Resale as the stock market for brands

0:02Product life doesn't end at the point of sale. In fashion, it may just getting started. There is a strong connection between people who buy a lot on resale and a lot of new clothing too. They just shop more. They turn over items faster. They return perfectly good pieces, which means resale isn't replacing primary retail. It's amplifying it. And that's a new gain. Brands aren't just designing for this season. They're designing for the future. How an item is going to circulate, hold value, signal status, and show up again years and even decades later. That has consequences for everything. Not just design, but also merchandising, supply, production, distribution, marketing, sales, financial planning.

0:55Growth is no longer just about volume. It's about durability, inventory quality, and unit economics over time. In this episode, we explore resell as the stock market for brands and how the secondary market reshapes the primary one. Welcome to Season 2 of Hitmakers, the show that tracks how culture moves margin, multiples, and market cap.

1:26Welcome back home, Lee. How was Austin? It was great. It was warm. That was basically the thing that I love most about it because I am so sick of the weather here in New York. But South by was great. It's always a lot of fun going there. I mean, it's just crazy there. They've actually stacked all. They've moved it from like a multi-week thing to kind of like stacking everything in the same short period of time. So like Austin is even more crazy now that it has been passed. That's wild. What does it do to hotel prices? Speaking of stock market. Yeah. No, I actually stayed outside of Austin at the Barton Creek Golf Resort out there, which is nice.

2:09I mean, it's good, but it gets away from all the craziness of the downtown and stuff. You know, that's what I realized after going to Cannes for more than a decade, going on 15 years, and always staying in Cannes by accident. A couple of years ago, when I was in Espri and we decided at the end of May to go and couldn't obviously find, it's so much easier to stay outside. Because it's so close. Like, it's literally like you sit in a car and you're like there. but it's like you get so much better accommodation and you get the pool and you know whatnot and it's like you kind of get away so that we're now doing that on purpose yeah no i agree and like i mean luckily with with the south by thing i wasn't having to go to a lot of places but generally you just have to hop in a car and go all over the place it's just tons of sprawl so you're gonna be in a car anyway so staying downtown isn't any more convenient than if you stayed outside of the city.

3:12I know. I haven't been to service at first in like... No, but it was good. I led some panels with Ford's global head of brand and kind of talking about kind of what's happening with Ford. Led a panel with the CEO of Framer and kind of what they're doing. Led a panel with Norm Claussen, who is the photographer of the Marlboro Man advertising. We're alive. Not Marlboro Man, the photographer yeah yeah yeah malbora man is gonna live forever but like it was a really like we talked a lot about world building and how he did that through his photography and how he transformed the west through the photography and stuff it was really interesting and it was i mean he's great he has all these like amazing stories of how he had to earn the trust of the cowboys and like what he had to do to like get certain shots and stuff like that and what was the visual vocabulary he was trying to develop to kind of create this new sense and ambiance to the west that wasn't there before so it was it was a great conversation i really enjoyed it you know what i think is amazing is like there is this fashion brand other errors who is using a lot of that iconography and yes it's really smart because just tells you how much that traditional americana has legs and it's really a shame that no one except ralph double r l he'd used it as as a world oh yeah in the u.s because you see like there is prep which is east coast there is american sportswear which is not really where it should be and there is the workwear but americana as if like american confession always looks to Europe, which I don't understand why, because this is unbelievable iconography and unbelievably globally recognized and imitated.

5:11Yeah, no, I totally agree with that. And actually, on the European point, we actually got into that in the conversation because I kind of made this point that like, you know, for so long, America has been sort of criticized by the art community as having no real art form of its own. And Sam Adams, like he was all about this big planes and so on. Yeah, yeah. No, totally. But like usually that conversation is through the lens of like European art and what constitutes art through the European eye. And what was really interesting in the conversation with Norm was let's just sort of accept that premise that America doesn't have its own art form.

5:50I don't necessarily agree with that, but let's just accept that premise for a second. What does America do way better than Europe? Production of myth. That's what I mean. Imagination and Hollywood. What is that production of dreams, if you will? Exactly. And global popular culture until just recently. Well, and exactly. And I think that's like an underappreciated thing about American culture over the centuries is because like when you're founded as like a bunch of colonies, you're founded as a bunch of like disparate groups of people, you have to create something that unifies people, a narrative that all these different people can kind of see themselves in.

