Will Tariffs Make Secondhand the First Choice? | Reimagining Retail

Summary

Behind the Numbers: Will Tariffs Make Secondhand the First Choice? | Reimagining Retail

Released on May 21, 2025

In this insightful episode of EMARKETER’s Behind the Numbers podcast, host Sarah Lebo delves into the intricate relationship between tariffs and the circular economy, specifically focusing on how these economic policies are reshaping the resale and rental markets in sectors like apparel, electronics, and toys. Joined by analysts Sky Canavez and Rachel Wolf, the discussion navigates through current trends, challenges, and future prospects of the secondhand market in the wake of fluctuating tariffs.

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1. Setting the Stage: The Current Tariff Landscape

Sarah Lebo opens the conversation by outlining the recent changes in tariffs, noting that tariffs on Chinese goods have been adjusted to 30% for a 90-day period, providing temporary relief for US consumers. She highlights the enduring impact of a 30% tariff on retailers' margins, referencing Zach Stambor's analysis: "A 30% tariff is still a significant hit to retailers margins".

Key Points:

• Temporary Tariff Adjustment: Tariffs on Chinese imports reduced to 30% for three months.
• Retail Impact: Despite the rollback, the elevated tariff rate continues to pressure retailer profitability.

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2. Tariffs and the Circular Economy: Initial Impacts

The discussion shifts to the circular economy, where Sky Canavez points out that secondhand goods generally lack international supply chains, potentially insulating the resale market from tariff fluctuations. He observes a surge in consumer interest in resale, citing Thredup's report of nearly doubling new signups between January and March: "We've seen growth from some of the big resale platforms like Thredup." Additionally, Sky references Sensor Tower data indicating increased downloads for fashion resale platforms, with Depop leading the charge among Gen Z users.

Key Points:

• Resale Platform Growth: Significant increase in user engagement on platforms like Thredup and Depop.
• In-Person Resale Activities: Enhanced foot traffic in thrift and secondhand stores.

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3. Contrasting Data on Resale Performance

Rachel Wolf introduces a nuanced perspective, highlighting contradictory data in the resale market. While platforms report user growth, some retailers like Buffalo Exchange have seen flat sales year-over-year. Referencing PwC's consumer markets analysts, Rachel notes: "There really isn't a lot of data to show that resale is seeing this huge surge, despite what some of these platforms are saying."

Key Points:

• Mixed Performance Metrics: Discrepancy between platform-reported growth and retailer sales data.
• Industry Skepticism: Uncertainty about the sustainability of the reported surge in resale activity.

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4. Benefiting Players in the Resale Market

Sarah probes into which companies are poised to benefit from the current trends. Rachel identifies Nuuly, Rent the Runway, Thredup, Depop, and The RealReal as key beneficiaries, especially as luxury goods become more expensive, making platforms like The RealReal increasingly attractive: "If luxury goods start getting even more expensive, platforms like The RealReal become a lot more attractive."

Key Points:

• Top Performers: Platforms specializing in apparel and luxury goods are reaping benefits.
• Strategic Marketing: Emphasis on the US supply chain and localized marketing strategies.

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5. Potential Downfalls: Supply Chain and Consumer Behavior

Sarah raises a concern about the possibility of consumers holding onto products longer to avoid replacement costs, which could strain the secondhand supply chain. Sky concurs, emphasizing the challenge of securing a consistent supply amidst intense competition among resale platforms: "Getting the right supply at the right time is a big challenge in resale."

Key Points:

• Supply Consistency: Difficulty in maintaining a steady influx of secondhand goods.
• Platform Competition: Balancing incentives for sellers and maintaining low buyer fees to stay competitive.

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6. Electronics Resale: A Delicate Balance

The conversation turns to the electronics sector, where Sarah speculates that rising prices of new devices might encourage consumers to retain their older models, potentially dampening the resale market. Rachel counters that much of the current stockpiling is preemptive, driven by anticipation of tariff increases: "A lot of people are stocking up now in those categories to get ahead of tariffs."

