Search engines for secondhand fashion - what does the industry look like?

The fourth phase of the online fashion resale industry is being built - curated platforms and search engines for secondhand fashion along with it.

I recently got to test the beta version of a new fashion resale platform called Phia. Phia’s platform is much like what we envisioned with my co-founder when building Cledja — a curated search engine for secondhand fashion, intending to decrease the time spent switching across platforms, and browsing through millions of products.

In addition to Phia, solutions like BENI and Faircado have recently entered the market, bringing secondhand options to the typical online shopping experience, as well as Sourcewhere, which brings a personal customer experience when shopping for luxury fashion.

These personalised and curated solutions are part of the current phase of the industry. The online fashion resale industry is in the phase of normalisation, and the more I stumble upon these solutions curating the shopping experience, the more confident I become that one of the biggest trends in fashion resale during the next years will be aggregator platforms.

Old mockup of what we envisioned with Cledja

The 4 different phases of online fashion resale — from 1995 to 2020

According to Business of Fashion, the fashion resale industry has been in the phase of normalisation since 2020. To understand what the different phases of the industry have entailed, let’s take a look back.

First phase — Creation (Pre 2008)

The first player in the online fashion resale market was eBay, during the Web 1.0 phase. At the time and after the move to Web 2.0, the interactive and dynamic websites, the first fashion resale site, Fashionphile, emerged in the US. That was quickly followed by 1stDibs, a managed marketplace for luxury items, including fashion.

Fashionphile has recently been raised as one of the successful examples of managed marketplaces while the general discussion has delved around the hardships of getting managed marketplaces profitable. Overall in fashion resale, a profitable managed marketplace is difficult to build due to low margins and heavy logistics. Fashionphile, a platform that for a long time focused solely on selling luxury handbags, has been profitable since its launch in 1999.

Second phase — Legitimisation (2008–2013)

Many of the well-known, big marketplaces that control the online fashion resale space today, were born in the phase of legitimisation. This time saw the launch of major managed marketplaces such as ThredUP and The RealReal in the US market. We also witnessed the launch and growth of major P2P platforms, such as Vestiaire Collective, Tradesy, Depop, Poshmark, Hewi, and Vinted. 

All of these marketplaces that have grown to be major players in the market today, were established in three years between 2009 and 2012.

Third phase — Differentiation (2014–2019)

Whereas in the second phase, the marketplaces launched in the differentiation phase developed a much more narrow focus in terms of product selection and the buyer persona. Managed marketplaces, such as Rebag (luxury handbags), Cudoni (luxury fashion), and Stadium Goods (sneakers) were released. New P2P marketplaces with a narrow focus were also introduced, such as Goat (sneakers), StockX (sneakers), and Grailed (luxury fashion).

Most of the successful companies established during the differentiation phase were focused on higher-end or luxury fashion pieces — emphasising the difficulty of building a solution in fashion resale outside of luxury due to low margins.

By the end of the differentiation phase, major fashion companies and smaller traditional fashion brands became more and more interested in entering the resale space — which is why also Resale-as-a-Service (RaaS) providers started coming into the market in growing amounts, and more partnerships between brands and platforms were seen.

Fourth phase — Normalisation (2020-)

Currently, we are in the phase of normalisation for the online fashion resale market. We are seeing more and more traditional brands entering the resale space, which has resulted in the continuing growth of RaaS models. Some brands collaborate with existing resale marketplaces or utilise RaaS model to integrate resale into their core business, whereas some brands have launched their in-house resale initiatives (such as Zalando and Nike). Continuously, brands are entering the resale market, as it becomes more and more evident that the industry will keep growing.

In addition to traditional brands interest in the resale market, also other complementary industries are seeing the industry’s potential: the biggest fashion rental marketplace in the US, Rent the Runway, entered the resale space in 2021. The synergies between rental and resale are undeniable — which is why this expansion felt like a no-brainer. 

The normalisation phase has also seen mergers and acquisitions of major marketplaces. In recent years, Etsy has acquired Depop, Goat acquired Grailed, and Poshmark was acquired by a South Korean search giant, Naver, to name a few. 

