Since the mid-2000s, the number of clothes purchased by the average consumer has more than doubled, while the number of times they are worn has declined by 36% compared to 15 years ago.

With a rise in conscious consumerism and growing recognition of the fashion industry’s role in climate change, brands are increasingly keen to show they are engaging in environmentally-friendly business practices. One arrow in their quiver is resale, but can it truly drive a more sustainable fashion industry?

Having explored the rise of resale in Part 1, we now turn to:

  • How resale can help create a more sustainable fashion industry.
  • How fast-fashion can get involved.
  • New technologies that could drive the efficiencies required for brand-owned resale to reach profitability.

Resale: the tip of the iceberg

Despite what brands may say about their eco credentials, the adoption of resale doesn’t guarantee net positive results for their environmental footprint. With 80% of the environmental impact of a garment generated during production, the important factor to consider when assessing environmental impact is the ‘displacement effect’.

This is the extent to which customers replace new purchases with secondhand. Even if resale continues to grow, without a dramatic reduction in the energy and resources expended on new garment production, fashion’s sustainability problem will persist. With fast fashion predicted to grow from $68.6Bn in 2020 to $211.9Bn in 2030, there is little indication that fashion production is slowing down. As the rise of ultra-fast fashion brands such as Shein, which adds a staggering 6,000 new products to its site daily, shows.

With new garment production occurring at a monumental scale, fashion waste continues to mount. The UK alone produces more than 200 tonnes of textile waste each year, of which over 50% goes to landfill. But so far brands have been slow to take accountability for the waste they generate.

Extending fashion’s shelf-life

Ultimately, resale doesn’t stop clothing from going to landfill, but it can slow the rising tide of fashion waste by extending a product’s lifecycle.

The RealReal has kept more than 19M items ‘in circulation’ since its inception, which reportedly translates to savings of over 25M tonnes of carbon and 1bn litres of water.

Industry-wide adoption could help slow the pace of fashion waste generation, but if resale is to truly drive sustainability, consumers must start replacing new purchases with secondhand. In business terms, resale must cannibalise the traditional fashion market. There are early indications that this might already be occurring, but with US fashion industry sales expected to reach more than $3tn a year by 2030 there is a long way to go.

Last year in the US, secondhand made up 10% of total fashion sales, doubling the 5% estimated for 2016

Brand incentives ≠ sustainability goals

On a macro-level, cannibalisation of firsthand sales may be beginning to occur, but brands engaging with resale are naturally looking to avoid cannibalising their own sales.

In fact, whilst ostensibly a channel to further sustainability goals, some resale platforms – catering to brand requests – actually stimulate new growth. For example, many brand-owned resale platforms reward sellers with vouchers that can be redeemed for new purchases.

Iman Allie, Director of Growth at Recurate reported that this prompted customers to spend 2.5x what they received in store credit on new items from the brand. This might be a boon for sales and a successful loyalty technique, but it’s certainly not a mechanism to combat consumerism.

The idea of reducing purchases is fundamentally at odds with the inherently consumerist fashion industry, as is most evident in the low-cost, high-volume fast-fashion business model.

To drive sustainability, we need everyone on board

As I explored in Part I of this article, fast-fashion and mid-market brands have been slower to adopt resale. While luxury resale has been key to changing consumer sentiment, fast-fashion companies must be part of the solution, as the largest contributors to the industry’s footprint.

For sustainable initiatives to stick long term they must also be sustainable from a financial perspective. Resale’s high and fixed operational costs present a real challenge to fast-fashion’s low-cost, high-volume business model. For fast fashion to buy into resale, there must be alternative routes to profitability.

New technologies drive efficiency

New developments in robotics, computer vision and AI could power automation in the stock management and product upload processes, driving efficiencies, to enable resale profitability at scale.

Automation is already being incorporated into resale in the more mature luxury segment. StockX recently acquired Scout to catch minor details in the product authentication process using AI. Similarly, Poshmark’s recent acquisition of Suede One will drive automation, using a combination of machine learning, computer vision and human review to virtually authenticate sneakers. This cuts out expenditure on shipping physical goods to authentication sites. Finally, Rebag’s introduction of Clair AI will use computer vision to identify and price luxury handbags in seconds, making the upload process as easy for customers as scanning a QR code.

These developments are driving incremental efficiencies, but advancing these systems to function at high volumes will take time. With only minor gains in the short term, investment in these technologies is likely to lag.

Instead of incremental improvements, are there any ‘first principle’ approaches that could truly disrupt the traditional linear fashion business model?

Ground-zero thinking

Kalkidan Legesse, CEO and founder of OWNI, aims to enable brands to build resale into the business model from the start.

Legesse witnessed the rise in conscious consumerism through her work at Sanchos, a sustainable fashion retail company she founded in 2015. After coming across customers doing ‘no-buy years,’ ‘no new November’ or ‘secondhand September,’ she became concerned about the continuity of her business. Moreover, she felt responsible for products sold by Sanchos that were sitting unused in people’s wardrobes.

The scale of unworn clothing is huge. Only 5-7% of total resaleable fashion inventory is actually being resold, resulting in an untapped inventory of circa 2.1tn.