Key Points:

• Stockpiling Behavior: Consumers buying and holding onto electronics to mitigate future cost hikes.
• Future Implications: Potential reduction in the resale supply if consumers delay upgrades.

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7. Generational Shifts and the Popularity of Resale

Sky and Rachel discuss the strong affinity Gen Z has for resale platforms, underscored by recent visibility at high-profile events like the Met Gala. Sky mentions eBay's prominence on the red carpet, with influencers like Emma Chamberlain showcasing resale finds: "Resale is once again having a moment... very popular with Gen Z."

Key Points:

• Cultural Acceptance: Resale embraced by younger consumers and mainstream events.
• Influencer Impact: Celebrities and influencers driving visibility and adoption of resale platforms.

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8. Sustainability and Long-Term Resale Viability

Rachel expresses skepticism about the long-term sustainability of the resale boom if tariffs ease and the price incentives diminish: "If you take the price component out of it, I'm not as sure." Conversely, Sky argues that the generational shift towards sustainability may ensure the permanence of resale trends: "The longer-term generational shift is here to stay... to reintegrate them into the circular economy."

Key Points:

• Economic vs. Sustainability Drivers: Debate over whether resale will persist beyond economic incentives.
• Environmental Considerations: Growing awareness of sustainability may sustain resale practices.

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9. Technological Enhancements: AI and Search Optimization

The episode concludes with a discussion on the role of technology in enhancing the resale experience. Sky envisions AI-powered tools facilitating better search capabilities and inventory management: "AI tools can help consumers find exactly what they're looking for in the heaps of digital listings." This technological advancement is seen as pivotal in addressing current challenges related to SKU management and search inefficiencies.

Key Points:

• AI Integration: Leveraging artificial intelligence to streamline product listings and improve search functionalities.
• Future Innovations: Potential for visual search and generative AI to transform the resale marketplace.

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10. Final Thoughts and Future Outlook

As the conversation wraps up, the participants reflect on the dynamic interplay between economic policies and consumer behavior in shaping the future of retail. While current data presents a mixed picture, the underlying trends suggest a resilient and evolving resale market, buoyed by generational shifts and technological advancements.

Notable Quote: Sarah humorously encapsulates the episode’s journey: "We started with the topic of tariffs and circular economy and we ended on generative AI." [17:06]

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Conclusion

This episode of Behind the Numbers provides a comprehensive analysis of how tariffs are influencing the circular economy, particularly the resale and rental markets. Through expert insights and data-driven discussions, listeners gain a nuanced understanding of the opportunities and challenges facing secondhand markets in today’s economic landscape. The exploration of generational trends and technological innovations further underscores the multifaceted nature of modern retail dynamics.

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Key Takeaways:

• Tariffs' Dual Impact: While tariffs present challenges for new goods, they also create opportunities for the resale market by making secondhand options more attractive.
• Resale Market Dynamics: Growth in user engagement on resale platforms contrasts with mixed sales data from physical retailers.
• Generational Influence: Gen Z's preference for sustainability and unique styles fuels the popularity of resale platforms.
• Technological Integration: AI and advanced search tools are critical for enhancing the efficiency and user experience of resale marketplaces.
• Sustainability as a Driver: Beyond economic factors, environmental consciousness may play a significant role in sustaining the resale trend.

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For more insights and analyses on the ever-evolving digital media landscape, tune in to Behind the Numbers every weekday wherever you find podcasts.

Transcript

[Sarah Lebo]

Want to reach your customers where they're already talking. Over the past decade, giphy has built a platform used daily by millions. Everywhere conversations are happening now. Giphy Ads enables brands to connect with their audiences through ads. People share, not just see. For more, head to ads.giphy.com that's ads.G-I-P h y.com hello listeners. Today is Wednesday, May 21. Welcome to behind the Reimagining Retail an emarketer podcast podcast made possible by giphy. This is the show where we talk about how retail collides with every part of our lives. I'm your host Sarah Lebo. Today we're talking about tariffs again, but this time we're talking about how they're impacting the circular economy. Before we get into that, let's meet today's guests. Joining me for today's episode, we have two of our analysts. From first up, an analyst from our long form desk, it's Sky Canavez. Hey, Sky.

