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Recycled fashion: The new e-tailing novelty

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Picking on a predictable characteristic displayed by the average women shopper — closet overflow, yet nothing to wear — and borrowing a page from the success stories of some international players, some online startups in India claim to have found gold in old.

These new set of startups, however, are disrupting the fashion category, where the stigma of 'second-hand clothing' is deeply entrenched in customers' minds.

These startups not only let aspirational shoppers buy ‘pre-owned’ branded, luxury or designer apparel at about three-fourth to half the price of a new product, but also give a new lease of life to clothes that are hardly being used by the original owner.

“‘I don’t have anything to wear’: isn’t this a common phenomenon?,” asks the founder of , Aboli Salvi, who launched her startup in May 2015.

“There are two types of women shoppers in India today: One who has too many clothes – big brands, trendy, almost new — piling up in her wardrobe. And then there are others, who aspire to own a posh piece but can’t because of the price tag. And this is where platforms like ours come into play,” she explains.

The trend of buying pre-owned goods is not new in India. OLX, Greendust, Quikr, among others, deal in pre-owned products such as automobiles, furniture and consumers durables, among others. These new set of startups, however, are disrupting the fashion category, where the stigma of ‘second-hand clothing’ is deeply entrenched in customers’ minds. In the past year, this space has attracted about a dozen startups who are claiming to create a new collaborative fashion economy. Share Wardrobe, Elanic, Envoged, Revamp My Closet, , Second row, among others, are a few marketplaces currently who are bringing in this change.

These startups work on a fairly simple business and revenue model: Create an online shopping platform that builds value for parties on both sides of the transaction. Buyers can purchase from a selection of ‘pre-loved’ branded and luxury clothes, footwear and accessories — which are put on sale after stringent quality checks — at relatively lower prices. Sellers, on the other hand, can bring life to their pre-owned clothes and accessories and can earn some easy cash through it. The revenue model is based on a consignment fee — which ranges between 10 per cent to 30 per cent — on the sale of these products.

Internationally, selling and purchasing pre-owned clothing is a fairly common concept. About 12 online marketplaces for pre-owned fashion in the US, including Poshmark and The RealReal, have raised about USD230 million, as per data provided by Tracxn.

“India is right now focused on online consumption, and e-commerce players are providing great deals to attract users. Once the consumption phase is over, many consumers would definitely like to share their goods. Eventually, sharing of goods makes complete sense and customers will realise it once they get full satisfaction, “explains, founder & CEO of the Delhi-based startup, Etashee, Amna Abbasi. Since its launch in November 2015, Etashee has attracted 40,000 registered users and is currently receiving around 1,00,000 monthly page visits.

Second-hand fashion not taboo anymore

While pricing is a major draw for consumers, the companies operating in this space believe that product catalogue, value addition to the closet, merchandise mix and change in the mindset of consumers, especially the younger generation, are the factors driving growth in the segment.

“Shoppers today have no inhibitions in buying a pre-owned product. Moreover, we are giving something which is adding value to their closet. An LV bag originally priced at Rs 1,00,000 can easily be bought for Rs 25,000 or even lower. So, why not!,” explains, Founder & CEO of Bengaluru-based , Rashi Meda, which retails only merchandise from luxury and high-end fashion brands.

Expressing a similar view, Abbasi asserts, “What is exciting is that the young generation has started moving ahead from the taboo of ‘second-hand clothing’ and are more open to the idea of re-use. They know how to strike a balance between sentimental value and utilitarian value of something.”

Investors on their part too, seem to have witnessed some potential in the segment and are opening their purse strings for this business model. In September last year, Zapyle raised around USD1 million in seed funding. Mumbai-based Envoged raised an undisclosed amount in seed funding. Another startup, Elanic raised an undisclosed amount in seed capital from venture capital firm Rebright Partners, TracxnLabs and angel investor Aneesh Reddy.

In January 2015, Etashee too raised a funding of INR 5 crore from a Delhi-based business group, and is now seeking for a fresh round of funds to scale up the business and reach to tier II cities.

Staying Alive

While these players are optimistic about the growth and opportunity, not even a single startup has able to attract the half of registered users of more-mainstream online peers such as Myntra and Jabong. In 2015, Jabong had a total customer base of close to three million while more than nine million users have downloaded Myntra app so far. In addition to that, the space is also being increasingly populated by me-too copycats.

On this, Salvi says, “We are here to create a new economy, something that does not exist today. And that is the fun part! Gaining acceptance amongst our consumers is our top priority.”

“And competition is good for this industry as it will force companies to provide the best solutions and will also introduce more customers to this concept. We estimate that this will be a billion dollar market by 2020. The challenge will be to tap into this opportunity,” she concludes.