Brands have little accountability for items once they leave the shop, placing the onus on consumers to extend a product’s life and dispose of them in an environmentally-conscious way. OWNI aims to change this by, ‘connecting businesses with the whole lifecycle of what they produce… to turn a linear business model into a circular one.’

For the consumer, OWNI provides ‘the tools to understand their clothing as an asset… by enabling people to liquidate’ their wardrobe with little effort. Functioning as a ‘digital wardrobe’, OWNI catalogues items purchased from partner brands, allowing its 3,500 current users to upload garments for resale at the click of a button.

In the future, OWNI aims to allow these brands to track garments from first purchase to resale, mapping out the location and condition of physical goods, and requiring brands to take accountability for the full product lifecycle. While it is still early days for OWNI and it will be a significant challenge to truly turn the needle, it is addressing a real pain point that major fashion brands should heed.

Tracking, traceability and the blockchain

OWNI is also part of a wider trend towards enhanced garment traceability. Several blockchain companies such as Everledger and Provenance are emerging to improve transparency in the fashion industry, providing insight into product supply chains, sustainability credentials and authenticity.

Similarly, the LVMH-backed Aura blockchain means that 30% of brands can now collect traceability details for their products. As these technologies become more widespread and the ecosystem of partners grows, the efficiencies required for resale to become profitable could be achieved, incentivising fashion brands from across the spectrum to get involved.

One example of blockchain’s application in the resale and rental space can be seen in H&Ms partnership with Lablaco, which launched a Berlin store where customers can rent clothing. All transactions are recorded on Lablaco’s ledger, and a QR code gives consumers visibility into the item’s full journey, allowing them to add memories and stories to the garments by uploading their looks to the blockchain.

Stepping beyond the QR code, brands are beginning to use Radio Frequency Identification technology (RFID). RFID tags are cheap and battery-free smart stickers, sensed from some distance away, that can be used for digital cataloguing.

Anyone who has enjoyed the magic of a Uniqlo self-checkout may have experienced this technology in action without even knowing it. Taking this further, some brands such as Moncler, Benetton and Burberry are now beginning to use RFID for product tracking, authentication, and even brand experiences. The ability for RFID to provide goods with a unique digital ID is an important enabler for blockchain-based garment traceability.

With great traceability comes great(er) accountability

Increasingly, brands are seeking ways to improve transparency to meet consumer expectations. For such brands, this may prove to be a double-edged sword, as greater transparency demands improved ethical and environmental credentials.

So far, attention has been on the early stages of the product lifecycle: manufacturing and supply chain. However, with improved garment tracking and automated identification of product and fabric types, these technologies could also be used to improve afterlife care.

OWNI, for example, categorises its garments according to brand, fabric type and degradation, information that could be provided to waste management and recycling organisations to inform decisions about a product’s end of life. In the future, companies may look to incorporate garment QR codes or RFID to enable waste sorting processes to be further automated, ensuring more clothes are reused or recycled.

A minority of brands, such as eco-focussed Pangaia, are already stepping in this direction, developing the capabilities required to take accountability for the garments they produce, from source to afterlife.

Business model re-boot

Another Tomorrow is an emerging fashion brand enabling enhanced garment tracking through unique QR codes. These enable the buyer to see the entire supply chain and provide an authentication tool for their product’s resale. Scanning the label will query Another Tomorrow’s content management system, supplementing product listings on their brand-owned resale site with existing product photos. This makes the resale process as easy as possible for the customer.

Perhaps most excitingly – if this trend enters the mainstream – brands will need to start designing for resale, and optimising for quality and longevity. In doing so they will fundamentally alter fast fashion’s current offering. If they refuse to adapt, fast-fashion brands risk becoming obsolete. Indeed, Legesse believes that widespread uptake of services like OWNI mean that fast-fashion brands ‘will simply not be around in 10 years’ time’.

That remains to be seen. But the conscious consumer is here to stay. Businesses that address fashion waste by reinventing buying models and transforming resale into a revenue-driver will reap the rewards, doing good for the world while they’re at it.

Insights:

Irresponsible Resale

While resale is ostensibly a way to further fashion’s sustainability, many resale platforms drive first hand sales, and therefore more fashion production and waste. There’s hope for resale’s eco-credentials as it scales and starts to displace firsthand sales, but for now fashion production shows no signs of slowing.

Shelf-life Extending

A thriving resale market is poised to increase the shelf-life of garments, helping curb the massive emissions caused by fashion’s waste problem. Poor-quality fast-fashion items are less likely to benefit from this extension, with the luxury sector gaining ground.

Cannibalisation Conundrum

80% of fashion’s emissions are produced in the production stage, so only when secondhand displaces firsthand product sales will we see a significant change in fashion’s environmental impact. Sadly, with fast-fashion continuing to grow, and consumer wardrobes expanding, there is a long way to go.

Business Model Reboot

In an industry where margins are slim and brands face increasing pressure to account for both the production stage and the garment afterlife, new technologies that allow garment lifecycle tracking and support are an important step to creating a truly sustainable future for fashion.