Investing 101 2.0
Investing 101 2.0
[EXAMPLE]: Second-Hand Clothing Market Landscape
[EXAMPLE]: Second-Hand Clothing Market Landscape

[EXAMPLE]: Second-Hand Clothing Market Landscape

Questions to Answers

What is wrong with the fashion industry and what are some ways that it can be fixed?
How is Thrilling different than its competitors?
What are some specific stats that show the landscape for the secondary fashion market?
How does education play into Secondary Markets Thriving

Key Terms

Description: Terms helpful in understanding the landscape of Sustainability specifically in the fashion Industry.

Fast Fashion- Fast fashion is the approach to designing, creating, and producing products based on fast moving trends and cheap prices. While cheap and trendy, fast fashion is dangerous because it results in overproduction, waste, environmental degradation, and the overworking of factory makers.

Slow Fashion - A deliberate choice from consumers to slow down their consumption, and buy less, while investing in high quality pieces that last longer. It is the ethos of “buying fewer better things”, embracing individual style rather than chasing trends.

Sustainable Fashion - This term usually means eco-friendly practices in the fashion industry, referencing the approach of designing, producing and consuming clothes that respect the planet by causing little to no damage, and therefore sustaining the environment. It also refers to the practice of recycling and reusing the product to extend its life.

Ethical - Ethical means brands committed to treating their makers with fairness, respect, and care.

Transparency- This is the practice of publicly sharing information about where products are made, and the makers that make them. It’s important to note that publishing a list of Tier 1 factories does not really make a brand transparent, but sharing the names and information about all the factories involved (from start to finish) does.

Circularity - Circularity is the approach to designing and producing products that can be repaired remade, reused, and eventually recycled or biodegraded at the end of its use. Truly circular products must be non-toxic, preferably biodegradable, so that any waste generated is minimized.

Greenwashing - This is the practice of branding or marketing a product in a way that misleads the consumer about its social and environmental benefits. It is common for fashion companies to use sustainability to differentiate themselves in the marketplace and appeal to socially conscious customers without actually being committed.

Cost Per Wear: Cost-per-wear considers the value of a piece in relation to how many times it's worn.

Key Drivers

Description: The fashion industry is the second largest in creating pollution following behind the oil industry. Here we will look at the different ways on how the industry is problematic in matters relating to sustainability and ethics.

Notes

Key Drivers
Key Drivers

Summary

The fashion industry is broken in many places not only is it bad for the enviroment but also in matters relating to ethics as well. When looking into the sustainabillity of the current state of fashion, it is not sustainable at all.

From the fast fashion, to the mass amount of water usage the industry is depleting many of our natural resources. Multiple natural habitats have been destroyed so that textile factories can be built. In these factories the workers are expected to work rigourous amounts of hours as well as every day of the week. They are treated unjustly and the pay is barely liveable.

The industry will have to change dramatically to even reverse a small percentage of all the damage that has been done. To fix these problems fast fashion will have to change: hazardous chemicals will need to be reduced, manufactures will need to reduce green house gases, updated labor laws, materials will need to become eco - friendly, products will need to be re-used and recycled, and water will need to be decontaminated or reduced.

This is no easy task and will take many large companies changing their policies as well as new startups coming along to bring awareness as well as new solutions. A big factor in all of this is the consumer's mindset moving from fast fashion to slow fashion.

*second hand shopping could potentially reduce enviromental impact by 75%.

Key Players

Description: Different companies that are trying to solve the problem of sustainability within the fashion industry. Most companies on the list

Thrilling (Secondary Market ) -Thrilling is a seed stage company founded in July 2018. So far they have raised a total of 2.1 million as of 07/17/2019 The company partners with company who bring in the second hand clothing for website and thrilling handles all the logistics, photography and data entry for the clothing.

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The difference with Thrilling may be that they don't hold on to the items they are selling at a warehouse instead they take a picture then give it back to the store until it is sold online or in store. May want to look into this.

Aaron-Thred Up (IPO) (Secondary Market) - Thread up is another secondary clothing market founded in 2009 that raised a series F on 08/21/2019 for a total of 305M raised. They are now working to IPO. They are an online thrifting/ consignment store tailored to women and children.

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Rob- The Real Real (Public Company luxury consignment) - This company was founder in 2011 and has raised a total of 359 Million and went all the way to a series H. It is now on the NASDAQ. The Realreal focuses on being the leader in authenticated luxury consignment online. Gucci is partnering with the real real for luxury secondary items.

