Over the past few weeks, I’ve had the privilege to speak to brands, nonprofits and many entrepreneurs who are innovating to ensure that we can all continue to enjoy all that is great about fashion, without the hefty environmental and social cost. I was delighted to see brands play an increasingly active role in #circularfashion, and this first article dives into the business opportunities in resale, repair, and rental, and the innovations and startups that make it all possible.

Brands are taking back control of resale, supported by a myriad new businesses

2023 saw brands jumping on the resale bandwagon and taking back control in a much bigger way. There are many options for them to do this, with new models still being invented: In Europe, white label pioneer Reflaunt has continued to evolve, adding instant buyback and concierge services to its offer, and C2C leader Vestiaire Collective now partners with select luxury brands to offer buy back and resale on its platform. Meanwhile, new players have emerged with turnkey solutions that get brands up and running with a branded pre-owned website and trade-in and resale offer within weeks (e.g. Trove in the U.S. and FAUME in Europe). Going further, Croissant enables guaranteed buyback at a fixed price through brands websites, blurring the lines between resale and rental. I have also seen clever solutions leveraging buyback to engage existing customers.

By getting directly involved, brands can deliver a pre-owned purchasing experience on a par with their “new” experience, get valuable data about their products, and best of all, drive both loyalty and acquisition. Indeed, while sellers (those who trade in) are customers by definition, they often have not bought directly from the brand. Through the buy back, a relationship is created with them. Additionally, many of the buyers of pre-owned items are new to the brand and a high proportion go on to buy from the new collections. This is something few brands can afford to ignore given the high cost of more traditional marketing channels today.

Dealing with unique items has long made resale logistics complex and expensive, but as specialist service providers work hard to optimize process flows and introduce new technology to drive costs down (example: Entrupy uses AI to authenticate luxury items in seconds), the business case for brands to launch resale is pretty clear.

Repairing is now fashionable

Brands are also following in the footsteps of online retailers and embracing repairs. In Europe it was great to see the likes of Save Your Wardrobe, SOJO and The Seam much more in the limelight after the much regretted demise of The Restory, with both B2C and B2B offerings

The business models vary, from marketplaces connecting customers with independent tailors (SyW, The Seam) to in-house tailor teams (Sojo) and there are pros and cons to both approaches — but ultimately in my view the winners will be the ones who can deliver the most frictionless and best integrated journey with the brands’ own channels. So the technology matters of course, but equally as important is the coordination with, and training of, internal teams.

It has been wonderful seeing so many brands launching the service and promoting it to their customers as it is so crucial for driving adoption which is still pretty low. After all, local tailors are not a novelty, so while convenience is much improved with the new platforms, it’s consumer behaviors that now need to evolve by thinking repair/alter first.

Time for brands to consider rental?

Although online retailers have started dipping their toes in rental (In the United Kingdom, Hurr has been partnering with Selfridges since 2020 and powers a dedicated website for MATCHES, while NET-A-PORTER has been testing both HURR and By Rotation over the holiday season), few brands — especially luxury ones — have entered the market as it remains fairly niche and mostly focused on occasion wear.

Still, if resale is proving efficient for acquisition and retention, surely rental could deliver similar benefits? I have seen very encouraging statistics regarding the percent of renters who go on to become first time buyers and there are signs that rental providers are pivoting to a “try-before-you-buy” model, with most of them offering to purchase the rental items, or even the new version at an attractive discount. This may seem to lessen the environmental benefits of pure rental models, but it does allow for more considered purchases.

And if fashion brands are to continue growing without forever increasing volumes produced, rental could play a key role in bolstering profit per piece once the logistics have been nailed. Already, specialist firms such as ACS (Advanced Clothing Solutions) in the UK and TERSUS Solutions in the U.S. are making rental (and resale) logistics a breeze and costs are coming down, while newcomers such as Supercycle who offer a rental solution fully integrated with Shopify, are removing barriers to entry for smaller brands.

Even more than for resale and repair, a smooth customer journey and adequately addressing the issues of size and fit will be key to acquiring and retaining customers, given the short term nature of a rental (if your event is tomorrow, you want to make sure that dress fits and looks good on you). AI-powered solutions exist, but have yet to be applied to rental.

On balance, brands with limited bandwidth are more likely to drive immediate benefits from launching resale where momentum has been building for many years, and can partner with retailers or directly with the rental platforms to learn from their experiments while they wait for consumers and business model to be ready.

Digital Passports to empower consumers to act sustainably

When it comes to consumer behavior evolution, brands marketing teams have a major role to play and the “Sustainable Fashion Communication Playbook” published by the UN Environment Programme has great suggestions on how to embed more sustainable messages into all brand communications. Perhaps more excitingly for marketers, digital IDs and digital passports are providing a new and powerful channel to inform and inspire customers to act sustainably. For those who are not familiar with these: digital ID technology enables products to be scanned to access a unique set of information held in the cloud (such as digital passports). Mandated by Europe’s ESPR regulation, Digital passports (DPPs) should feature information that “helps consumers and businesses make informed choices when purchasing products, facilitate repairs and recycling and improve transparency about products’ life cycle impacts on the environment.”

DPPs deserve a dedicated article and their role in providing greater transparency on a product’s origin and composition is critical, but here I am interested in their huge potential in boosting circular fashion by removing the frictions that hold consumers back. For example, they can include links to resale options, information on the recyclability of an item and which operators can recycle it, a list of the closest repair solutions, and more — all of these dynamically updated based on the consumer’s location. Further, the data held in the DPP can be used to create simpler customer journeys, such as creating a listing on a resale platform in one click (ex. Chloé ’s collaboration with Vestiaire Collective). Using block-chain technology, digital passports will be able to track events in the product life after its initial sale, providing useful information to the next owner but also invaluable data for brands.

Implementing digital passports will no doubt be a substantial endeavor for fashion brands, but I believe they will roll out faster than one might expect, because smart marketers will be quick to realize the huge potential of Digital IDs not only to promote more sustainable fashion but also as a new direct channel to reach consumers: think storytelling, loyalty program registration, styling recommendations, etc.

For those who’d like to dive deeper into DPPs and their applications, see EON and Avery Dennison’s Atma.io, two leading providers of DPPs, for much more information.

Job done? Not quite

So, with new platforms and plenty of incentives for brands to help shift customers into circular behaviors, we should be well on our way to circular fashion, shouldn’t we? The catch is that to maximize these opportunities, fashion items need to be durable and recyclable, and less than three percent of items are recycled today. More on this and on designing for recyclability in part two of this series.

This article was originally published on LinkedIn and has been republished with permission.