Nurturing Customer Trust In Luxury Resale
Sustainability and authentication can’t be ignored in the luxury resale economy. How do resale marketers make their case for customer trust? Luxury apparels worth trillions sit in closets, and probably half of them are collecting dust. The most basic solution would be resale. With the Kardashians and Bollywood star Deepika Padukone endorsing pre-owned luxury items, […]
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Sustainability and authentication can’t be ignored in the luxury resale economy. How do resale marketers make their case for customer trust?
Luxury apparels worth trillions sit in closets, and probably half of them are collecting dust. The most basic solution would be resale.
With the Kardashians and Bollywood star Deepika Padukone endorsing pre-owned luxury items, the hesitation towards buying second-hand goods is rapidly fading.
Meet Mira. She loves her high-end clothes with a sustainability badge stuck on them. Her wardrobe might not be extensive, but it has several items purchased from luxury resale platforms.
Today, the Google search result for sustainability touches peak popularity with a score of 90. The fashion industry is also witnessing a significant behavioural change towards the resale market, as customers push for sustainability and demand authentication.
In more recent news, luxury shopping destinations Net-a-Porter, Mr Porter, and The Outnet have launched an online resale service to help consumers embrace conscious shopping.
Owing to the holiday mood, Adobe estimates a $207 billion in online spending, and many luxury resale brands are hoping to profit a significant amount from the number, and looks like they can.
ThredUp Resale report indicated that the second-hand apparel market has grown 21 times faster than the retail market in the last few years, 52 per cent of customers bought or sold a pre-owned luxury item in the last one year.
The global luxury resale business is booming. Farfetch is expanding its handbag luxury resale programme by their recent entry to the UAE, Kuwait, and Saudi Arabia. On par with its 2030 sustainability goals, the platform is also allowing customers to use a fashion footprint tool to identify and understand the environmental impact of their wardrobe, and they can also use a Fix service, to repair their luxury items.
According to Luxe Digital, 34 per cent of luxury consumers sell second-hand products, and 26 per cent buy pre-owned items. Nevertheless, the most critical factor that has the potential to impact the numbers and add customer value is authentication.
The Authentication Factor
Counterfeit fake goods have rocketed the digital luxury marketplace. Fake Gucci, Prada and Louis Vuitton handbags and other accessories are sold in the market every day. A Forbes report revealed that many resale platform’s authentication processes are dependent on human expertise, which is susceptible to errors.
For a long time, many resale platforms marketed themselves with claims of strong authentication processes. For instance, TheRealReal gained massive popularity as they claimed to have trained gemologists, horologists, and art experts handling the authentication, but when it was later revealed that the so-called experts were just overworked copywriters, there was panic.
Chanel filed a lawsuit in late 2018 against The RealReal for selling counterfeit products on its platform. While the legal battle continues today, the question of the authenticity of the resale market is glaring. According to Harvard Business Review, the global market for counterfeit goods crossed $3 trillion a few years ago, and the numbers are only higher in recent times.
Experts believe only 20 per cent of items go through a second round of authentication in its lifecycle. Who is to say products haven’t been switched somewhere in the time?
So, how do other resale marketers make their case for customer trust? Customers are no longer gullible enough to take an employee’s word that yes, the discoloured Prada is real.
Authentication is key.
Chanel tried introducing serial-numbered cards but they could easily be stolen, lost, or faked. Luxury resale marketers are often tying loose ends, but it’s a lost cause without technology. While Artificial intelligence, data analytics, and blockchain are critical technology factors, marketers can enhance their strategies by focusing on the hybrid economy and resale-as-a-service.
Also Read: CXO’s Role Is Changing? Maybe Not
The Hybrid Economy
The resale market is no more a fragmented process that once took place in small, local shops or between two random consumers who were introduced to each other by a third party. Consumer reach is broader today, with eCommerce, weighing under trust and transparency.
With seamless end-to-end experiences, resale websites are competing against each other by offering premium services including curation, authentication, and personalisation with data-driven insights. Luxury brands are no longer at war with resellers. Customers’ behaviour towards sustainability put aside all differences, and a new partnership began to merge.
Vestiaire Collective website has been operational for over a decade, and only in 2019 did it open a brick-and-mortar store in collaboration with Selfridges in London. The boutique features a curated collection of second-hand, vintage luxury pieces for customers to browse. The store also includes a dedicated resale section where customers can deposit their luxury items that they want to sell.
Meanwhile, some luxury brands are investing in resale website acquisitions. For instance, Neiman Marcus acquired a minority stake in online consignment site Fashionphile, and Richemont acquired Watchfinder.
Ralph Lauren collaborated with digital marketplace Depop to offer its customers curated vintage, sold-out Ralph Lauren pieces.
Upscale outdoors brand Arc’teryx launched a recommerce programme Rock Solid to buy back used Arc’teryx products from consumers. The brand then refurbishes these used items and sells them at discounted prices.
Resale-as-a-service
Resale platform ThredUp has been advocating resale-as -a-service since 2018, and luxury brands are listening. For instance, M.M.LaFleur includes a Thredup bag in each eCommerce order, and customers can add items into the bag and put it up for resale.
Some other resale tech solutions include Trove, Shopify, and Salesforce Commerce Cloud. Balenciaga partnered with Reflaunt to offer peer-to-peer resale services on its owned site.
The Archivist offers a range of services to luxury fashion brands that want to earn revenue via resale and establish their own resale experience. Apart from in-store buy-backs, a branded second-hand marketplace and a peer-to-peer marketplace for both buying and selling, the startup provides luxury brands with a data dashboard for global resale marketplace insights on which of their products are selling where and for how much.
Several brands including COS and Balenciaga integrated the resale model in their after-sale services. Even Harvey Nichols and H&M partnered with resale technology company Reflaunt.
With Reflaunt’s resale-as-a-service solutions, luxury brands can empower its customers to resell or recycle their previous purchases with easy solutions on their eCommerce platform. Marketers can also offer customers a seamless solution of creating product listings, and allow store credits.
Also Read: Marketing Trends Driving Luxury
Strategic investments on the horizon
It’s a luxury resale arms race, and marketers must anchor on technology to help consumers make their pick. With customer demand for personalisation on the cards, luxury resale platform Tradesy recently invested in a personalisation algorithm that presents relevant items to consumers based on data analytics and lays out insights from customer purchase and search history.
Additionally, social marketplace Poshmark recently acquired Suede One, a platform that combines ML and computer vision to virtually authenticate sneakers. The technology will help analyse luxury product images, run algorithms on consistencies to identify whether the item is real or a counterfeit. For popular sneakers such as Jordan 1s and Yeezy 350s, Suede One can automatically authenticate the majority of submissions with over 99 per cent accuracy, only based on internal testing.
While strategic investments to accelerate growth in high-growth resale categories are surging, entering the resale ecosystem with efficient circular models and supporting customer’s demands for sustainability can provide marketers with opportunities to nurture customer loyalty.
Meanwhile, increased use of data analytics along with blockchain and 5G for better customer engagement will perhaps be the next collective movement in the luxury resale market.
