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the right to resale
Lululemon wants to buy back my old leggings, and probably yours, too.
A few clothing firms are trying to formalise the secondary economies related to the resale of their items of dress. We’re moving from a place where the consumer is in full control of circumventing formal markets - since you can still bargain or haggle in informal resale contexts - towards more closed ecosystems. The peer-to-peer economy that has (long!) supported trading and reselling has become a new normal of sorts online thanks to eBay, Craigslist, Facebook Marketplace, and other sites. But that freedom is being tentatively challenged as some clothing companies try to recapture some of that value for themselves, because they have figured out that they can sell the same item more than once (the practice is sometimes referred to as “recommerce").
The art of selling the exact same item to different people is perhaps most familiar with Ticketmaster’s Resale program (which officially started reselling in 2005) and the practice seems to be creeping into apparel. Canadian companies on the resale bandwagon are: Canada Goose’s Generations program, Arc’teryx ReGear, The North Face “Clothes the Loop” program, Birds of North America ReNests, Hoi Bo, and others (who am I missing!!?).
When it comes to garments, consignment as an economic activity isn’t at all new, but it is being done in new ways. Its digital formalisation makes it a little easier to pass on your gently used duds, and the practice can potentially link into loyalty programs and associated data points collected by firms. The companies engaging in clothing buyback programs will tell you that this practice is ‘good for the environment,’ and while this is true, it is not necessary for a parent company to control their resale market in order for people to sell their clothing. Another purported benefit is that their ecosystems might combat counterfeit (which could be a legitimate desire for some, like collectors).
Whether a firm is running a digital buyback program or facilitating reselling via a closed platform (or both), it raises the question of what it means - or meant - to ‘own’ something right now. Are we just paying a premium to borrow clothing items from companies? We aren’t quite renting them, but it can feel close. Think of Peloton’s experiment with a certified buy-back program (buyback programs give the seller funds right away, sometimes in the form of a gift card or store credit).
It took me a second to hone in on why this micro-trend seemed concerning. There are obvious positives: more firms are integrating the circular economy to their business value, and customers can earn back some of their investment in an item while giving it new life. I’m not concerned about clothing companies reclaiming their resale economies from consignment stores or peer-to-peer platforms, and I see some positives in terms of convenience for customers. I am a bit annoyed that clothing companies engaged in these buyback schemes can take a cut of a transaction that they would not otherwise be able to access.
The hazard here is that these companies are able to assetize their products in a way that expands their ability to extract rent. While creative, it just doesn’t feel like an innovative business strategy. The potential harm comes from the steady erosion of rights when you purchase a product. It’s another area where we are moving from owning an item outright (property rights) to having contract rights that are always eroding. Another example of this shift is when a warranty is downgraded when you purchase an item secondhand. This disincentives the resale and discourages buying a gently used item. Right now, it doesn’t seem like shoppers have the bargaining power to push back on this shift.
There is a natural link between the prospective loss of the ability to resell your clothes anywhere to the right to repair movement. Legislation is opening up artificial and unfair barriers that lock in purchasers to using licensed repair technicians supplied or licensed by the parent firm.The most infamous - or at least by now, hopefully familiar - example is John Deere, but also Apple’s new Self Service Repair. So it’s not new for there to be faux walls in commerce that infringe on consumer freedom.
It is fundamentally good for people to be able to sell their used goods and recapture some of their market value. But I think the ‘right to resale’ is something we should keep our eyes on. Maybe we risk working a little bit backwards with these reselling ecosystems, pulling resale away from thrift shops, garage sales, and online platforms so that parent firms can capture the most revenue possible. It’s sort of like password sharing. We used to split Netflix subscriptions and now that’s been ‘cracked down’ on. Brand-owned resale feels like a hangover from the optimism of the sharing economy or a bad use of a blockchain. It’s not hard to anticipate how it could grow incrementally in this inflationary period. I’m ultimately more supportive of peer-to-peer and just wonder if that ability needs to be more proactively protected.