Luxury Brands Need a Better Approach to Resale Sites, Does This Leave an Opening for eBay?
Luxury Brands Need a Better Approach to Resale Sites, Does This Leave an Opening for eBay?
A recent WSJ article talked about the different approaches happening between brands and resale sites.
The reality is once your brand becomes attractive and coveted enough, your price premiums start to work against you, and your outlets start feeding the resale market.
I've found there is a line of people out the door buying products at the Gucci Outlet for resale online.
Ultimately, as a brand you want some control of your channel. But your own supply chain can be your enemy on marketplaces. Your product will find its way to buyers, somehow, someway.
Kering Group (Gucci's owner) has partnered with Vestiaire and TheRealReal in exchange for investment or a cut of sales. Hermes and Chanel have not and discourage this.
One problem? Many of these resale marketplaces are not profitable. But why not eBay? Yes, that profitable marketplace.
I've always thought that an underexplored part of eBay's strategy was to be the world's outlet store. Challenge with this approach is it takes two to partner. Many brands don't want to be on eBay. Hard to escape the flea market image, and other fashion-oriented branding attempts (Fashion Vault for instance) have failed miserably in the past.
What, if anything, could eBay offer to make it worthwhile?
The one thing that eBay has these other resale marketplaces don't have is cash flow. eBay is an unbelievable cash machine. In theory, eBay could offer these brands a cut of sales of their luxury brands.
Another approach would be for eBay to acquire one of the resale sites that is struggling for cash (pick any one) - particularly one that has partnered with some of these brands.
In this case, I think their best move would be to create a more upscale marketplace brand and start diverting higher-end brands from eBay inventory there. Likely to work better -- in the long term -- than trying to force an eBay brand on a luxury site.
eBay working with brands probably won't work in a lot of cases. Many brands still hate resale. Resale expands the market to new buyers who would never get your brand otherwise, but also means for some segment of buyers they might not get a new bag instead.
In this economy, a brand's stance against resale may be starting to crack, however.
Resale could represent a lucrative line of business that they have no control over now, which the marketplaces could let them into. If resale is the brand's enemy today, getting closer to the enemy is sometimes a good strategy.
Particularly if it helps pad investor's bottom line.
What else could eBay or brands be doing here?
