EBay and Neiman Marcus find gold in secondhand clothes
Today’s consumers are looking for deals, even if that means buying and wearing someone else’s clothes. Management at eBay and Neiman Marcus, two companies not known for having a lot in common, demonstrated they see opportunities to build their businesses via the secondhand route, even if the approaches they are taking are completely different.
Earlier this week, eBay announced it had acquired Twice, an online secondhand clothing marketplace, to help improve eBay Valet, an online consignment marketplace where “Valets” sell a wide variety of goods for eBay members in exchange for a percentage of the sale.
A couple of days later, Neiman Marcus said it was working with The RealReal, a consignment retailer that will pay the department store chain’s customers for gently used designer clothing and accessories. The kicker is that customers, who are referred to The RealReal by the department store’s sales associates, are paid for their contributed possessions with Neiman Marcus gift cards.
When eBay formally split from PayPal on Monday, new president and CEO Devin Wenig said the company would surprise people in the years ahead, not by how much it was like major retail competitors, but by how different it was. He recommitted to focusing on eBay’s core customers while pushing innovation in a three-pronged strategy that calls for:
- A more robust commerce platform: Using data to improve discoverability and the user experience;
- A vibrant marketplace: Attracting sellers who will bring unique inventory to the site;
- Elevated product and brand experiences: Creating simple and easily accessed experiences through a multi-screen strategy.
The deal with Neiman Marcus represents the first time The RealReal, which specializes in the resale of luxury designer brands, has partnered with a department store chain. The two companies ran a test in six Neiman Marcus stores in which sales associates promoted the idea of customers reselling their used goods using The RealReal.
The consignment retailer initially pays 60 percent of the sales price with the percentage increasing to 70 percent for sales of $7,500 and up. The RealReal pays in the form of Neiman Marcus gift cards valued at 10 percent more than a straight cash transaction.
“After seeing the increased demand for this service since its pilot program launched in February, we recognized the benefit of offering the service to our customers across the country,” Wanda Geirhart, CMO at Neiman Marcus, told USA Today.
A Dallas Morning News article points out that Neiman Marcus in its deal with The RealReal appears to have learned a lesson from another Texas-based retailer, GameStop, which buys back games and electronics from customers with gift cards that can be used in the chain’s store and website.
- A New Beginning: Stay True to Our Roots, Evolve Fearlessly – eBay, Inc.
- eBay buys Twice, a secondhand clothing company – USA Today
- Ebay Doubles Down On Its “Valet” Service With Acquisition Of Clothing Resale Startup Twice – TechCrunch
- eBay Valet – eBay
- Twice Clothes – eBay
- Neiman Marcus teams with luxury consignment startup The RealReal – USA Today
- Neiman Marcus has new message: ‘Shop today, consign tomorrow’ – The Dallas Morning News
Discussion Questions
Do you see the sales of secondhand goods expanding in the years ahead? How will this affect retailers that sell new items?
Poll
BrainTrust
Mark Price
Adjunct Professor of AI and Analytics, University of St. Thomas
Gajendra Ratnavel
CEO, L Squared Digital Signage
This is a niche market, but a strong one. If you’ve visited Worth Avenue in Palm Beach you know that there are a number of very profitable small businesses reselling designer clothing.
The stigma around discounting and consignments disappeared during the recession, even among luxury purchasers. And why not?
The secondhand market permits retailers to sell their clothes more than one time which is an appealing proposition, since the second time the product cost is essentially zero. The key question is whether or not these secondhand sales cannibalize their core business.
Secondhand sales have a particular appeal to Millennials, with the lower price points, the “hunting experience” to find unique items and the ability to share the cachet of the brand itself. If secondhand sales brings in a new customer segment to the brand with incremental sales, then the experiment will prove successful.
This concept plays nicely into our rising Millennial base. They are really into alternatives to owning and this comes close. If they are loyal to a brand such as Neiman Marcus, why not buy, wear, re-sell and buy more?
It keeps them trendy at a much more reasonable cost.
For my 2 cents.
Yes, absolutely. This is such a great idea. For people with designer clothes, it’s not worth their time to try sell them on Kijiji or eBay. Consignment is a great outlet and local consignment retailers just don’t have the reach for clothing. Online consignment is great and now customers can get better value. Most people just want more clothing anyway, so the gift card idea is fantastic. We will see more of this!
Resale of luxury leather goods in Hong Kong is very popular and competitive, so why not in the U.S.? Of course you will have to compete with the successful fast-fashion store trend in which fashions are worn only a few times then discarded.
High-end consignment selling is a very personalized business that seems unlikely to scale well. A $7,000 designer dress, size two, worn twice, on sale for $2,500, appeals to an exceedingly narrow audience.
A well-organized online platform might improve the odds by reaching a nation-wide market, but try-ons will be a challenge.
It’s interesting to see eBay reinventing itself again. Re-selling collectibles and other pre-owned merchandise is part of its heritage. If the people from Twice have the know-how to really buy well, the collaboration may make an impact in the mid-priced apparel category.
Second hand goods are no longer just a fashion or economic statement. In some areas it is also tied to the environmental movement of recycling and pushback against fast, disposable fashion. It has a very specific following.
NM’s deal for gift cards I think works well since we are talking luxury retail after all, which NM has a big piece in.