Aaron- Depop (Secondary Market) - Depop was founded in 2011 and raised their series C on 06/06/2019 for a total of 105.6 Million raised. Depop is a secondary market for peer to peer selling. Prices may be higher than thrilling and threadup because consumers set prices for their own clothing.

Rob- Poshmark (Secondary Market) : Poshmark was founded in 2011 and has raised a total of 153 M. They are currently preparing to IPO as of 09/27/2020. Poshmark is another competitor in the space where people can buy and sell their clothes online.

Aaron- Swap (Secondary Market ): Swap was created in 2008 and has currently raised a total of 33.4 million as 12/08/2016. Swap uses AI to help inform the low-priced pre-owned clothing consignment store.

Rob- Rent the Runway (Clothing Rental) : Rent the runway is an online e-commerce store founded in 2009 and has raised a total of 541.2 million. This company allows women to rent designer apparel and accesories. Advertises at sustainable but may be green washing. The amount of dry cleaning for products emits high amounts of carbon dioxide. Returning clothes often all requires lot of shipping, transportation, and boxes that end up not getting recycled.

Aaron- Material World (secondary designer) - Material world is a series B company that was founded in 2012 and has raised a total of 9.8 million as 03/30/2016. They are a personal styling service that delivers pre-owned desinger items at up to 90% off of retail. Low amount of publicity not too many articles compared to others.

Rob- Vestiaire Collective (2nd hand luxury) - Created in 2009 and has raised a total of 240 million wit the last round of funding on 04/20/2020. Cool to see thet got money during Corona. I think this shows that investors see 2nd hand fashion as a large upcoming market. It is a global marketplace that enables people to buy and sell luxury pre-owned fashion products.

Aaron- Worthy (2nd Hand Luxury) -A series B company created in 2011 that has raised a total of 8 million as of 10/22/2015. Worthy is a pre-owned luxury goods marketplace specifically in jewelry. Uses an auction system.

Rob- Kidizen (Parent-to-parent 2nd market place)- Kidizen a series A company was founded in 2010 and has raised a total of 5.1 million as of 03/9/2017. On this website parents can sell and buy pre-owned kids clothes.

Aaron- Vinted (2nd Market) - Vinted is a series 3 company founded in 2008 and has raised a total of 260.3 Million as of 11/28/2019. Vinted is another second hand company.

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Last week, Lithuanian fashion reseller Vinted acquired its Dutch competitor, United Wardrobe, forming one of the largest resale plays in Europe with a combined 34 million users. (Posted 11/3/2020)

Rob- Grailed (Peer to Peer Market) - Grailed is a NY based Series A P2P Clothing Market. They have raised a total of 16.5M as of 06/28/2018.

Most Common Solution Types

Secondary Shopping: We plan to focus on secondary shopping as the solution because it brings about the most impact. With return programs, the companies are still producing a high amount of clothing with manufactures.

Return/Recycle Programs - Return programs are a good way to get people to send back items they no longer use for a discount. The items then can be resold in the secondary market for a slightly lower price. This helps to continue circularity of the product instead of it going into landfills.

Clothing made from sustainable materials - This is another good option because trees would not have to be used for Nylon, instead ecofriendly materials could be made instead.

Repurpose - Another opportunity is in the up-cycling of clothing to make them useable once again. This is a great way to lengthen the cycle of clothing.

Renting - Renting clothes is another trend that has started to pop up. This is good for the re use of clothes. This is a great way to target people who like to change up their clothing style a lot without bringing as much negative impact to the environment. Renting may be bad because of the amount of dry cleaning that takes place. Still better than what we have now.

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Rental Brands

https://bit.ly/31MVL1t (rent the runway)

https://www.nuuly.com/ (nuuly)

https://www.infinitelyloft.com/ (infinitely loft)

Digital Fashion - This completely fixes the sustainability issue because all clothes are online. Fashion can be pushed farther than ever before because it is completely online.

*Shipping is a niche area where new greener options can be thought up outside of the packaging,

*CAGR for industry is expected to be 4.6% from 2020-2027

Trends

Sustainability Trends

  • Younger generations are more aware of how our buying habits impact the Earth. They are looking to make more investments in clothing rather than frivolous purchases.
  • 49% of all 18-24 year old are very supportive of sustainable fashion brands. While all other age ranges are a little less supportive of the initiative.
  • While many understand the importance of sustainability, only 7% percent of participants from one survey said that sustainability was the most important factor.
  • Education to the general public about this topic still need to grow.
  • People aren't willing to pay significantly more for sustainable.
  • People want to see brand transparency.