6:30And so what America has always really had is this movement towards creating these meta stories, these myths that hold a lot of people together, whether it was like the Westward Expansion, whether it was Pioneers, whatever it might be. But it manifests itself just like exactly like you said in Hollywood, in books, in advertising brands and so on. Yes. And that's why America has always had such a strong pop culture influence globally is because myths kind of like harken to something kind of like inside people that they connect with, but allow them to bring their distinctive kind of point of view to it, but still see themselves in it.

7:12And so it really is this kind of like unifying art form and the way that like fine art is that fine art, you know, you have to learn. You have to learn to appreciate. Because the archetypes of cowboy is the outlaw, the pioneer, the explorer. And that's very uniquely American characteristic. Yeah, exactly. He has American dream. You don't have like British dream. Yes. Well, 100%. I don't want to know. A hundred percent. And that was like actually the thing that we talked about with Norm, which was the cowboy prior to Norm's work was really seen as an outlaw. Someone on the fringe, dusty, rugged, raw, rough.

7:56But his work actually brought a pastoral sensibility, seeing that the West was like this beautiful, romantic place to go to, which kind of tapped into that return to Eden sensitivity of like a lot of European history and stuff. I mean, even America was seen as like the discovery of Eden. It's why Virginia is called Virginia because it's like virgin land, a return to a place where civilization is not. Although the Pelacian Mountains. Yeah. But that's what he was. That was the archetype that he was consciously, subconsciously pulling upon was that pastoral idea of returning to a closer relationship with nature and therefore a greater sense of happiness of being closer to nature.

8:45And that's what the cowboy started to embody, which was different than what a cowboy was prior to that. But wasn't Calbee always about like, yes, outlaw, but there is always some sort of freedom from the rules. So I think that was when like they wanted to get everyone to smoke. So smoking was freedom, breaking the rules. Your like coolness is at the end of the day, like not adhering to social norms. Oh, 100 percent. I think both of those things are about freedom, whether it is outlaw. So an outlaw is about reclaiming individual freedom from the system by living outside the system. The pastoral idea or more mythically described as a return to Eden is about a movement to a place where you are unburdened by bureaucracy.

9:35You are unburdened by corruption. You are unburdened by conflict and friction. And you can live in a place where all of that is resolved and you are unburdened. And that in itself is a form of freedom as well. But they have different tonalities to them. Like, for instance, to your point with Ralph Lauren, Ralph Lauren does not basically mimic Norm Clausen's work because Ralph Lauren is communicating outlawness. He is doing it because it is a pastoral sense of freedom and open range. Big sky kind of road ahead of you. I think he's doing it because he, like, look, what Ralph did really well is to capture two American mythologies.

10:14One is the New England prep, and he needed something else to capture the rest of the market, which is West. Like East Coast and West Coast is static. So these are two, like one is workwear, the West. And I'm just looking like purely for merchandising standpoint and product design standpoint. And East Coast is, so there is a logic of prep, there is logic of workwear. So he needed that mythology, that aesthetic to build the world around, literally. So that's why he chose that. I don't think there's anything deeper than that. Oh, no, I completely agree. It was very easy to find the logic in that one is freedom and the other is great Gatsby, basic aspiration.

10:56Aspiration and freedom are two sides of American dream. Yeah, no, I agree with all that. I mean, I sort of slightly disagree with the point about it's not anymore. He wasn't driven by anything other than merchandising strategy and logic to capture market share. Can we make wealth? I'm 100 % positive he thought about that, but I think there is like an emotional element underneath it of why he had a relationship with the West. He's so tired from his car. So like, hey, like respect and genius. You know what I mean? Like, yeah, I don't know any other designer who's done that. Like any. So. All right.

11:37Shall we? Let's jump in. So market moves. So as a reminder, this is a segment where we track how companies are building cultural capital to move markets. First up is Pokemon Go. Niantic says photos and scans collected through Pokemon Go and its AR apps have produced a massive data set of more than 30 billion real world images. The company is now using that data to power visual navigation for delivery robots and letting them identify exact locations on city streets without relying on GPS. Yes. Abercrombie & Fitch reported record full year net sales of$5.3 billion in the fiscal year 2025, a 6 % increase year over year, and the first time in history the brand has crossed the$5 billion threshold.

