Apparel resale is big business – estimated to be worth $51 billion by 2023 in the US alone – and platform company Yerdle is positioning itself as a way for brands to deepen customer engagement via this channel while adding environmental credentials.

Co-founded by former Walmart chief sustainability officer Andy Reuben in 2012, the company is now promoting strategies through which manufacturers can find new value beyond the first sale and move into the circular economy by re-selling used items.

According to some estimates, as many as 33% of Generations Y and Z have used some kind of resale purchase or rental in the last year, and participation is estimated to be growing by around 40% year-on-year. Reuben argues that the consumer interest is there, but it has taken time to find the right formula.

“When we started Yerdle, we worked on a marketplace where people could exchange used items. And what we learned was that the friction in doing so was just too high – posting something, finding the item, trusting the seller of the item”, Reuben told McKinsey. Though brands liked the concept, they were reluctant to see their items next to very worn items.

Two years ago, this insight led the startup to pivot towards brands “so that alongside the items they have always made and sold, they can buy back items that customers no longer need, and then resell them.”

Now the platform is powering segments of its partners’ retail offerings. For instance, the outerwear company Patagonia uses Yerdle to run its Worn Wear hub, an e-commerce component of the company that allows customers to browse and buy used items that people have traded in for store credit. Though the hub appears under the aegis of the Patagonia brand, Yerdle takes care of the logistics, tech, and program management.

Despite widely reported forecasts – admittedly commissioned by the resale company thredUP, and compiled by the retail analytics firm GlobalData – that the US second-hand market is set to double in the next five years, brands still have doubts. After all, by promoting pre-owned items, why would customers buy new?

“It is a massive market shift whether or not brands and retailers take part. And when a brand is dealing with a disruption that is inherently a shift in how customers buy and what they buy, the choice of sitting this out is to walk away from the customer”, Reuben says. “I don’t know why a brand would do that.”

He maintains that the platform’s real influence is in strengthening relationships with customers, especially with schemes similar to Patagonia’s, in which traded-in clothes are bought back with in-store credit. Offering a gift card to bring back a jacket, he says, is re-engagement that builds loyalty.

“When that jacket then gets sold to a new customer who aspires to the brand, we typically see a marketing return twice as good as a brand benchmark, because you’ve got an item to work with right now that appeals to a group of people who aspire to the brand.”

Sourced from McKinsey, Patagonia, thredUP