the mindset. Because I do find it interesting, you know, that a user's mindset about different garments in their wardrobe is different, you know. Sometimes we do look at a t -shirt or something and kind of don't give it much value. If you compare it to as, you know, Gerrard said a winter coat or something.
You know, there are things that we own that we don't value that much. That's just like kind of part of the mindset. And I don't necessarily want to put all the responsibility on the user. There is like us as citizens who own things, because I do think that there's a huge influence from the apparel industry to reinforce that mindset.
[00:34:16] Barry O'Kane: The elephant in the room there for me is externalizing the costs. So the things that we own that are cheap. And we can have lots of them or buy them and it doesn't matter if they don't last very long. The reason for that is because our system, our economy, our linear economy has externalized those costs.
The climate, the waste, the social, all of these things come from costs just aren't built in. And so now we have a really deep challenge of how do we make clothes affordable and bring in these externalized costs. And I agree that responsibility shouldn't sit with the buyers. And it's a mindset that the fashion industry thrives upon.
[00:34:56] Emily Swaddle: Kristina, you talk about like fulfilling a need. And I mean, I know a lot of people who buy things, not because they're fulfilling a need. And I think actually driven by the branding. It's not coming from the customer side necessarily, it's coming from the other side of like, well this has been put in front of me so I'm going to buy it.
And that's as true of Vinted as it is of, I don't know, Nike.
[00:35:19] Kristina Bull: Yeah, absolutely true. And you're right, it's driven by the brand marketing and working with brands. We work with a whole range of brands. The budget of a sustainability team versus the budget of a marketing team, you can't even compare them because it is still that mindset.
And that's kind of the stuff that we talk about around circular business models when in order for them to be taken up by a brand fully, you have to get everybody on board and therefore you have to get marketing on board. But it can't be a marketing driven activity because then the sentiment gets lost because actually they don't really mind who the customer is, as long as that product's being sold.
So it's definitely making sure that the marketing of the circular business model has to be because it's displacing and then that's getting into a whole mindset of, well, do we really want to displace a purchase?
[00:36:07] Emily Swaddle: I mean, this really is like the big question for me when I think about all this. I feel that tension, you know, and I'm not sure if it is possible to have a thriving and impactful recommerce ecosystem.
Because I'm not convinced it's entirely compatible with the bottom line interests of so many brands. The majority of the fashion industry. Is that possible?
[00:36:34] Barry O'Kane: Are their incentives actually aligned? Like the platforms just want the things to sell as much as possible. Many of them have impact reports or talk about mission led stuff or whatever, but how closely do you think those things are aligned to having that impact on consumption?
[00:36:52] Kristina Bull: I think one of the challenges is those recommerce sites, like you say, are looking to turn stock because, you know, some of the platforms have huge, huge numbers of products on them. So they have to turn the stock and even if it's peer to peer, there's still kind of the need to have fresh product on there.
So there's certainly an aspect of linear mindset around that because you're still having to shift product. And therefore, if you're shifting product, people are buying more than they need.
[00:37:23] Barry O'Kane: So, in reality, there is a risk that better recommerce actually makes things worse. This is a recurring challenge in a lot of the circularity discussions.
By making something better or more optimized, do we just end up having more of it without thinking about the consequences of that, the externalities especially. And I think technology has a really important role to play in that. Technologists, as listeners to this podcast will have heard me say, technologists have an ethical and moral responsibility.
Software engineering is one of the peak skill sets in the history of humanity. One of them. And we can't ignore the impact that we have with the technology that we create. So thinking about the role of the technology in aligning these incentives and finding the right way for recommerce to be successful, to think about the challenging things around displacement, for example.
And that's not even touching on some of the other impacts.
[00:38:21] Emily Swaddle: Yeah, I think that's something that's come to my mind is, you know, we're talking about the best thing for these items is that they are used by as many different people as possible to like prolong their life and we've got to make sure that they're reused, reused, reused, reused, reused.
But that in itself has some impact, right? Because it's got to travel and it needs packaging and we've got to think about energy costs of servers and stuff like that. I think what I'm trying to say is that it still feels like we're thinking quite narrowly. But the skeleton of recommerce and the technology within it can be used in combination with like many other mindsets to have many other solutions and many other outcomes.
