What: The second-hand fashion market has grown to USD 100 billion globally, driven by price-conscious consumers and environmental concerns, yet most platforms struggle to achieve profitability despite rapid growth.

Why it is important: The contrast between rapid market growth and profitability challenges highlights the need for innovative business models in the circular economy, as demonstrated by Vinted's successful no-seller-fee approach.

The second-hand fashion industry has undergone a remarkable transformation, evolving from niche charity shops to a USD 100 billion global market. This growth is primarily driven by price-conscious consumers, with Vestiaire Collective reporting that second-hand designer items are 33% cheaper than firsthand fast fashion alternatives. The sector's expansion has attracted mainstream attention, with luxury resale platforms featuring in popular media and major retailers entering the market. However, profitability remains elusive for many platforms, with companies like The RealReal and thredUp experiencing significant stock value declines since their public listings. To address operational challenges, platforms are investing in technological solutions, from AI-powered listing tools to innovative authentication methods. The industry holds substantial growth potential, with analysts estimating USD 200 billion worth of luxury goods in wardrobes ready for resale, though only 3% currently reach the market. As the sector matures, companies like Vinted are demonstrating that alternative business models, focusing on user experience and operational efficiency, may hold the key to sustainable profitability.

IADS Notes: The second-hand fashion market's trajectory in 2024-2025 reveals a complex landscape of growth and challenges. While ThredUp's March 2024 projection of a USD 350 billion market by 2028 aligns with the article's reported growth from USD 30-40bn to USD 100bn, the path to profitability remains elusive for most players. Vinted's breakthrough to profitability in April 2024, achieving EUR 17.8 million in net profit, stands as a rare success story, achieved through strategic pricing and revenue diversification.

Traditional retailers' increasing participation, exemplified by H&M's French market entry in September 2024 and Harvey Nichols' Luxury Promise partnership, validates the article's observation about mainstream retail integration. Consumer behaviour data from December 2024 showing 84% of shoppers planning second-hand purchases reinforces the article's findings about price consciousness and environmental awareness driving adoption. The integration of new technologies, particularly in authentication and inventory management, addresses the operational challenges highlighted in the article, though profitability remains the sector's primary challenge as we move through 2025.

The business of second-hand clothing is booming