Secondary Market Shares

  • The second hand clothing industry is set to expand by 10% by 2029.
  • It will be one of the highest growing segments within the fashion sector within the next 10 years.
  • These alternative shopping methods will help to keep the fast fashion industry stagnant with a steady 9% of the market over the next 10 years.
  • During this pandemic while retailers have seen their numbers drop significantly the online second hand industry has seen a 50% increase in sales over this same period. This is expected to continue through at least 2021.
  • 4 in 5 consumers are open to doing second hand shopping when money gets tight.
  • Some of the bigger players in this field include Thredup, Fashionfile, The Real real, and a few others.
  • Digital Resale Market Poised to grow 27% this year to 9 Billion and could quadruple by 2024.
  • By 2029 Resale all together will be worth 44 Billion.
  • It's hard for these companies to operate in the black because of cost of warehousing, authentication, etc.

Miscellaneous Trends

Resources -

Macro Level Reports:

http://media-publications.bcg.com/france/Pulse-of-the-Fashion-Industry2019.pdf (Complete) (29 pages )

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Trends
  • the fashion industry has improved its social and environmental performance in the past year, but at a slower rate than the previous year
  • In the last two years alone the apparel and footwear industry grew between 4 to 5%, in line with projections through 2023 that show annual growth of approximately 5% (largely driven by Asia-Pacific and developing countries).
  • By 2030 the global apparel and footwear industry is expected to grow to 102 million tonnes in volume and USD3.3 trillion in value
  • Mentions of sustainability in social media increased a third faster than overall social media growth demonstrating more awareness and concern among consumers
  • 75% of consumers in the five countries surveyed view sustainability as extremely or very important.
  • Research shows that 38% of consumers report actively switching from their preferred brand to another because it credibly stands for positive environmental and or social practices.
  • Market segment
    • Open (16%)
    • Middle ground (49%)
    • Middle ground (49%)

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Synopsis

  • The Pulse Score is a global and holistic baseline of the sustainability management, target setting and implementation of sustainability initiatives of the fashion sector. It is based on the Sustainable Apparel Coalition’s (SAC) proprietary Higg Index and extends its scope to extrapolate its findings to the entire industry.The Higg Index is the most extensive and representative existing transparency measurement tool of the industry..
  • Despite this improvement, the fashion industry is still far from sustainable.Furthermore, the findings demonstrate that fashion companies are not implementing sustainable solutions fast enough to counterbalance negative environmental and social impacts of the rapidly growing fashion industry
  • By 2030 the global apparel and footwear industry is expected to grow to 102 million tonnes in volume and USD3.3 trillion in value. Moreover, the Sustainable Development Goals estimated that global carbon emissions need to be reduced by 45% from 2010 levels by 2030
  • Nevertheless, for 7% of consumers sustainability is the most important decision-making criteria. 23% prioritize high quality, 17% prioritize high quality, and 16% prioritize receiving good value for their money.
  • This picture shows the thing that the consumer is most concerned with when going to buy clothing.
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  • This picture explains why sustainability might be important to them.
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  • This report was created to explain how companies in the fashion industry are doing towards reducing their carbon footprint. It assigns a score that the world must meet to slow down pollution and looks to see if movement is being made toward the goal. For the 2019 report many companies slowed down their initiatives and at this rate will not reach the pulse score needed in time. This report also looks into the consumer behavior and what motivates them to buy. This report can give a better view of how the fashion industry is really doing when it comes to being environmentally friendly.

https://assets.kpmg/content/dam/kpmg/cn/pdf/en/2019/01/sustainable-fashion.pdf (39 Pages about survey on sustainable fashion)