[Sky Canavez]

Hey, Sarah. It's great to be back.

[Sarah Lebo]

Great to have you. And it's one of our short form writers who writes about tariffs every day now, Rachel Wolf. Hey, Rachel.

[Rachel Wolf]

Hey, Sarah. Thanks for having me.

[Sarah Lebo]

Thanks for being here. Rachel, are you writing about tariffs today?

[Rachel Wolf]

I am, not surprisingly.

[Sarah Lebo]

I know well, you're talking about. Okay, so as we always do with our tariffs episodes, let's see, set the stage a little for our time of recording. Since this changes so much, tariffs on Chinese goods have been rolled back to 30% for 90 days, offering a bit of reprieve for US consumers. Though as our colleague Zach Stambor wrote, it's clear the Overton window of tariffs has shifted. A 30% tariff is still a significant hit to retailers margins. Today we're looking at how tariffs will impact the circular economy, by which we mean resale and rented goods. And and I'm particularly curious about apparel, electronics and toys. Obviously this is also impacting auto, but since that's its own beast, we're gonna stay away from that for now. So let's start with that. How will tariffs impact the circular economy? There's no international supply chain on most secondhand goods, so at first glance, it seems like tariffs would be good for resale and rentals. Right?

[Sky Canavez]

Yeah. Early indications are that consumers in at least in certain categories are really interested in resale. And we've seen heard of a lot of growth from some of the big resale platforms like Thredup. They reported nearly doubling their year on year, new signups between January and March. And there is some data out of Sensor Tower showing a big uptick in downloads of some of the popular fashion resale platforms. I think depop was at the top. It's really popular with Gen Z, it's now owned by Etsy, but it has a very social community feel. And we've also been hearing that foot traffic at thrift stores and secondhand stores is up for in person thrift shopping and resale shopping.

[Rachel Wolf]

Yeah, it's interesting. I've seen some contradictory data. I mean, on the one hand, as Guy said, you have all these platforms saying they've seen a huge jump in the number of users on their platform. At the same time, you know, you have some prominent resellers like Buffalo Exchange, which have noted sales are basically flat year on year. PwC's consumer markets analysts said that there really isn't a lot of data to show that resale is seeing this huge surge, despite what some of these platforms are saying.

[Sarah Lebo]

Yeah, I mean, what companies stand to benefit from this behavior? Anecdotally, it feels like everyone in New York City is renting clothes from Nuuly right now.

[Rachel Wolf]

Yeah, I think certainly Nuuly rent the Runway, I think also is probably one of the companies that would stand to benefit thredup, as we've said, depop, I think those are the usual suspects on the high end, I would say the real real as well. I think once luxury goods start getting even more expensive than they already are, then that just makes platforms like the RealReal or Bestiar Collective a lot more attractive.

[Sarah Lebo]

Yeah, if I were these companies, I would really be leaning into the US aspect of my supply chain and marketing. That said, there are some ways I could see tariffs hurting resale. For example, if people hold onto products longer to dodge higher replacement costs, could that choke out the secondhand supply chain?

[Sky Canavez]

I think that's a big. One of the biggest challenges in resale is getting the right supply at the right time, ensuring consistent supply. And there's so much competition now among the different platforms to get the supply. This has been more of an issue, I think, in fashion, but I think there's potential for it to spill over into a lot of the other categories as well. And so the platforms are really trying to create better incentives for consumers to sell on them. I think at the same time, if consumers are feeling strapped for cash, it makes resale more appealing to them as a way to make some easy money from products they already have in their homes. But they're going to look for the platform where they can get the best prices and pay the lowest commissions. And that can put platforms in a bind. As we saw last year, Poshmark tried to cut its seller fees and pass on some of those costs to the. To the buyers, and there was a buyer revolt of sorts, and they kind of had to reverse course on that.

