In a recent Op-Ed piece in BoF, Kate Sekules the founder of ReFashioner, makes an argument for the cottage industry of second-hand fashion as a serious market for retail fashion growth. In the piece, she argues that by setting standards for merchandise, establishing fair pricing standards, etc. the market can experience exponential growth and generate a halo effect that raises the entire industry, akin to the experience to be found in the automotive industry’s used car market. Labeling the trade as ‘re-commerce’ she argues that by establishing a “Blue Book of Fashion” the industry can establish the type of fair market system that yields a condition to price matrix compatible with proper valuation.
This is a really interesting idea, and Ms Sekules certainly has a vested interest in hoping that it’s true, but it misses the key economic component that the vast majority of garments are simply not durable. The concept works, and works well, in the automotive industry because the product lasts for 20 years and in the majority of cases has an ever declining value that follows an essentially linear trend which bottoms out at the value of the raw materials from which the vehicle is constructed.
With clothing, there is certainly a market for vintage, but it is fundamentally different from depreciation model. Vintage clothing is valuable because of rarity and demand, similar to other collectibles, and is not something that has a value primarily based upon wear and age.
If you were to apply actuary principles to the products of the garment industry, nearly everything produced reaches a near-zero balance within about 3 years. That’s not to say that a sought after Louis Vuitton evening gown that’s 3 years old is worthless... but its value relative to other gowns doesn’t follow a bookable model, and is based upon what someone is willing to pay for it rather than what it is actually worth in terms of materials, manufacturing costs, etc.
She postulates that;
If all the clothes in the world come back to the market in a second (and third, and fourth…) round, who could possibly write that catalogue? Why, ‘the crowd’ of course. I envisage a structure into which the buyers and seekers and sellers and owners input each piece’s data — and an algorithm spits out its current value, according to factors like consumer desire, realised prices, original (adjusted) retail.
It’s a neat idea, but mathematically it doesn’t work, or at the very least doesn’t yield an algorithm that functions without a whole bunch of assumptions and generalizations that attempt to correct the fact that when represented mathematically, these goods aren’t so much like cars as they are like a car’s tires.
Concern is expressed that as the market begins to mature, a bloodbath will ensue as the masses realize the value of the clothing in their closets. To this point, I think everyone needs to take a breath and think about what the masses have in their closets. It’s mostly from Walmart, and it was mostly worth about zero dollars the moment it was first worn. So I don’t think we need to have much of a concern about a horde of people suddenly casting out millions of garments into a frenzied marketplace in an orgy of cash lust... it isn’t going to happen.
I do agree with Kate on one point though, the industry does need a plan. The vintage clothing industry is growing, and there’s no denying that. If businesses that focus on this area are going to be ultimately successful on the internet, then they need to start building meaningful differentiation now, because the fact of the matter is that the big kahuna is eBay, and they aren’t just an 800 pound gorilla... they’re King Kong.
The folks specializing in identifying and marketing quality vintage and ‘used’ garments are going to have to find a way to seduce the owners of these garments away from that monolith, or else the kitschy and unique will ultimately give way to the easy and profitable, and those who have not competed well in the cold and practical world dominated by this giant will be nothing more than yet another footnote in the evolution of internet commerce.
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