Why We Invested In Obsess
We are excited to have led Recurate’s $14mm funding round and be partnering with Adam, Wilson and the entire Recurate team.
Earlier this year, we published some of the most promising areas and themes we want to invest behind. We were interested in the next wave of innovation in commerce, which we felt would be an evolved relationship between the vendor and consumer. Consumers are becoming more receptive to engaging with sellers in more personal, less transactional ways. For example, there is interest in bidirectional messaging with brands, engaging with them across platforms, seeking out vendors that align with their own values, etc. Nestled against a backdrop of rapidly escalating customer acquisition costs and enormous competition, we knew brands also had an incentive to think creatively about the route to increase LTV.
A fascinating category addressing this was resale. Secondhand sales have existed for a long time. Still, a few forces have significantly increased the importance of the category: marketplaces like ThredUp, Poshmark, and The RealReal have brought secondhand online and massively increased comfort with purchasing resold items. A push for sustainability has existed throughout the past decade, but COVID immediately reduced new retail ails and catalyzed “thrifting.” 86% of consumers say they have bought or are open to purchasing secondhand products, and there were 36.2 million first-time sellers in 2020. [ThredUp 2021 Report]
What surfaced as a compelling new avenue of opportunity for us were brands trying to get involved directly. It makes a lot of sense - resale is the perfect way to build a perennial relationship with customers. Once you’ve acquired a customer, you want to be top of mind when that customer is ready to buy again. A great way to do that is to offer a forum for them to resell an item and purchase a new one less expensively. And of course, brands were already involved - many had a thriving secondhand community, but all of those evangelists existed on third-party sites. It’s also a great way to bring new buyers - 71% of buyers purchase secondhand from brands they wouldn’t otherwise be able to afford. Brands can also cope with the realities of supply chain pressures better by running with leaner inventory and leaning into resale for additional inventory, not to mention meeting sustainability goals or profitably processing even their owned excess inventory.
It also makes enormous sense to consumers. This was not a bet on the savvy seller - the consumer managing listings across marketplaces as a side hustle. We actually expect reselling to be a behavior that most consumers will soon adopt. Hard to imagine as today, the average consumer sees limited value selling into a third-party marketplace – the listing process is challenging and the value net of fees isn’t great. But branded resale completely reimagines all of that; just select the item from your order history, send it back, get reimbursed for the item's full value to then purchase something new. Consumers have come to expect exceptional and effortless returns - why not an effortless resale, too?
It’s also a new approach to secondhand for buyers - rather than browse thousands of listings, buyers over time will likely come to expect resold listings on major brand sites. These will be effectively the outlet option to engage with a new label. The existence of the secondhand market only reinforces the quality of those SKU’s, and would even incentivize a new purchase - 40% of consumers under 30 consider the resale value of an item before buying it.
We are thrilled to partner with Recurate and the many exceptional brands they already call customers as they continue to grow behind their ambitious vision of resale and its critical role in eCommerce.