It’s Not You, It’s ‘Re’: why some circular fashion businesses struggle to succeed

There are devastating break-ups going on in the fashion resale and repair sectors right now. It’s just not working out for many of the resale and repair sites that exploded onto the market in recent years. It’s difficult to make money, investors are getting the ick and becoming more reluctant to part with their cash.

Just last week, Cudoni, the luxury resale platform said the current economic climate had made it “impossible” to continue doing business. It said on its website, “the market and the world has seen unprecedented change and the rising cost of living and economic crisis have been difficult to ride out for every start-up, not just ourselves. We have explored every option available, but sadly in the current climate, it is impossible for Cudoni to continue. From today, we will no longer be accepting consignment items, and will begin the process of shipping all items back to their owners.” In January 2023, it was reported that the luxury resale platform had raised £7.5 million ($9.2 million) from backers including eBay’s venture arm.

Also in the past week, Louise Weiss, Co-Founder at dotte; the UK's no.1 reseller community for kidswear and official resale partner of choice for progressive kidswear brands, posted on LinkedIn: “Despite the fact that dotte was absolutely thriving, it's with a heavy heart that Sam and I are announcing the closing of dotte today. In the current climate we just weren't able to secure funding to take dotte to the next level. We're frustrated, we're angry, we're heartbroken. But mostly we're so sad this solution won't exist for families any more, at a time when it's needed most.”

Dotte was the UK's number one children swear reseller but has announced its closure

The ‘current economic climate’ is being blamed for many of the problems, yet the irony is, you’d expect more consumers to be turning to resale than ever before.

The projections for resale are startingly optimistic. The high-end rental and resale market could grow five times by 2025, “significantly outpacing” the anticipated growth rate for new apparel. Circular business models have the potential to grow to 23% of the global fashion market by 2030, driven by “rising consumer-sustainability awareness”, along with inflation squeezing consumer spending power, according to a new report from Bloomberg Intelligence called ‘Global Apparel the Rise of Rental, Resale and Repair’, which has utilised GlobalData estimates.

Even the most well-known names still aren’t making a profit. Online fashion resale platform Vestiaire Collective is on the lookout for potential acquisitions and needs a little more time and scale before it becomes profitable, CEO Maximilian Bittner and co-founder Fanny Moizant said at the Luxury at the Summit by Miss Tweed in Val d’Isère, the French Alps, on Sunday 2 April.

The online platform, which competes with FARFETCH, Vinted, The RealReal and other resale websites, is widely expected to conduct an initial public offering once it is ready and market conditions allow. Vestiaire Collective was launched by six entrepreneurs in Paris in 2009 to give a second life to items lying unused in people’s closets.

Etsy’s Irish holding company has had to write down its investment in Depop a year after the $1.6bn acquisition. Etsy believes that it overpaid by $1 billion for Depop and Elo7 ‘Brazil’s answer to Etsy’.

Etsy believes it overpaid for Depop

As the resale market has become more competitive both for sales and sellers, one of the originals is flexing its muscle. eBay Germany announced in March 2023 that private sellers will no longer be paying any listing or sales commission fees to sell on the platform.

Germany is eBay’s third largest market, behind only the US and the UK. Oliver Klinck, eBay Germany’s Managing Director, said that the removal of fees for private sales will boost eBay.de’s attractiveness, increase the variety of offers on the site and drive business.

Currently, private UK eBay sellers are charged 12.8% commission on every sale. If eBay decides to extend the removal of fees to other markets it will drive private sellers to the platform, even for luxury products because they have authentication procedures in place. It will squeeze the other platforms further.

eBay is bucking the trend and thriving

The repair sector has also having its fair share of problems.

In February 2023, the luxury repair company, Restory saw its co-founders exit the business. Emily Rea, Co-founder of The Restory, an on-demand aftercare service for luxury fashion, took to LinkedIn to announce that the three Co-founders have stepped down from the business.

"I am sad to share that last week I, alongside my co-founders Vanessa and Thaís, resigned from The Restory. I am full of emotion but thankful for the incredible experiences, and the positive impact we had enabling repair, circularity and ultimately making fashion more sustainable.”

The company was founded in 2015 and had secured partnerships with Manolo Blank, Harrods, Selfridges and Harvey Nichols.

The Restory at Selfridges

Co-founder, Vanessa Jacobs, posted on LinkedIn: “Today, I was informed that all staff were terminated with immediate effect and a “proposed” liquidator was named. My heart is broken, but my focus is on my (former) team, customers, partners and suppliers.”

In March 2023, The Watch Hospital's 19 repair shops in the UK suddenly shut without notice. Staff at The Watch Hospital were made redundant as part of the large-scale closure, but the majority have been able to retain their jobs following the takeover by Timpson.

Both these sectors are labour intensive and require experts. Resale needs authenticators and accessors while repair needs experts in handling and offering satisfactory and worthwhile repairs.

The conundrum this sector has is, it often deals with one-of-ones, all that work and effort for one pay-off. If they raise prices then they price themselves out of the market. If something is too costly to repair you probably won’t bother, if a resale price is too close to new, unless it is rare, you’ll opt for new.

Some brands have moved into ‘resale’ themselves, which for many is lip service and green washing for sustainability reasons, but it does take more product away from pure-resellers who need a continuing supply of desirable product.

Investors are getting anxious, they can’t see profits anytime soon and these are cash hungry businesses. Lack of investment will be the main reason many pull the plug and we can expect more breaks ups along the lines of "I don't think our long-term goals align anymore”.