12:26Q4 alone delivered$1.7 billion in net sales, up 5 % from the prior year, with earnings per diluted share of 3.7. The results mark the fourth consecutive year of more store openings than closures, a deliberate reversal of the aggressive store closure strategy the brand adopted during its earlier turnaround years. Online sales now account for 44 % of total revenue, but the brand's physical expansion signals a clear belief that stores will drive brand heat, especially in premium shopping destinations where foot traffic remains strong. YouTube is now the entertainment king. According to a news analysis by Moffat Nathanson, the site where you once watched Grape Lady fall and groan in pain for 14 uninterrupted seconds is now the largest media company in the world by revenue.

13:19Last year, YouTube recorded$62 billion in revenue, surpassing Disney's$60.9 billion, which doesn't include its park business, as the most of any media giant. Maybe more impressively, the Alphabet-owned video platform also posted$40.4 billion in ad revenue, more than Disney's. Paramount's and NBCUniversal's and Warner Bros. Discovery's combined. Lifted by its 2.5 billion active users, 10 million YouTube TV subscribers, and the largest audience share among streamers, the company on its own is now valued between$500 and$560 billion. For perspective, Netflix has a current market cap of over just$400 billion.

14:02Nike's in the news because it sparked speculation about a Converse sale on Thursday evening when the Swoosh issued its latest 8K filing with the Securities and Exchange Commission. In the new regulatory filing, Nike said the company's management approved a plan to implement certain organizational changes, which together with previously approved actions are expected to result in a pre-tax charges of approximately$300 million for the nine months ending February 28th. Nike stated in the filing that the charges were primarily associated with employee severance costs and substantially all recognized in the third quarter of the fiscal year.

14:42John Galeano is now designing for Zara. The Spanish retailer has signed the design legend to a two-year creative partnership, which will see him reauthor, quote unquote, the brand's archives. Returning Galeano to fashion after an absence of two years following a feat of bravura and Viral Sensation. That was his final artisanal show for Maison Margiela in 2024. Galliano is quoted as saying, I've been curating some of Zara's recent archives, which is what he told Vogue during Paris Fashion Week. And he added that the idea is that I will re-author them. Eddie Bauer, the 106-year-old fashion brand, just discovered that legacy does not guarantee liquidity after its bankruptcy auction for over 170 stores drew zero qualified bids.

15:28Not one buyer was willing to take on the traditional retail model. Eddie Bauer's latest Chapter 11 filing lays bare how far its North American store operator has fallen from the brand's early 2000 peak of nearly 600 locations, which now account for about roughly 175 stores today, generating a fraction of its former sales. This is the third trip to bankruptcy court for an Eddie Bauer retail operator in two decades. But unlike past restructurings, the current case involves Eddie Bauer LLC, the brick and mortar licensee, not the Eddie Bauer brand itself, which remains owned by Authentic Brands Group and is insulated from the filing.

16:08With more than$1.7 billion in debt on the books and four straight years of mounting losses totaling$174 million, the failure of the auction is less about bad timing and more about a business model that couldn't compete with leaner digital-first outdoor brands and direct-to-consumer players that now define the category. And in fact, Authentic Brands Group has ring-fenced the Eddie Bauer name and its growth channels from the struggling mall-based license by separating out Eddie Bauer's e-commerce and manufacturing and wholesale licensing to Outdoor 5 from the brick-and-mortar business before the filing.

16:46A clear signal that the name and IP still matter, but the stores do not. How do you make tech that is truly wearable? Well, for Whoop, whose core product is a performance and recovery tracking band, the answer is to effectively make it invisible. Whoop CEO Will Ahmed said that Whoop as a product needs to be worn continuously. And if you're wearing something on your body continuously, it starts to blend into your fashion, identity, and status. And after appointing a Coldwall founder, Samuel Ross, as its global creative director in January, Whoop started collaborating with his design studio on a collection named Project Terrain.

17:27The first drop came out on March 12th and allows users to choose between wearing their sensor on their wrist via the Whoop band or they can remove the sensor and place it in special pockets embedded in the clothing. As for eBay, well, it continues to dominate the resale landscape by an overwhelming margin, capturing 532 million monthly visits, more than six times the traffic of its nearest competitor, Mercari, which recorded 85 million visits in February, decreasing from 103 million in January. fashion focused platforms are carving out significant digital real estate with Poshmark at basically 50 million, Depop at 22 million, ThredUp at 12 million, and The RealReal at 11 million, and Vented at 7.5 million, all of them placing within the top 10, which shows the accelerating consumer shift towards secondhand fashion.