[00:39:01] Barry O'Kane: Yes, we're asking some huge questions here. And we're going to keep coming back to those questions through this episode and future episodes of this exploration. Thinking about impact, for Andy, who we heard from earlier, displacement isn't always the only or necessarily the best way to look at this.
[00:39:19] Andy Ruben: There are things that on the surface seem really good to us that don't actually pencil in omissions.
And as there's more insight that potentially renting a t- shirt will just not be worth the squeeze. In fact, we're going to be going the wrong direction. Let's be careful to not just get really excited about models that feel really good, but actually don't have the right outcomes that are the intent of what we're doing.
[00:39:45] Barry O'Kane: Andy uses renting as an example there, but the principle holds true, perhaps even truer for recommerce.
[00:39:51] Emily Swaddle: It's an interesting question, but how can we actually put numbers on this? Alongside J. R. Siegel from Worldly, Andy has put together a white paper. So far, we've been thinking about this from a whole industry perspective, but what about from an individual company?
J. R. explains.
[00:40:06] J.R. Siegel: We took a very brand centric approach to look at what does this mean for the carbon impact of a brand and how they report their carbon footprint, which is slightly different than what does that mean for the world and is it causing folks to consume less? We just don't have enough good data to know that.
I'm very supportive of academics doing more research on this so we can get a better displacement rate. And we can add that into our calculations. We're just not there yet. And so what we did is we split the industry into five different brand archetypes. Those are premium apparel, outdoor, mid tier apparel, athleisure, and fast fashion.
Where is each of these five archetypes in 2023? When we think about carbon though, what we're really focused on is the future. How can we meet the Paris agreement? How can brands move us towards this climate future that we all want? And so for that, we considered three future scenarios out to 2040. The first is business as usual.
The second scenario we model is to say you really lean into supply chain decarbonization. If you do that, you're able to decarbonize by about 2 percent per year based on material efficiency, working with your supply chain, taking all these interventions. The third scenario is say, hey, what if we pull all those supply chain decarbonization levers that we know we can do and we know every brain can start on today and we also rev up a resale business, a recommerce business.
Then we ran the numbers out to 2040, and those are the results that came out in the white paper.
[00:41:30] Emily Swaddle: So we already discussed how, what type of product we're talking about will have an impact on displacement rate. And the research that J. R. and Andy have undertaken indicates that product type can also be a major factor when it comes to determining where resale can help companies achieve the most climate impact when they're looking at emissions.
[00:41:52] Andy Ruben: The question we're asking then in the three scenarios, where did scenario three meaningfully bend that arc of carbon between now and 2040? And what we found across all the data, if we simplify everything, there were two factors that were really dominant in how to assess that. The first is when a brand sells products, all their products, some of their products, whatever products that have value after the first sale, circular models have potential.
When a brand is producing and selling a product that really there's very little value after the first sale, a circular model is not going to be the best lever to pull. In fact, likely the best lever to pull is dematerialize that item as much as possible, because the second, third, and fourth sale is really not going to be there.
There's just not the demand. So that is the first reason that we tend to see the greatest opportunity with premium apparel, luxury, outdoor. The second one then is, when you are doing that as a brand, capture as much of the revenue on the second and third and fourth sale as possible. And the reason for that is, when we talk about shifting from a linear to a circular model, we talk about the effects of the production.
The more you can substitute a dollar of revenue growth for an item that does not have to be produced, that takes away from an item that did have to be produced, your overall footprint for your revenue growth goes down. Or is less than it would have been had all of that come from new production.
[00:43:23] Barry O'Kane: So Andy and JR's white paper is looking at greenhouse gas emissions, and we've talked about that as one aspect of the broader challenges within the linear economy.
And we know that there's many other potential beneficial impacts of resale from an environmental standpoint. And that just doing resale doesn't automatically lead to these benefits.
[00:43:45] Emily Swaddle: Yeah, I think from everyone we've spoken to so far, what is clear is that there's a lot of like nuances and complexities, you know.
It depends on what kind of product we're talking about and what kind of platform we're using and what kind of process and all these things. It depends on these things, right? And that complexity seems so inherent to this that it's impossible to just try and simplify and look at one thing. And also speaks to like how recommerce needs to be able to work in sync with so many other interventions.
whether that's got to do with emissions or other circular practices. I do think that there needs to be this big picture approach. Otherwise you lose the complexity and well just it's not going to work. I don't know. Otherwise it's rubbish.