In addition to the growing amounts of matured players entering the market, and a number of mergers and acquisitions increasing, enhanced user experience is a common feature developed in the normalisation phase of a market. For online fashion resale in the current technology landscape, this most likely means improved AI-based recommendation systems, better search algorithms, and personalisation tools to increase convenience in the shopping experience. The search engine and aggregator solutions, such as Phia, Sourcewhere, BENI, and Faircado, will most likely be part of the market in the future.

Fourth phase in more detail: search engines for fashion resale

Existing online fashion resale marketplaces will most likely eat their part of the market. Players will integrate solutions into their marketplaces easing people to find what they are looking for. Example of this kind of feature includes for example Sellpy’s AI search for secondhand fashion products.

Yet, no existing player will be able to solve the customer’s pain point which relates to the growing amount of marketplaces and the need to browse multiple sites to find what you are looking for. This is where I bet fashion resale search engines come into the picture and solve the pain point for the customer.

Whereas Phia has been one of the most intriguing solutions (even just in the beta phase) that I’ve recently tested, other solutions in the market seem promising as well.

Sourcewhere’s highly personalised user experience and personal customer service make the product positioning very unique and luxurious. Even though personal customer service might be resource-intensive in practice, the luxury price point of the items sourced might help the company build a sustainable business model.

BENI and Faircado entered the market with simple Chrome plug-ins that present the user with a secondhand option for the fashion product they are browsing in a traditional online store. Later, BENI also launched an additional app for browsing secondhand items with search engine type features.

Other players currently in the market include for example GEM, probably the first search engine for secondhand fashion, and Genie, a recently launched AI-powered search engine for archive fashion.

Some players currently in the market

Who will succeed in the market?

Having researched and tried to build my solution in the market, I do have a couple of ideas about what kind of solutions I think will have the easiest time scaling, and what kind of marketing messages will get the masses moving. Even though you cannot predict the future, here are some features I think the winning solutions will have.

Focus on the luxury market will have the easiest time turning a profit and raising funding

There will most likely be room for multiple players in the market of personalisation and recommendations in fashion resale, especially as today fashion resale has reached a market value of $230 billion. Although, for the exact reason that the market has matured, I believe the success element is to start with a niche approach. 

The luxury approach is a no-brainer, taking into account the size of the luxury market, but also the fact, that with higher price points the company is more likely to overcome the margin-problem of the entire fashion resale industry. Sourcewhere started from a niche approach of archive luxury fashion, expanding to other parts of the luxury industry. Luxury fashion is also in the scope of Phia. Focus on luxury fashion and its lure in higher profits can also help the players in the field raise funding more easily, and therefore gain bigger market share quicker than competitors.

A marketing message built on convenience and deal-making, not sustainability, will resonate with a wide audience

I believe another key success factor comes down to the marketing message. It’s been proved by reports and research, most latest by ThredUP, that a majority of today’s secondhand fashion buyers are not primarily motivated by sustainability, but by price or style. 

Whereas the key marketing message for players like BENI and Phia is scoring high-quality, luxury fashion with low prices, the marketing message by Sourcewhere and Genie is easing the search for unique, hard-to-find luxury pieces. Even though these solutions are part of the circular economy, and therefore the practices are inherently more sustainable, I believe the players in the market have noticed that it’s not the marketing message that gets customers moving. 

User-generated content is converting users to buyers — curated platforms could utilize community curation

Aggregator solutions feature often millions, if not billions of products. Presenting the right product in front of the right customer is a curation (technology, AI), as well as a UX/UI problem, yet I believe successful community curation can support a high-quality product to get the early adopters onboard. 

User-generated content and recommendations have become widely adopted by fashion e-commerce, and are viewed as a content piece to build credibility as well as increase conversion rates. Utilising user-generated content in fashion resale is no easy task, as nearly every product sold is unique. In curation platforms, I see the possibility to utilise user-generated content in the form of community curation. Product curation made by the users, whether manually or with the help of AI tools, could engage more users to spend time on the platform and ease the initial step in starting to use the platform. Would love to see the upcoming solutions test with this approach.

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These are my predictions for the next phase in the online fashion resale market, and what it could look like in terms of personalised and curated shopping experience.