18:24And that is where we're going to jump off into today's conversation? There are three things that fascinate me. I mean, less and less as they're becoming the norm. First, that secondhand market is now bigger than the primary market, just in volume of sales. So resale is basically the first place where consumers go. It has gone three times faster than the first hand market. In the US, the figure is even bigger, 23 % or five times faster than overall apparel. So that's like insane. And I saw somewhere the figure that the RealReal New Arrivals page has like, what, 20 ,000 new items a day. Oh, wow.

19:10I mean, a lot of people have a lot of stuff they want to sell. So, again, the Real Real also is not my favorite place to sell stuff because it's very much skewed towards buyers, not sellers. Like, what do you mean by that? Oh, my lovely Miu Miu flats. I wore them once and I paid$1 ,000 for them. And next thing you know, they're like at least$200 some year. You're like, well, that's kind of disrespectful. for both to me and Miu Miu. So, you know, it's like they want to move the merchandise, basically. Yeah, yeah. And then they take whatever, 20, 25 % and you get, what, 150 for something, you paid$1 ,000.

19:59Yeah, yeah. You know what I mean? Whereas now there's like Vestiaire Collective and especially eBay and especially if you're a non-seller with the community, you commend your prices. You don't commend your prices here. Why do they sell it for so low? They want to move it. Do you know how much it would cost to store all that stuff? Even if they increased the price by 100%, it still would be relatively low. I know. But they're like, and they say, oh, no, we look at the markets. And I'm like, no. So you're all like, look, it's very news. I know. And then you go to eBay and it's like. Yeah, The RealReal is not a sponsor of this podcast.

20:41Obviously. It's very clear. Well, no, look, this is, like, we want to talk about different models. And, like, this is a very buyer-skewed model. That's why. And also, it's a mechanism of growth. If you're building a two-sided marketplace, like, there are a lot of people who are willing to sacrifice price for convenience. A lot of, like, sometimes I'm just like, just take it. They're going to shop at your door with bags and you don't care about making money out of it. You just want it gone. And if you get some money through it, amazing. So motivations really differ. But if you are really a professional reseller, so what we said in the introduction, it's like if you're buying with a future resell value in mind, then sure as hell you're going to want to make your money.

21:31or at least you want it to depreciate as little as possible. It's been so interesting, the dynamics around this, because, you know, I think to your point, like probably when these resale markets started, the whole attitude was just people have stuff they want to get rid of that is still perfectly good. How do we help people facilitate it? Even back then when Salvation Army was like, or Red Cross were ruling supreme, there was this place called Beacon's Closet in Brooklyn, or like what goes around comes around, but especially Beacon's Closet. So you have to go there in person, and they were the consignment stores.

22:12Yeah. Well, Simon's stores were literally for connoisseurs. So they would size you up when you showed, like, you know, and they were like, oh, this person is like, I don't know. They're like, they're a buyer. They know luxury. And they would price your items higher than if you showed up in sweatpants. They would be like a no-no. So that is kind of like, oh, where is the unit economics? What we are going to get to? And how is the value assigned? But consignment shops existed since forever, except you got money when the item was sold. the rear wheel that takes. And yes, you get money when it's sold, but it's usually sold like this, like in three seconds.

23:00Yeah, yeah, yeah. Well, I think the interesting thing is just the introduction. But if you want to get rid of shit, you go to Salvation Army. And I mean, obviously, I think that's a really good point that a lot of this comes from Salvation Army consignment stores and so on. But it's like once you have the introduction of the internet and you start hosting this as a marketplace online, that's when the real dynamics start changing because you have more volume, you have searchability, you have all the things that a market needs for the buy and supply and demand sides to find each other and to have more visibility into the information that helps shape those decisions.

23:35And that's where I think – I think that's where this all gets really interesting. Because, like, the market is really mirroring what's happening, you know, in the New York Stock Exchange or NASDAQ or any market. any capital market where you're moving stuff, a lot of the dynamics are really simple. A lot are similar. A lot of the role players in those markets are really similar. And I want us to get deeper into that, but I just want to kind of blow our listeners' mind, assuming they're listeners. Yes, the listener. The same ring to it, our listener. No, no, listen. Since 2020, Collective Archival Fashion Sales jumping 439%.

24:22That's only six years. Especially Gen Z millennials, 41 % of user base. So now luxury resale accounts for 20 to 25 % of total resale revenues. That's where it comes. Yeah. Consignment you're actually buying because you know, I'm going to wear this again. Luxury strategy, fashion strategy on last episode. Basically say, hey, this is not going to, Even though I'm paying luxury price and I'm buying from a luxury brand, this is not going to be trendy next year. So I'm going to flip it. So that's the same thing. What actually ruins streetwear is flippers. People who are not buying to own it, but people who are buying to resell it.

