Choosing the product that has passed through many previous lives at the expense of its new version is becoming more and more popular. In this race, Web 3.0 seems to benefit some…
As global warming increases, the new product is no longer a given. Thus, resale platforms for fashion items such as “Vinted” or “Vestiaire Collective” have never been so popular. Faced with these pure players, how will luxury brands fare?
Second hand race winners
At a time when Europe is reaching 10% inflation, the used market is becoming more and more interesting. For everyone, it gives the privilege to give new life to what is no longer used, to save on the purchase of essential items, to favor quality over convenience, to revive the vintage… These many advantages naturally attract new consumers such as the middle class or more specifically generation Z in love with ecology in an increasingly connected world.
At the heart of this market, already estimated at 86 billion euros in Europe, and expected to grow by 15% to 20% per year, the fashion sector takes precedence over all others. In fact, after a rise in the popularity of polluting “fast fashion”, producing modest clothes at full speed within it, it is rumored that it will definitely see secondhand hands overtake it in the next few years.
After growing by 140% between 2019 and 2021second-hand e-commerce platforms are firmly responsible for this, as “they have 60% of the online fashion market”. Driven by the global Covid 19 crisis, the Lithuanian platform Vinted, one of the leaders in the second-hand fashion sector, now allows almost 50 million “vinties” to make money from their wardrobe. If it has already made 70% of purchases in 2020, Vinted today faces strong competition from many platforms such as Vestiaire Collective, whose business model clearly inspires more responsible fashion. With 550,000 new articles per week, the latter focuses on the luxury sector, whose values and clientele were probably not what was expected.
Luxury brands compete
If “fast fashion”, which advocated low-cost fashion and overproduction of new clothes, did not rhyme with the luxury sector’s uniqueness, rarity, authenticity and high prices, it is equally difficult for brands to connect with the often bargain prices on the other hand. But in a world of climate emergency, they have found much more in common than one could imagine, because according to the Hermès Foundation, “Luxury is what lasts, repairs what is forward”. Strongly echoing pre-owned values, with the majority of consumers going there to find a rare product, pre-owned luxury is expected to experience an annual growth rate of 10 to 15% over the next ten years..
Some luxury houses are thus trying to manage their own second-hand market in the image of the Gucci brand, offering a selection of vintage pieces newly restored by the house’s craftsmen. using its GucciVault online site. Unfortunately, these options on the used market are clearly stifled by those offered by pure players, which multiplies advertising to the public. After understanding their strike force, some partnerships such as the Kering group, which took 5% of the capital of Vestiaire Collective in 2021.
This market, led by giants, puts brands at a disadvantage, as they no longer have power over the resale prices of items that are often 50% cheaper online, and have no knowledge of the players who consume these “pre-owned” items on the most known platforms. On the buyer side, although some are increasingly arming themselves, the platforms increase the problems of authenticity or payment fraud, keeping the most timid consumers away. After a study, “71% of the French say they would buy used luxury goods more often if the brands handled their resale themselves”. If it is very difficult to adapt to the popular and sustainable circular fashion in the real world when you are a luxury brand, the technologies of the future will definitely change the game.
Opportunities for new technologies
With the announcement of web 3.0, more luxury retailers are gradually settling into this new digital universe, commonly known as the “metaverse”. In particular, we find the Dolce & Gabbana brand, which in 2021 offered to acquire virtually and/or physically one of the 9 unique pieces of the “Collezione Genezi” collection on the UNXD platform. In 2022, it participates in the first fashion week of the metaverse Decentraland, along with many others such as Etro or Giuseppe Zanotti, and launches a short-lived store that allows users to dress their avatars with the most beautiful pieces of the house. According to an investigation, $25.66 million would have been reported to Dolce & Gabbana follow the various projects about this new universe, which represents a real potential for the latter in light of its many appearances.
In fact, the presence of luxury brands on Web 3.0 brings them closer to a modern generation that is highly consuming of these products called “Non Fungible Tokens” (NFTs). In a technical way, they are certified by the blockchain, which guarantees their authenticity, rarity and exclusivity – concepts that cannot be overlooked when talking about luxury. To the delight of these users, who appear to be similar to those found second hand, these NFTs are very easily exchangeable in this market because all important information about the life of the article will have been stored in the blockchain. : historical holders, price… Consequently, resale is greatly facilitated, as any question of counterfeiting is excluded.
In addition to all the above-mentioned advantages of NFT, they have the opportunity to give luxury brands sovereignty over the second-hand market. Equipped with “smart contract” technology, which offers certain possibilities, such as the generation of “royalties” (remuneration by the brand for each resale of an NFT), luxury brands could thus benefit from a lifetime annuity on their articles. . Moreover, this information is hardly insignificant when we know that a Gucci bag has sold for more in the metaverse than its counterpart in real life. More than that, they could even collect data on second-hand players, prospects for the first-hand market, which, in the form of an avatar in the metaverse, will offer brands an unprecedented angle of knowledge.
To impose themselves on the ever-expanding used market, luxury brands need to break free from platforms while getting closer to Generation Z, their core target. Finally, all this hype behind this uncertain world where they have the opportunity to issue digital goods associated with their articles, which ensures not only perfect trust of the consumer but also a financial added value, is it not therefore a boon for luxury brands? With more than half placed in the test/launch phase before 2025 on web 3.0, luxury brands are trying, perhaps not knowing that they have so much to gain.