A recent Second Hand Effect report from Adevinta and Schibsted showed that their ten marketplaces potentially saved 20.7 million tonnes of CO2 in 2020, which is equivalent to 41% of the total CO2e in Norway during one year.
Opting to buy second-hand items instead of new ones saves a lot of energy, raw material, chemicals, and everything else that is needed to manufacture a certain item, but it also prevents from items ending up in landfills.
Even though some of the items are made of natural and biodegradable materials, such as cotton and wood, those materials don’t decompose in landfills the way you expect them to. Instead, they are trapped with other similar items and can’t get enough oxygen and fluids. Those conditions cause organic matter to release methane, a harmful greenhouse gas.
Who buys second-hand items?
It seems that Gen Z and millennials are aware of the non-biodegradable fact since 40% and 30% of them respectively are second-hand shoppers, according to the study commissioned by ThredUp, one of the popular second-hand marketplaces. 90% of Depop’s active users are under 26 years old, the company, which has more than 26 million users in over 147 countries, says.
“Younger people are getting smarter than ever about how wasteful [fast fashion] is. For years, I was trying to convince retailers to care about this,” said ThredUp co-founder and CEO James Reinhart.
With a quite young user base and growing eco-awareness, second-hand marketplaces have grown really big and the market is expected to grow from $28 billion today to $64 billion within five years, according to ThredUp and research firm GlobalData Retail.
In 2020, the number of searches for second-hand items has been 60% higher than that of new products, and this phenomenon can be seen in all age groups, says Singapore-based classifieds marketplace Carousell.
People aged 25-34 are the main group of this wave of green consumption, with 48.6% share, and the next group is 18-24-years-old, with 41.7% of share. Those who are 35 and older accounted for only 7.4% of all purchases, according to Carousell.
What second-hand items people mostly buy?
Carousell says that the most popular second-hand items were clothes, then shoes, bags, watches, and sports shoes.
Adevinta’s Sustainability Report from 2020 calculated how much users of the marketplaces saved in different material production. Users saved 1.2 million tonnes of plastic, equivalent to 21.8 billion two-liter plastic bottles, or 201 billion plastic gloves; 7.8 million tonnes of steel, which is enough to make 1,075 Eiffel Towers; and 0.7 million tonnes of aluminum, the same amount used for 1.8 billion Italian coffee makers.
Poshmark users can resell clothes, bags, jewelry, makeup, shoes, beauty products, toys, art, furniture, and pets products.
How does that affect the planet?
At TheRealReal, which operates 16 retail locations, and engages more than 20 million users online, people mostly buy clothes, jewelry, watches, fine art, and home decor. The company claims it has saved 896 million liters of water and 18,732 metric tonnes of carbon.
Lithuanian-based Vinted, which operates in 12 markets across Europe and the US, focuses mainly on second-hand fashion. It has over 37 million users. While shopping for second-hand clothes, users are prolonging the life cycle of garments and preventing them from ending up in landfills.
For instance, to produce a single T-shirt, 2,700 liters of water is needed. Not to mention all the chemicals needed to dye the fabrics, transport costs, energy costs, etc. The fashion industry is the second-largest polluter in the world, after the oil industry, according to the Sustain Your Style website.
But, a recent study “Contribution of Online Trading of Used Goods to Resource Efficiency: An Empirical Study of eBay Users” calculated the environmental effects of information and communications technology and shed light on a comprehensive and different view of the online second-hand business regarding sustainability.
The primary effects of trading on the eBay platform include, above all, the energy used by the servers and computer centers, for data transmission and for the consumers’ computer usage. The study adds the emissions made by every purchase (transactions), packaging, and shipping.
Even though these online marketplaces use the equivalent of hundreds of thousand metric tons of CO2 in energy usage, selling and buying used items is still beneficial for the environment, which concludes the study.
How are companies profiting from eco-awareness?
Investors see the rise of second-hand marketplaces and started investing in them a few years ago. Vinted is valued at more than $1 billion and, even though it operates mainly in Europe (with a small market in the US), it caught the eye of investors from both Europe and the US.
“At Lightspeed, we look for outlier management teams building generational companies. We’ve been impressed by the team’s ability to build an incredible product and value proposition for their community, and adapt and expand their business along the way. Vinted is defining its market and has built a global brand in C2C commerce and communities,” said Brad Twohig, a partner at Lightspeed.
Vinted became the biggest online ready-to-wear seller in volume in 2019, with more than 16% of the market share. Every user on the platform makes 5 purchases per year on average and spends almost 100 euros.
In January 2021, Poshmark had a successful IPO, with a valuation of $7.4 billion. The company has 30 million active users who spend 27 minutes a day on the platform.
There used to be a stigma in buying second-hand items, but that seems to be the past, and the investors are aware of the behavior shift. Even though more Americans than ever are shopping secondhand, the majority of them still prefer to buy new products. So, there is room for growth.
Also, some of the marketplaces decided to partner up with large traditional retailers – ThredUp works with Walmart and JC Penny to offer their customers second-hand fashion items.
What is the future of the second-hand marketplace business niche?
There is a shift in the overall market – the retail sector is expected to shrink 15% between 2019 and 2021 and the online second-hand market is expected to expand by 69% in the same period.
Not only C2C businesses are thriving. There is now a broad range of B2B businesses that provide services at each step in the value chain to help brick-and-mortar retailers resell, like Lizee (a logistics and management service for apparel retailers interested in entering the clothing rental space), The Renewal Workshop (an online platform that takes discarded apparel and textiles from retailers and turns them into renewed products, upcycled materials or recycling feedstock), Trove (offers retailers a complete suite of back-end services to recover used clothes, and then clean, repair and resell them), etc.
This systematic change will include more collaboration between public, private, and civil society through initiatives such as the Platform for Accelerating the Circular Economy (PACE).
“Before the pandemic hit, the resale market was on track to double. Now this growth may very well accelerate. Resale sites are coming out big winners as the pandemic plunges the economy. Analysts predict consumers will turn to sites like thredUP and Rebag to clean out their closets for extra cash…and stuck at home and worried about their finances, they’re hunting for bargains online,” writes Business Of Fashion.
The second-hand market is expected to hit $64 billion by 2024 and will overtake the traditional thrift and donation segment, writes ThredUp.
Are second-hand marketplaces saving the planet?
There hasn’t been a lot of research on how resale affects the planet and is it really making a difference. If a second-hand item replaces the new one, then the calculation is clear.
However, our consumerism habits have changed and we buy more stuff than ever. There’s no evidence that people are replacing their new purchases with secondhand ones – there has just been more of both, writes Fast Company.
The apparel industry has been growing exponentially from 50 billion garments in 2000 to more than 100 billion in 2015. The pandemic pummeled the fashion sector, but it has still grown by about 3%.