25:08The wind is the other side of saying commercialize it, build the market, build scale of that market. so luxury resale leather goods clothing shoes 80 so bags shoes and then clothing and the final thing i'm going to say is very little to do with sustainability which was again in our intro people who are buying firsthand clothes by resale the more resale the more returns, the shorter times that people keep items. It's basically one market amplifies the other, one market doesn't replace the other, which is depressing. But if you think about sustainability, but not if you think about the whole reorganization of the fashions operating system, which we are going to get to.

26:03All right, well, let's get into it. Let's get into it. First thing, it's consumers are not consumers anymore. They're basically, when you look what Leandra Medin did for eBay campaign, she's a curator. She's someone who has, who is an influencer, creator, influencer, curator, someone with a deep knowledge and love for fashion. So her items, her selling the same piece of clothing as me selling the same piece of clothing would not command the same price. So that is the crux of the secondary marketplaces. What is the unit economics here? Unit economics is of a new item is the opening bid. That means how a brand prices something that goes on a shop floor for the first time is when you say this is a hypothesis, I'm going to price this at 100 bucks.

26:58Everything that happens, any value that's being added or subtracted from that item, it's now the matter of the secondary marketplace, which is, which does not operate just according to the economic. logic. A hoodie can be a piece of cotton for initiated or an early era merch for a club that doesn't exist anymore. How do you price that? I always really just love this kind of like IPO framing with it because anyone who's ever priced anything for a new product, you know, it's all price discovery. You do a little bit of research, just like people do with their S1 process, trying to figure out like, what do we price it at to generate the right demand, not overprice it, stuff demand and so on.

27:47But I just think of Patek and an example with their Nautilus that had this Tiffany blue dial on it and stuff. They put it at retail for 52 ,000, which got completely bought up by everybody. And then in three months in the secondary market, it was trading. And I use that word specifically trading at above$2 million. You get this stuff into circulation to drive liquidity to drive volume and it drives up the asset value. And so basically, within three months, it had grown at something like over nearly 4 ,000 % premium over what it initiated at. And that's that kind of IPO pop that you typically talk about in a stock market that you want.

28:35I think the interesting thing for Patek is what happens when you buy back that stock to then resell it again or to drive up the asset prices, which brings up a whole other conversation. But to your exact point, it is that relationship between that initial offering and then where the value of the asset goes after that and having a clear understanding of the relationship between the two, just like Goldman Sachs would help any startup figure out for their IPO. Now, let's stay with this for a minute, because I did say here that this is a fundamental restructuring of the fashion operating system. Because see, a fashion brand, a luxury fashion brand releases a specific product line.

29:20And that product line, for example, does incredibly well. So opening bid is great. So a fashion brand can, like Hermès does, if an item sells too well or too quickly, they discontinue it. fashion brands have at their disposal incredible market manipulation mechanisms which means that they cannot only play with their current merchandise but they also play with the merchandise that saturate that is present on the resale market as well at the same time which means that when you have real-time exchange what are people buying on real real eBay, Depop, ThreadUp, Postmark, whatnot, like even Oxfam, Salvation Army.

30:13That's all information. So I have no idea why someone doesn't not build an AI search engine, which says, give me like top items from 1990s New York nightlife energy. You know what I mean? That is what literally resale gives you resale is not about i want to i don't know blue cardigan it's literally specific aesthetic that or specific style and that's what deep pop is about like all those sellers you buy their style you buy into their style so anyway going back so if this is a real time exchange there is volatility does it means some sub stacker says oh my god they put together and edit and they say these sneakers are going to be amazing like i'm thinking about wearing these sneakers for spring so all of a sudden the price of that those sneakers go up and that means they go up depop they go up on ebay and the sellers then increase that price so that means what and then brands don't react to that you see that's a massive miss with their primary market at all.

31:25Only sellers in that fragmented sellers, and I'm saying sellers, and I'm saying fragmented market, although it's a massive market in fragmented market, because there's still individual sellers. Yes, the real, real is one, but real, real is tiny compared to eBay as you shared. On eBay, they're all individual sellers, their reputations, their aesthetics, their styles, their point of views, and so on. So see how, like, if you look at that, if you want to talk about cultural IQ, that resale value, that real-time value of items that go up and down, if someone builds a dashboard that tells you that, that brings you, how do you then merchandise new items in stores and sell?