Fashion resale sites eye up consolidation to capitalise on industry boom

Fashion resale sites are fighting to acquire smaller companies as the demand for circular fashion booms off the back of the global supply chain issues.

Companies including Poshmark and ThredUp have scooped up smaller firms to fend off the competition from larger-known brands including Urban Outfitters and Levi Strauss, which have recently launched their own thrifting divisions.

Levi Strauss launched its own second-hand clothing website “Levi’s Second-hand” last year where it sells authenticated used denim it sources in mainly from its own customer-base.

Analysts say that volume growth is vital for second-hand clothing brands to make steady profits in a sector that is well known for its tight margins and inconsistent inventories.

READ MORE: Fast fashion must be “shelved” within the decade according to Zalando CEO

The global supply chain crisis is rumoured to be helping the industry, with deep-pocketed retailers struggling to fill rails as apparel had the highest online out-of-stock levels among US retail sectors in the run-up to the holiday season, according to Adobe Analytics.

“Companies like ThredUp and Poshmark have to demonstrate growth, and one of the things that they will probably do in the next few years is acquire other players, maybe in foreign countries,” GlobalData managing director of research Neil Saunders told Reuters.

The fashion resale industry is predicted to grow 11 times faster than the broader retail clothing sector by 2025, mainly driven by growing environmental concerns over the working practises of the fast fashion industry, according to figures from GlobalData.

Industry experts also expect the boom in the resale market could help it reach $76.4 billion within the next four years in the US.

Poshmark, a platform for peer-to-peer sales that takes a 20 percent cut of each transaction, made its first acquisition earlier this month, buying a sneaker authentication brand.

Etsy Inc has also bought British secondhand fashion app Depop for $1.6 billion. More consolidation, Julie Wainwright, chief executive of luxury reseller The RealReal Inc, said earlier this year, “is going to happen.”

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