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Synopsis
  • The survey for this report was conducted online by YouGov in June and July 2018. It polled a total of 5,269 people, receiving more than 1,000 responses from each of Hong Kong, Shanghai, London, New York and Tokyo.
  • Across the five cities polled – Hong Kong, London, New York, Shanghai and Tokyo – citizens are universally concerned about the environment, with 78 percent of respondents saying they are either very concerned or concerned to a certain extent.
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  • Net support of sustainable fashion is at 49 percent in Tokyo, 55 percent in New York, 54 percent in London, and 71 percent in Hong Kong, with Shanghai in the lead at 90 percent.
  • Higher income groups and more frequent shoppers in the survey tended to be more supportive of sustainable fashion across all cities.
  • Young people – especially those aged 18-24 – the most supportive of sustainable fashion.
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  • Worldwide, few people say they are willing to pay more for sustainable fashion. ( Thoughts: This can be used as way to show that thrilling is a great option. They offer a sustainable solution while being able to keep prices low through reselling pre-owned clothing.
  • People see sustainability in fashion in many ways 8% of all seeing resale as a viable option. 10% see second hand as well.
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  • This is a survey that shows peoples sentiments on the overall idea of the fashion industry. Based on this survey it can be concluded that pricing is a big factor in the things that people buy. Through the survey you can also infer that young people are the most supportive of sustainability. They want documentation and proof that companies are doing their part. Overall most of the age ranges want more information provided through labels or even ratings.
  • More than half of those polled in every city said that they believe that artificial intelligence or augmented reality can help reduce the amount of fashion bought online that they would otherwise have to return or dispose of because it does not fit or suit them. The three Asian cities were more positive about these benefits than London and New York, with those in Shanghai being by far the most enthusiastic supporters, pointing to Asia being a testing ground for such new technologies.

https://www.mckinsey.com/~/media/mckinsey/industries/retail/our insights/its time to rewire the fashion system state of fashion coronavirus update/the-state-of-fashion-2020-coronavirus-update-final.pdf (47 pages medium)

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Synopsis

The coronavirus is a time for the fashion industry to reset and reshape the whole value chain.

The pandemic sped up themes that already began to show up with consumers such as radical transparency and sustainability first.

Themes such as digital acceleration, discounting, industry consolidation and corporate innovation will be prioritized once the immediate crisis subsides.

During this time there will be 3 pillars which are fashion systems, consumer shifts, and global economy. Within each of them you can find a theme. During this time companies will have to plan for hard times. Bargains as well as the digital escalation will also be a big thing. People will be looking to get a great price whether it is online or in person. (Thought: Thrilling fulfill the discount mindset and digital escalation by being an online thrift shop.) Many physical companies will go into distress during this time as well as see a change in the value chain.

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  • In Europe and the US, more than 65 percent of consumers expect to decrease their spending on apparel, while only 40 percent expect to decrease total household spending during the pandemic.
  • As a result on spending, overfilled warehouses laden with unsold seasonal stock will haunt most players, as long lead times weigh heavily on fashion’s supply chain and global consumer appetite for discretionary purchases wavers.
  • The pandemic will bring values around sustainability into sharp focus, intensifying discussions and further polarizing views around materialism, over-consumption and irresponsible business practices.
  • Social distancing has highlighted the importance of digital channels more than ever and lockdowns have elevated digital as an urgent priority across the entire value chain.
  • Many consumers will be looking for so-called “investment” pieces — minimalist, last-forever items, that feel more responsible given the state of the world.
  • Companies must strategically think about their future now. This includes identifying financial leverage, divestitures, acquisition opportunities and strategic partners, increasing earnings, and creating operational and financial stability early in the recession.
  • Sustainability credentials will be employed as one method to regain consumers’ trust and wallets as they emerge from the discounting slump.
  • In conclusion, with the pandemic in play many companies are going to have to change or get left behind. A big way to stay with the times is to get into sustainability . Especially with consumers becoming more educated on how the industry is destroying our world.

https://candafoundation.org/en/news/pdf/future-sustainability-fashion-industry-delphi-final-report-futureimpacts-ca-2019-v7.pdf (109 pages long)

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Synopsis

Assuming current trends continue, the majority of the Delphi experts do not regard a net positive impact of the fashion industry as achievable. 75% regard this as infeasible for the restoration of the natural environment and 62% regard this as infeasible for working conditions and poverty.

https://www.ellenmacarthurfoundation.org/assets/downloads/A-New-Textiles-Economy_Full-Report_Updated_1-12-17.pdf (150 pages long)

https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our Insights/The state of fashion 2020 Navigating uncertainty/The-State-of-Fashion-2020-final.ashx ( 108 pages long, I really like this one)

Websites:

Good On You (Complete): https://directory.goodonyou.eco/categories/activewear (complete)

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Synopsis
  • Sustainable fashion directory
  • With Good On You, you can discover the very best fashion from around the world and learn everything you need to know about ethical and sustainable fashion.
  • They do the work to read between the seams for you. They are the world’s leading source for fashion brand ratings. They pull all the information together and use expert analysis to give each brand an easy-to-understand score.

