DHL Is Going Into The Resale Business

DHL announced today that it entered into a partnership with resale company Reflaunt to provide logistics services for the resale (vintage) business. Under the arrangement, brands contract with Reflaunt to manage their resale operations and all products get handled and authenticated by DHL personnel at DHL facilities.

How it works:

- Consumers go to a brand's site to and use software provided to the brand by Reflaunt which manages the process.

- The software arranges for DHL to pick up, sort, grade, authenticate, photograph, handle and ship. To consumers, it appears that they are only interacting with the brand.

- Both DHL and Reflaunt will market the service to brands.

Why This Is Important

There are many reasons why resale is a huge growth opportunity for consumer products:

- It allows consumerss to access brands they couldn't otherwise afford.

- It makes purchases of new products cheaper because part of the purchase price is recoverable.

- It is better for the environment, creates less waste and extends the life of products that would otherwise sit unused or go to landfill.

For all those reasons and others, consumers want it.

But there are problems with the resale business. Most notably, it's super hard to make money. Billions have been invested and lost trying to build resale businesses at a large scale.

Some of the reasons why it's so hard are:

- There's a limit to what resold products can be sold for because they always have to be less than new products.

- Resold products have higher costs of handling, inspection and authentication than new products because every item is unique and arrives one-by-one instead of by the thousands. Some are fake and have to be individually weeded out.

- Resold products have to be coaxed from consumers' closets individually whereas new products can be ordered, made and shipped by the pallet.

While we are beginning to see signs of profitability in resale (see this article), the infrastructure to make the industry efficient is only now beginning to appear. Until not long ago, it was thought of as clothes for poor people. Now thinking is changing.

That a company the size of DHL believes this is an opportunity is a significant change. Contrary to what investors thought when they put billions into big resale platforms like The RealReal and ThredUp, a lot of the infrastructure for resale doesn’t have to be purpose-built; it can be tacked on to existing operations and that's what DHL is doing.

DHL is not the only one. A company called Open For Vintage is taking the information from brick-and-mortar vintage boutiques worldwide and posting the products on e-marketplaces to expose it to consumers worldwide. It’s another example of leveraging existing infrastructure instead of investing billions to build it new. The efficiency of the approach makes it likely we will see more such developments over time.

This trend will lead to a time where you'll be able to scan your closet with your mobile device, decide what you want to sell and it will get posted online immediately. That kind of change is a long way off but it's coming. The commitment of a company the size of DHL is one of the signs that resale can be made more efficient by implementing existing resources to drive profitability in resale. More ways will have to be found to realize the enormous potential of resale because that’s what consumers want.