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When Manish Chandra was developing the online shopping community Kaboodle in 2005, he noticed that women kept trying to resell clothes from their own closets — not just recommend cool pieces they’d seen on e-commerce sites.

When Hearst Interactive Media purchased Kaboodle in 2007, Chandra started to think about ways to fulfill that need. But technology remained a big hurdle.

“One of the big things in fashion merchandising is photos,” he says. “You could take [a photo] from your camera, take the SD card out, insert it into the computer, edit it and upload it. But when the iPhone 4 first came out in 2010, I finally saw the ability to easily do a buying and selling platform.”

That’s how Poshmark, a fashion reselling marketplace built around the mobile phone, was born. But Poshmark is far from alone. It’s estimated that there are more than 60 online consignment retailers, though all function slightly differently, and it’s enough for the subsection of the market to have its own name: re-commerce.

Chandra points to the sheer size of the potential re-commerce marketplace. Fashion is a $520 billion industry, of which more than 50 percent is women’s fashion. “One-third of women’s purchases are never worn,” he says. “Another third gets used once or twice.” That adds up to a lot of inventory just sitting in women’s closets.

But no longer are those items relegated to gathering dust. Women are finding ways to boost their bottom lines, and some are even launching new businesses as a result of the re-commerce trend.

Throwback idea moves online

The idea of reselling never-worn or gently used items is nothing new. It’s been going on for decades through bricks-and-mortar consignment and thrift shops. Children’s Orchard pioneered the children’s consignment franchising model in the 1980s and has expanded into Style Trader, which serves men, women and teens.

“One of the things that business people like to do is open the two concepts side by side, much like a business owner opening multiple stores in the mall,” says Taylor Bond, president and CEO of Children’s Orchard and Style Trader. “There are efficiencies in employees and the back office systems are the same.”

Style Trader has just begun franchising, but it has done so in a far different environment. “We’ve seen the days when people came in the back door because they didn’t want anybody to know, to now where it’s a sense of pride,” Bond says.

There’s a pecking order in bricks-and-mortar reselling: resale features inventory owned by the store itself; consignment is on loan by the consumer, who is only paid when the item sells; and thrift outlets sell items donated to them.

The same sort of general pecking order follows in re-commerce. There are sites that focus only on designer or couture brands, others that only accept items that have been shipped to one site and vetted by experts and still others that allow customers to post virtually any item that’s new and most that have been gently worn. Return policies vary widely, too, from those that are extremely liberal to those that only accept returns if an item isn’t as promised.

A passion for fashion

So what is driving re-commerce? Kate Sekules, founder of ReFashioner, which focuses on the sale of designer brands and vintage pieces, believes it’s out of a love for “the clothes in our closets, even those we’re not wearing. We find it hard to get rid of things we own, even those we don’t want to wear,” she says. “Now there are better ways to offload them and it makes the process easier. Ideally there’s a little bit of a ritual: You tell their story, you pass them on with love to someone else who is going to appreciate them.”

For Noah Ready-Campbell, founder and CEO of Twice, a re-commerce site that immediately pays customers once items are accepted, it’s about monetizing the closet. “The economic downturn is still out there for a lot of people. They’re asking, ‘Can I earn any extra money? Do I have something in my closet that I don’t need anymore? How can I stretch my clothing budget a bit further?’”

But as with eBay, which began as a way to conduct online garage sales and now has professionals who make their living off selling on the site, there are opportunities for individuals to become professional re-commercers and boutiques to take their collections online.

Chandra says Poshmark has women who put a few items up on the site and those who travel the world shopping for bargains, which are then sold via Poshmark. The average Poshmark “closet” has 19 items; the largest has 3,500. He believes the marketplace will see its first seven-figure seller in 2014.

“The average Poshmark user spends 20-25 minutes per day in the platform and opens the app seven to 10 times per day,” Chandra says. “Women can build a loyal clientele that resembles the kind of relationship you may have with a boutique.”