[00:44:34] Barry O'Kane: So where does this leave us so far? We started with two big questions. One was the assumption that resale can help with many of these challenges with linear fashion. And the second one is, what is the impact of technology? Is it really positive? What are the challenges with that? What are your reflections, Emily?
[00:44:54] Emily Swaddle: Yeah, I think we're still kind of left with those questions. But it has been really interesting to look at the layers and layers of detail and nuances that have come from these conversations. And we need to keep asking these questions. We need to dive deeper. You know, are the platforms the best way to go?
Are they actually like successful enough as businesses to keep them viable? Are brands buying into this in a sustainable way? How is this industry going to continue to evolve and grow? I'm super interested to kind of think about where we're moving with this as we look forward.
[00:45:29] Barry O'Kane: One of our real themes from previous seasons of the podcast is embracing the complexity and the system thinking needed to look at circularity.
And it's interesting that our deep dive into one topic really clarifies that point. It's complex and it's difficult. Mm hmm. Setting aside eco anxiety and, and stress about it all, I really enjoy the complexity of those problems. Yeah. And as technologists, we claim to thrive in complexity and enjoy finding nice solutions to difficult problems.
So it's a place that feels very natural for technologists to get involved in, for software engineers to get involved in.
[00:46:06] Emily Swaddle: And I really love that we started here because this is a real meeting point of those technological tools, the data, the commercial trends and also our mindsets as citizens and our collective mindset like as a community when it comes to valuing resources.
And I think over the however many episodes we've done about circular economy now, we keep coming back to this question of like valuing resources. And how can technology and the tools and the processes support us to value the resources we have. And this industry feels like such an obvious place where all those things merge, the meeting point of all those things.
[00:46:49] Barry O'Kane: That's really true. And I'm quite interested in the idea of recommerce being a powerful gateway to wider circularity and deeper change. Perhaps in future episodes, we'll talk a little bit about that. But as an example, if I'm a fashion brand and I currently have only surface visibility into what happens to the product after I sell it, if I'm now involved in a resale program, I'm physically getting, potentially getting things back, I can physically hold and see how the people who are wearing my clothes, my fashion are using it. I can start to build a deeper, repeated relationship with those users. I can start to look at aspects of the business, which might've been seen as waste, as opportunities. And maybe it opens the door to some really exciting potential changes.
[00:47:37] Emily Swaddle: I think the same can be said for the users on the buyer's side. It's quite an easy way to like step into the world of resale, but obviously resale goes far beyond the fashion industry and could maybe open the doors to understanding other elements of circular practices outside of your wardrobe, you know, maybe further into your house or your family or your business or whatever.
And I think that, yeah, like it's a gateway in so many aspects.
[00:48:05] Barry O'Kane: So in this episode, we've set the scene and we've looked at perspectives of the brands, citizen users and their broader environment. Next time we're going to explore solutions to some of the challenges we've raised, and with particular reference to the fourth group of major players in this space, the platforms and the technology providers.
Before we go, we want to leave you with a stat that Andy Ruben shared with us, reminding us of recommerce's potential.
[00:48:31] Andy Ruben: Business of fashion's got a stat out there that I love, that isn't just looking at the amount of things in our closets, it's looking at the desirable things in our closets that somebody else would want, and their best estimate of the value of those items sitting idle in our closets right now is around 2. 1 trillion dollars . So anyone who operates in retail, recommerce, physical, any retail has to look at 2. 1 trillion dollars and say, wow, if you let up 2. 1 trillion dollars , that will change everything. Am I prepared to be half a step ahead or half a step behind as customers continue to move into thrifting and resale.
[00:49:13] Emily Swaddle: Thank you for listening to this episode of HappyPorch Radio. You'll find our show notes at happyporchradio. com, which include links, resources, and much more.
[00:49:23] Barry O'Kane: If you're interested in exploring these topics further with us, come and join our live webinar in the next few weeks. Visit happyporchradio dot com and sign up to our newsletter for more details.
[00:49:33] Emily Swaddle: We want to say a big thank you to all of our guests that joined us for this episode. Their details and contacts are also in the show notes.
[00:49:41] Barry O'Kane: I've been Barry.
[00:49:42] Emily Swaddle: I've been Emily. And thanks to Ben helping us behind the scenes.
[00:49:46] Barry O'Kane: Thanks for listening.
[00:49:47] Emily Swaddle: Until next time.