Fashion Consignment Shops: Silicon Valley is Now Your Competitor

If you own a fashion consignment shop, chances are you rely on a steady stream of customers who want to consign their “gently used” clothing with your consignment shop.

In recent years, however, your consigning customers may be becoming a new type of competitor. That’s because they can turn to a new generation of mobile apps specifically designed to make it easy to resale their gently used clothing. And in the process bypass the consignment store altogether.

We’re not talking about boring old eBay or grungy Craigslist, either. We’re talking customers selling haute couture designer labels and $1,000+ handbags with a tap on their phone.

Investors Move into Clothing Resale

In just the past couple of years, a tidal wave of startups have focused their attention on disrupting the traditional clothing resale and consignment industry. Powering their efforts are literally millions of dollars of investor cash. A recent Bloomberg article states:

Venture capital firms poured hundreds of millions of dollars into fashion resale in 2015; total funding over the past five years has blown past the $400 million mark. In January, online consignment shop Tradesy raised $30 million. By the end of April, vintage luxury reseller RealReal had raised $40 million and social commerce site Poshmark had taken in $25 million. European resale shop Vestiaire Collective scored a $37 million round in September. Then came Goldman’s monster round for ThredUp, perhaps the most mainstream of the bunch.

Even more recently, Poshmark raised another $25 million for their growing app platform. The website TechCrunch, which reports on the startup scene, reports:

Attracting 1.5 million sellers since its launch, Poshmark has found a niche in the clothing resale business, with an app that makes cleaning out your closet sociable. On the site, you can follow your friends, boutiques and brands for an Instagram-like feed centered around shopping.

“One in 50 women in America have opened up their closet on Poshmark,” founder and CEO Manish Chandra tells TechCrunch. Poshmark argues it has found a way to “implement social commerce in a way that’s never been done.”

What this Means for Your Fashion Consignment Store

Remember back in the 2000s, when Amazon got so big that independent bookstores couldn’t compete and started closing up? At least, that’s what the media was reporting at the time. Truth is, disruption is always a factor in any business, especially retail. But book sellers who found a niche and provided honest customer service withstood the Amazon threat and continued to stay in business. In fact, now that the dust has settled and the Amazon brand is more than just books, independent bookstores are on the rise again.

As a consignment shop owner, you’ll want to focus on those things that apps cannot replicate. Like connecting with your customers (and consignees) on a personal level. When you and your staff understand their tastes, guide them to through your inventory, and make them feel special, your customers will want to come back again and again.

Your other advantage is your physical store. You know that photos on a phone cannot replicate the experience of touching real clothing and trying it on to see how it fits. So the more you make your consignment shop a unique destination, where customers feel welcome and your merchandise shines, the more your customers will visit and tell their friends about your shop.

Russell Droullard

Russell Droullard is an online marketing expert with a speciality in search engine marketing for independent retailers. He has over 20 years of experience directing marketing programs for startups, consumer brands and global manufacturers. Russell can be followed on social media at @rusdroullard and +RussellDroullard.

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