The global resale market is experiencing explosive growth and is projected to reach $218 billion by 2026. The luxury resale segment, currently valued at $32 billion, is expected to reach $51 billion in the same time frame – growing at a rate of 4x the primary market.
While in-store buying experiences still attract the most luxury buyers, the global pandemic caused a number of physical stores to close and initiated a shift in consumer buying preferences. Online platforms now account for nearly a third of luxury resales, and this figure is expected to increase an additional 30% each year. Today, the market primarily consists of peer-to-peer exchanges that allow collectors to sell products directly to each other and curated marketplaces that attempt to authenticate collector-supplied goods.
For buyers, statistics show that younger generations increasingly look to the secondary markets to make a purchase before checking the primary market. The same study showed that nine in ten luxury resale buyers end up making a full-price purchase from the brands they shop in the secondary market, and 75% of luxury resale buyers have also contributed to the market as sellers.
With these extreme growth metrics and consumer trends supporting the future of resale, luxury brands are extremely interested in capitalizing on their resale demand; however, there are two major barriers preventing them from entering the secondary market.
The largest concern in luxury resale is authenticity— counterfeit products plague the current market and comprise the world’s largest criminal enterprise. Projections valuing counterfeit sales are wide-ranging, but consensus estimates place the impact of counterfeiting in the luxury goods market above $600 billion annually.
This is especially challenging for peer-to-peer exchanges (e.g. Poshmark and eBay), but even curated marketplaces (e.g. StockX and Goat) that authenticate products are unable to ward out all of the fraudulent items. Because there is no sufficient solution to prevent counterfeits today, there are an increasing number of authenticity-focused lawsuits between brands and resellers.
To cite a few examples, LVMH employs over 60 lawyers and spends nearly $17 million each year on legal fees related to anti-counterfeiting lawsuits. Chanel won a $11.5 million settlement with TheRealReal over counterfeits sold as authentic Chanel pieces. Nike is also currently working through several lawsuits with StockX for selling digital products marketed as 100% authentic. After working for decades to establish valuable brand equity, brands are extremely cautious of counterfeits circulating in the secondary markets and tarnishing their reputation.
The next major concern for luxury brands entering into resale is the need to provide a premium-quality experience for their collectors. There are a small number of Resale-as-a-Service solutions today that provide the infrastructure for brands to participate in resale; however, in addition to counterfeits, the challenge is maintaining price integrity over time and providing an on-brand experience.
These solutions primarily exist to offer consumers luxury products at a discount, but many high-end brands do not want to erode their own margins by offering resale on their platforms. Consumers are looking for brands to actively participate in resale, and they would prefer brands to offer resale on their own platforms rather than through third-party exchanges.
At One of None, we’ve built an innovative technology that overcomes these barriers. We call it the Hybrid Asset Solution and are thrilled to empower brands and artists to eliminate the risk of counterfeits and ultimately own their resale markets.