Sitting in her living room, a petite YouTuber known as Simplistically Sarah excitedly opens her Lululemon package, holding up a pair of hot-pink biker shorts for the camera and observing with approval: “They look pretty new to me.”

While most shoppers want their online orders to arrive in mint condition, those purchasing from Lululemon’s “Like New” program expect a few frayed stitches or bits of pilled fabric. The leggings, tank tops and other athleisure items bearing the Like New stamp find another life with these shoppers after the original buyers have returned them to the company for small store credits.

More than a hundred retail brands now operate these types of online resale shops, as consumer and corporate interest in “re-commerce” soars, and as purpose-built platforms make it cheaper and easier for companies to operate in the space. For retailers, the second-hand market offers an additional revenue stream and helps them achieve sustainability targets, while introducing new customers to their brands. Shoppers, meanwhile, can thrift with little risk they’ll receive counterfeit products, paying less for their favourite brands or finding discontinued items they covet.

The bargain on one pair of navy leggings was enough to entice Sarah, the YouTube influencer, even though her go-to colour is black: “I decided since they were a little less expensive than traditional Lulu, I would go ahead and try them,” she said.

The retail re-commerce market borrows from precedent set in other industries. “This is a market that is coming from automotive to technology—really phones—into fashion: apparel, outdoor, luxury,” said Andy Ruben, founder and executive chair at Trove, a Brisbane, Calif.-based firm founded in 2012 that provides re-commerce solutions to brands. It’s a natural progression from certified pre-owned vehicle or smartphone programs, he said, which gave brands control of their items in the resale market and consumers faith that the goods were legitimate.

The second-hand apparel economy has a longer history than that of cars and cellphones. People have long sold unwanted clothing at yard sales and thrift stores, and with the rise of the internet, some of that activity moved online. Sellers posted listings on Facebook buy-and-sell groups, while websites like Craigslist created formal spaces for resale activity. More tailored solutions, such as Poshmark or Depop, eventually emerged. 

It was a matter of time, then, before retailers sought their own piece of the action. Lululemon, which did not respond to requests for comment, launched Like New as a pilot in Texas and California in May 2021. Customers traded in more than 200,000 items before the Vancouver-based company expanded it about a year later to the rest of the United States. People can bring their used Lululemon tops, bottoms, bags and outerwear to most stores in the U.S. and trade them for gift cards ranging from US$5 to US$25 per item. The company doesn’t accept damaged goods or tank tops, swimsuits, bras and some other products. It sells the clothes it does take in at a discount to the original price, typically between 40 and 50 per cent off.

In an April 2022 call with investors, Celeste Burgoyne, Lululemon’s president of Americas and global guest innovation, said Like New has strengthened the direct-to-consumer side of the company’s business. “We are currently one of the top brands in most third-party resale sites,” she said. “This gives us an opportunity to have the guests who love resell now buy directly from us.”

A subset of resale shoppers are drawn to retro, discontinued or special-edition items. Earlier this year, Canada Goose, best known for its up-market winterwear, launched a re-commerce store in the U.S. called Generations. Its vintage section listings recently included a tan vest from the 1980s and a jacket from the ’90s with the company’s prior name, Snow Goose, on its labels.

Fans of Lululemon’s bygone product lines include Natalie Savevski, a 30-year-old from the Detroit area who has been buying the brand’s clothes for more than a decade and most values pieces from many years ago—she believes the quality back then was superior. She heard about Like New on a Lululemon subreddit she frequents and on a group text chat with friends.

Savevski has purchased from the resale site several times, opting for limited-edition or hard-to-get products, such as a pair of purple “align shorts” made with the company’s whimsically named “wee are from space” fabric. “I love using it for really rare products, products that I know that I wanted, I’ve seen on their site, but I just never purchased right away and then it sold out and never got restocked,” she said. “That’s kind of what I hunt for.”

Nearly 130 brands host re-commerce shops, according to a monthly report from ThredUp, a California-based online thrift shop. The list includes major brands such as Patagonia, Levi’s, Steve Madden and recent entrant H&M. In a separate report by ThredUp, 88 per cent of retail executives at brands with resale offerings reported that the model helped drive revenue.

Victoria-based Anian Clothing, which upcycles clothes found in landfills into material for its tops, spent 14 months developing its re-commerce shop, Resell, before launching it in the summer of 2021. The quality and durability of Anian’s clothes demand a higher price point, said founder and president Paul Long. (Several of the company’s long-sleeve shirts, for example, run about $200 each.)

Shoppers who come across second-hand Anian clothes on third-party sites like Kijiji might balk at the price, he said, because they’re not aware of the clothing’s origin and quality. Resell, where many customers are familiar with the company and its sustainability ethos, “allows that product to retain a lot of its added value,” Long said.

Despite these benefits, Eric Bellomo, an emerging-tech analyst for Pitchbook, doubts re-commerce is a major profit driver for retail clothing brands—at least not yet. It has, however, garnered significant venture capital interest in the tech companies who provide platforms powering the industry. In 2021, re-commerce startups closed 20 investment deals for a total of about US$2.8 billion, Bellomo noted in a recent report.

Trove, for one, powers 13 retailers’ resale programs, including those of Lululemon and Canada Goose. Previously known as Yerdle, the company was first a platform for consumers to resell goods among themselves, without a retailer’s involvement. Seven years ago, Ruben shifted the firm’s focus to providing the tech and logistics for re-commerce. Trove now charges retailers a fee for its technology and hitches its success to their resales, making money either through a per item cost or revenue share, depending on the contract.

The company offers both physical tech, such as a scanner, and a platform that uses machine-learning algorithms to identify a returned product, assign it a value and issue a gift card to the seller. Those items then go to either a Trove warehouse or the retailer’s own space, where they are further graded on quality and more precisely identified. The scanner can discern, for example, the exact colour of Lululemon leggings, which have names like “java,” “Maldives green” and “dusty clay.” At that point, the item can be listed on Like New. 

The process is not yet entirely smooth for either consumers or retailers. Lululemon’s fervently devoted fanbase took to social media with several complaints after the program first launched. Some found the online descriptions of items’ quality or colour didn’t match what arrived. (Ruben said he’d be surprised if inaccurate colour descriptions were a problem today.) Others grumbled about the gap between what Lululemon paid in gift-card value and the amount it charged when it resold the items online. 

One YouTube influencer told her followers they could get better value by both selling and buying their used clothes elsewhere, describing Like New as a “double profit” for the company. She did, however, credit the retailer for directing all profits from the program to sustainability initiatives.

Bellomo didn’t discount the criticism, but said there is “considerable cost” to retailers running these programs, and that they’re quicker and easier for consumers to use than third-party sites. Incorrect product data remains a challenge for investors and startups in re-commerce, Bellomo said, but one that technological improvements are likely to address. Overall, he sees a bright future for the ecosystem.

Companies in the space share his optimism. Lululemon teases more markets to come on its website, while Canada Goose plans to offer Generations in Canada later this year. On the tech side, Ruben said Trove is “closer than ever” to achieving profitability, though he declined to specify when. In the meantime, he said, the company remains focused on growth—both its own and that of the retailers it serves: “Every brand we work with can double and double and double again.”