That’s for good reason: Some of Poshmark’s sellers are small boutiques that use the sites as an easier way to sell online. Chandra says he has also seen women seizing upon rare items — such as pieces from the Phillip Lim line at Target — which they purchase to resell, sometimes for a profit and other times just to break even. “Some of them just see it as a way to share, to supply other women,” he says. “Other women pull together something unique using their own aesthetic and design.”

Poshmark operates a little differently in that its sellers build personalities and customers follow them, a blend of social re-commerce. The sale itself remains somewhat arms-length since Poshmark handles customer service and payments. But deep social interaction is encouraged, from building and following personalities to purchasing directly from people whose styles shoppers like.

“The potential buyer may ask the seller to model the item or ask questions about it,” Chandra says. “Typically, women become style mates and regularly shop each other’s closets. That prevents a lot of mishaps.”

Poshmark has a strict no-return policy, only accepting them if an item isn’t as promised. But that in itself creates a cycle: “If you don’t like it or it doesn’t fit, you can always sell it on Poshmark,” Chandra says. “That dual facet of knowing a lot about the item and seeing it modeled removes a lot of issues.”

Still, some issues remain in this relatively new niche. “The branding of most of the resale sites is not sufficiently clear, so people cross-post an item in multiple places,” Sekules says. “They may forget what they’ve posted, and when someone inquires about an item, it’s sometimes gone. It’s frustrating for the buyer.”

Accepted or rejected

For the sites that do not accept all comers, the issue of rejecting items can be tricky. At ReFashioner, the idea to curate clothing came both from Sekules’ background as a fashion editor and from seeing what happens when sites become too product-heavy.

“It’s all about editing,” Sekules says. “When it’s presented beautifully, it’s enticing. In order to change the way people consume, you’ve got to interest and excite them.”

ReFashioner sellers photograph and upload photos, which then are vetted and edited by ReFashioner staff before posting. “People have become good self-editors,” Sekules says. “When we launched the beta in August 2010, there was a lot of turning away of stuff. Now … we hardly have to reject anything. They obviously get it and are doing what the site was designed to do. The smart consumers that have caught on will say, ‘This one is for ReFashioner. That piece is for somewhere else.’”

Twice operates somewhat differently: Consumers box up their clothing — ensuring that it is from a brand that the site accepts — and ship it off. Twice staffers go through the clothing, select what it will accept and either return unwanted items to the seller or donate them to a nonprofit.

Selection is based not only on condition but “where there is really value we can give to the customer,” Ready-Campbell says. “That means we stay away from the very low-end brands. Not because there’s anything wrong with it — they’re already so cheap that there’s not a lot of savings we can pass on to the customer. We also don’t want to have a lot of … small niche brands that not a lot of people know.”

When Twice accepts an item, a seller is cut a check; Twice then steams the clothes, photographs, sells and ships. “We’re so much simpler than eBay or peer-to-peer marketing places where you have to do all the work,” Ready-Campbell says. “It’s as simple as dumping it in a bag, sending it off to us and you get a check.”

Where re-commerce is headed

Re-commerce — as with any aspect of online fashion shopping — has to overcome the issue of fit. “That’s a big barrier for people,” Bond says. “That’s where bricks-and-mortar has always had it over the Internet.”

Sekules agrees. “This is impossible to get around. People want to try things on. It’s even more the case in resale because everything is singular and nearly everything has a history.

“I do believe that real world events — and pop-ups is what’s thought of first — might have a part in the solution,” she says. “We have started having invite-only party-style events, so we can see what works on a smaller scale and take it somewhere else. … I don’t think there’s any way around it. [Real-world selling] has to be in the mix.”

Regardless of the kinks that still need to be worked out, the growth potential is there. “By no means is the demand for good resale going away,” Bond says. “Resale is big across all merchandise areas and it’s growing tremendously. Initially it was a value issue. It’s gone broader than that.

“The days of conspicuous consumption — where you had to keep up with the Joneses — that’s changed,” Bond says. “This generation that’s coming up, they’re taking greater pride in the value that they get and value doesn’t [always] mean new. That’s a big generalized trend that is now emblazoned in people’s psyches in how they shop.”

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