The promising future for online resale marketplaces

January 30, 2021, 12:00 PM UTC
Poshmark, an online marketplace for secondhand goods, rose 142% in its trading debut after raising $277 million in an initial public offering.
Gabby Jones—Getty Images

In the early days of France’s first national lockdown in March 2020, Ariel Novak was panicked. The art director and decorator’s vintage decor business on Selency, France’s leading secondhand interiors platform, was tanking.

“In the first two weeks, we brought in only 1,000 euros in sales. My partner and I wondered how we’d survive if that continued,” Novak recalls. 

The scale of economic uncertainty surrounding the pandemic may have motivated consumers to abstain from nonessential shopping initially, but the slowdown didn’t last long. With a global surge in online resale business by April of last year, the crisis accelerated the secondhand (or “re-commerce”) market, a boon for both marketplace platforms and their sellers. According to the 2020 ThredUp Resale Report, online resale is expected to grow 414% in the next five years, while the broader retail sector is projected to shrink by 4%. 

Though considerable attention is paid to the industry’s biggest players—including peer-to-peer social marketplace Poshmark, which filed an IPO in December; StockX, the largest marketplace in the world for sneakers, streetwear, and collectibles; and 1stDibs, a leader in home decor and antiques—European platforms are following closely on their heels.

“The explosion of secondhand is a global movement that was well underway before the pandemic,” explains Novak, who began selling vintage on Selency four years ago with his partner, Sydney Sabatier, to test the waters before launching their own e-commerce site AXS Design last summer. “Between the end of the first lockdown in France and the end of December, our sales jumped by 55% from last year. People were nesting; they were spending more time than ever in their own homes and taking a real interest in making it more comfortable.” 

Selency’s own figures would seem to confirm that. The platform’s cofounder Charlotte Cadé says the company, which was built on the principles of the circular economy six years ago, more than doubled its sales from 2019. While the constraints of the pandemic have certainly played a role—retail stores were shut for extended periods of time in France and much of the European market where the company operates (Belgium, England, and the Netherlands)—as well as the consumer’s money-saving considerations, she believes the aspect of sustainability is the abiding factor. “The shift is in behavior. Our consumers were already sensitive to the idea of buying less but buying better, but the realities of this moment forced even more people to reevaluate their habits.”

The consumer desire to rein in excessive consumption in favor of more conscious and environmentally respectful practices is likely to grow even stronger: A McKinsey report indicated that 71% of consumers are indicating a shift toward investments in higher-quality garments and a deepened interest in circular business models such as resale, rental, or refurbishment following the COVID-19 pandemic. 

Whether that will make the industries themselves more sustainable in the long term is debatable, says fashion journalist Alden Wicker.

“I haven’t yet seen evidence that online secondhand purchases are replacing new purchases. Resale sites might be encouraging consumers to buy more overall, since it’s easier than ever to turn around and flip whatever they buy,” Wicker says. “However, if these resale sites create a culture where consumers take into account the resale value of what they buy, that could encourage brands to focus more on providing repair and improving the longevity and quality of their products, rather than overconsumption of short-lived trends and cheap products that fall apart quickly.”

That’s what France’s Back Market, a rising star in refurbished electronics and appliances, is banking on. The company, which predicts that the U.S. will be its second biggest market in 2021, is focused on convincing consumers that there is no reason to buy new products and is currently working toward defective rate parity (according to the company, new products have about a 3% defective rate; its rate is currently at 5%, half of what it was five years ago).

“We have a wide selection, lower prices on expensive, authenticated goods, the exact same features, and strong durability,” says Back Market COO Raoul Costa de Beauregard. That’s on top of supplying buyers with one-year minimum warranties to instill trust. 

While there was a market for refurbished products well before COVID-19, this period has driven the business forward in a way that Costa de Beauregard says the company never could have anticipated. “During the first lockdown, our worldwide sales doubled. The week that President Trump distributed the relief checks, we saw 1,000% year-on-year growth in the U.S. That was massive,” he notes. “We’re part of an $80 billion market set to double by 2025. Value may be the dominant concern, but the ecological consciousness of our customers exists. We expect that trend to continue.”

And then there’s the marketplace experience itself which has improved radically since the early days of eBay. For one, logistics are frictionless. The development of alternative loops for last-mile deliveries, such as FedEx SmartPost, which works with the USPS and Mondial Relay in Western Europe, has enabled marketplaces to keep shipping costs low and fixed and convert even the most tech- (and post office–) averse consumers. 

Ensuring the platform is pain-free and fun to use is part of what CEO Thomas Plantenga says contributes to the success of Vinted, the decade-old Lithuanian resale fashion and housewares giant. “We’ve worked hard to make sure our platform is intuitive—from the ability to buy with just a click to asking questions directly or self-printing shipping labels,” he says. But the turning point came in 2016, when the company reworked its business model: “This included making it free to list and sell, which helped us attract a greater number of sellers and items, which in turn attracts buyers through greater choice. We also introduced buyer protection for a small fee, secured payment options, lower shipping prices, and customer support services.”

Whether it’s cost, ethics, or simplicity that is driving the resale industry forward, one thing is certain: A combination of the three has already upended e-commerce for the long haul. 

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