Brightly: https://brightly.eco/what-does-sustainable-fashion-really-mean/ (Meaning of Sustainable Fashion) (Complete)

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Synopsis
  • As more and more people find out about what their dollars are supporting, they are starting to seek out sustainable fashion, or fashion that is made in a way that protects and preserves the environment for future generations.
  • Most importantly, sustainable fashion is high quality and made to last for years and years, so that you don’t have to keep buying more of it every month. Because that isn’t sustainable for your finances.
  • Brightly team looks into each brand’s supply chain to ensure their operating practices are ethical and sustainable.

About Thrilling: https://www.essence.com/fashion/the-co-founder-of-thrilling-is-all-about-sustainability/ (Complete)

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Synopsis
  • Founder of Thrilling Shilla Kim-Parker
  • Online Thrift Store
  • Thrilling curates a selection of threads from local NYC vintage shops and features brands like Louis Vuitton, Giorgio Armani, and Calvin Klein
  • Talks about rise of secondary fashion

Future of Resale: https://www.bloomberg.com/news/articles/2020-10-21/online-thrift-shop-thredup-files-confidentially-for-u-s-ipo (Complete)

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Synopsis
  • Thred-up online thrift store IPO
  • Looking to raise 200 to 300 million early next year
  • Poshmark a peer to peer market looking to IPO
  • Digital Resale Market Poised to grow 27% this year to 9 Billion and could quadruple by 2024.

Cheat Sheet to Sustainable Fashion Terms: (Complete) https://www.highsnobiety.com/p/sustainable-fashion-glossary/

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Synopsis
  • Explains different fashion terms

Thredup Report (Complete): https://www.thredup.com/resale/

Snippet of Research on market growth (Complete): https://www.grandviewresearch.com/industry-analysis/eco-fiber-market

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Synopsis
  • The rapidly growing online fashion market, rising disposable income, and the development of high-quality innovative fabrics are factors driving the textile industry across the globe
  • This trend has led to a shift in preference toward bio-based alternatives, such as organic cotton, hemp, and other sources of eco fibers, which is anticipated to fuel the market growth over the forecast period.
  • High costs of fertilizers, expensive equipment required for organic production, and frequent crop failures due to climatic irregularities are some of the key factors responsible for a considerable fall in demand for eco fiber products.
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Future Market Size (Complete): https://bwnews.pr/326HdKg

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Synopsis

The global Ethical Fashion market is expected to decline from $6.35 billion in 2019 and to $6.14 billion in 2020 at a compound annual growth rate (CAGR)

More about sustainable Fashion (Complete): https://moxiefuture.com/what-is-responsible-investment/investors-guide-to-sustainable-fashion/

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Synopsis

The fashion industry is a true powerhouse for global development, worth an estimated 2.4 Trillion and employs 60 million people along its value chain. Global production exceeds 100 Billion garments a year.

More than $500 billion of value is lost every year due to clothing underutilization and the lack of recycling.

It takes 2,700 liters of water to make a cotton t-shirt – representing about three years worth of drinking water for one t-shirt. That’s a lot of water!

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Business of Fashion Future of Resell (Complete) (Paywall):https://bit.ly/2GqPwZV

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Synopsis

Resale’s prospects have never been brighter. The pandemic and global economic downturn have created plenty of new customers looking to score deals on secondhand clothes.

No major player has figured out how to consistently turn a profit, even as they measure annual turnover on their platforms in billions of dollars (shares in The RealReal, which went public last year, are trading well below their IPO price).

For most resellers, authenticating and documenting each item remains one of the biggest costs of operation.

RealReal, for instance, generated $318 million in revenue last year, but spent $143 million, or about 45 percent of that, on operations and technology, which includes the collection, authentication and documentation of its products

The hype around fast-growing, money-losing resale start-ups ignores one inconvenient fact: there’s a giant, profitable company that’s been selling secondhand clothing online for decades, Ebay. They have a 33 Billion Market Share.

Books:

The Conscious Closet: The Revolutionary Guide to Looking Good While Doing Good

ReFashioned: Cutting-Edge Clothing from Upcycled Materials

Zero Waste Fashion Design

Slow Fashion: Aesthetics Meets Ethics

Fashionopolis

Movie:

The True Cost

Podcast:

https://consciouschatter.com/podcast/2016/3/23/s01-episode-05-waste

https://consciouschatter.com/the-root

https://consciouschatter.com/podcast/2019/7/9/s04-episode-168-thredup-massive-rise-of-resale (podcast with thred up)

https://thewardrobecrisis.com/podcast/?_ga=2.267852557.2094264270.1555073544-1128472062.1555073544

Calls & Meetings

Ideal Contacts

CEO of Thrilling