Women want loss recovery for their closets because fashion trends change so quickly. Any kind of loss recovery is better than nothing. If women can get $20 for a $600 sweater, they’d rather make that deal than get nothing. Many consumers of luxury goods just want to turn around the expensive designer merchandise they purchase seasonally.
And there are a lot of people who want to buy those clothes. Even in hard economic times, people still want to look good. Young people today love fashion but can’t afford to buy timely designer threads. There is a 12.5 billion dollar annual unregulated marketplace of second hand designer fashion in the US alone. This market has grown in leaps and bounds over the past 5 years. And with the economic recession deepening, the market for second-hand fashion is only going to grow faster.
Companies that are taking advantage of the tremendous growth in the secondary fashion marketplace are seeing tremendous growth. On the brick and mortar front, second-hand clothing chain Second Time Around expects to cross the billion-dollar mark in revenue this year. Another second hand chain of brick and mortar stores, Buffalo Exchange, has experienced 38% growth rate over the past three years. On the ecommerce side, the East Asian company Milan Station taps into the secondary market for luxury designer handbags and IPO’d with a $270 million valuation in late May. There is a tremendous market for secondhand designer goods, and startups that work to take advantage of that space have the potential to wildly succeed.
The second hand designer goods market is currently totally unregulated. eBay and other retailers have lost the grey market legal battles and are paying penalties for brand dilution to LVMH and other luxury brands. However, there are still over 7.2 billion postings in the luxury apparel category on eBay. Most of them are counterfeit and the market is crying out for regulation. That is where technology has tremendous power to radically disrupt the marketplace.
Tech and fashion might seem like an oxymoron but, Abi Muller, the 5’3” 23 year old, stiletto wearing python hacking CEO of tech-fashion company Picki Picki is working to change that. Abi says, “The fashion industry has turned a blind eye to this massive market that consumers are creating for themselves, the market is emerging naturally. The challenge is giving architecture to a pre-existing consumer trend and regulating it.”
PickiPicki is a New York based start-up technology company with the goal of giving luxury brands the power to control the branding of their second-hand merchandise and allowing retailers to maintain customer ownership. Pickipicki is developing proprietary software that empowers retailers to create their own online marketplaces along the lines of Stubhub, an Internet start-up that developed technology to regulate the resale ticket industry.
Grey markets, a market in which the resale of items within an industry relies on claims as to the authenticity of those items, are places where technology can be extremely disruptive. Many of the 7.2 billion items posted to the luxury apparel category on eBay are not authentic; there simply are not enough brand-name luxury items even produced for them all to be authentic. The ability to develop software that will allow brands, retailers and consumers to verify the authenticity of an item has the potential to overhaul the incredibly large and lucrative fashion resale industry. At PickiPicki, Abi Muller and Chief Technical Officer Thomas McCabe, one of the Peter Thiel 20 under 20 fellowship finalists are taking this problem seriously and are using the most innovative technology to address the problem.
The use of technology to disrupt and regulate an entire grey market is admittedly complex but it has been done before. In the case of Stubhub, which was founded in 2000 immediately following the dot com crash, the internet company gave the pre-existing consumer trend of ticket scalping an architecture for achieving legality and infrastructure. This allowed for the buying and selling of second hand tickets for games, shows, and other events that proved to be extremely lucrative: Stubhub experienced exponential growth despite launching during a recession. PickiPicki aims to be the StubHub of retail fashion. According to Abi Muller, “PickiPicki gives architecture and regulation to a pre-existing consumer trend. This allows us to streamline and scale the process of designer resale, responsibly.”
Grey markets are great places to invest during a recession because they expand in times of economic hardship. People want the same sorts of goods that they are used to buying during good times, but they can’t afford to pay the same amount for them so they search in secondary market places. In a charming twist of fate, Laura Fluhr, the mother of co-founder of Stubhub Jeff Fluhr, owns the most prominent designer fashion consignment/resale shop in NYC, Michaels. Now, inspired by the success of stubhub, stealth start-up PickiPicki aims to bring the StubHub model to fashion resale.
*Nathana O’Brien contributed to this post.
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