[Sarah Lebo]

Yeah. For electronics in particular, I could see the supply chain being hurt. For example, like, if people don't want to spend money on the new iPhone, which Apple is saying it will be more expensive, not because of tariffs, but it's sort of hard not to see at least a correlation there. They might be holding on to their older electronics for longer instead of trading up, and that could hurt the resale market.

[Rachel Wolf]

Yeah. But I think it'll take a while for that to happen, just because a lot of people are stocking up now in those categories to get ahead of tariffs.

[Sky Canavez]

And in other categories like apparel and toys, I think there's already so much supply sitting in people's homes that the real key or challenge is unlocking it, getting people to sell it, getting people to adopt that circular mindset, which is a very gradual shift, one that's likely to take place more among younger consumers than going completely mainstream.

[Sarah Lebo]

Yeah. I mean, how do you get. Unlock that, get people to resell? I think that that economic downturn could potentially help that.

[Sky Canavez]

Yeah. On the luxury side, I've been seeing incentives from some of the resale platforms for new signups. Like, we'll give you an extra $100 if you. When you sell your first item, and they will give additional bonuses if you sell more on their platforms. So. So that's one way. It's a lot harder to. To do in lower price or lower margin categories or areas like toys where the goods are not going to cost that much. And maybe a lot more of that resale will go to channels like Facebook Marketplace, or not even resale channels, but places like buy nothing groups.

[Sarah Lebo]

Yeah, I mean, that could be a real benefit to Facebook, which is hurting as Shein and Temu pull back on ads there. Do you guys also have, like, a shameful corner of your home where your potential resale or giveaway items sit, or is that just me?

[Sky Canavez]

It's my office right now. I have a closet that's been full of some baby and toddler items that I'm trying to clear out so I can reorganize the home. And I've taken it out of the closet. So all of that is now sitting on the floor and it'll be making its way into the. There's a combination of the buy nothing group the marketplace and then just giving away to friends and people we know.

[Rachel Wolf]

Yeah, I also have a bag of cast offs just waiting to be sent to Goodwill.

[Sarah Lebo]

Yeah, mine is waiting to be put out on the street outside of my apartment.

[Sky Canavez]

And finding the time to do that is challenging. I think one of the reasons we saw a big uptick in resale activity during the pandemic was that people had more time to clean out their homes and to sell stuff and also more time to shop online and more money to spend online. So we did see a bit of a boom in resale in that real pandemic era. Along with there were also the supply chain challenges that made more consumers willing to look to resale channels for the products they were looking for. And then following that, there was a bit of a dip in resale activity, particularly in apparel, because the new apparel brands and retailers wound up with too much inventory, which they then had to discount. So that kind of reduced the price gap between resale and new items, particularly in the lower price fashion segment.

[Sarah Lebo]

One thing we also saw during that pandemic era was a lot of brands wanting to own their own resale markets, incentivizing consumers to give or sell their items back to them so that they could be control their own resale market. For brands that are doing that now, as people sort of flock toward resale, could that potentially hurt their new goods sales, which may become more expensive?

[Rachel Wolf]

I think it depends on how they want to own the experience. Right. If they want to do their own end to end resale experience, then it keeps buyers in the fold. You can also incentivize people who trade in their used goods and give them discounts for new goods. And that again could help drive sales, even if it's at a discount.

[Sky Canavez]

I think for a lot of brands, it's a valuable customer acquisition tool as well. For those consumers who can't yet pay full price just to introduce them to the brand and its products and the quality. And if you have the goods to support your brand, they will be able to convert in some categories, like children's wear. It might just make more sense to go with resale for the most part. But you can also create kind of a virtuous cycle in resale, selling new items and then taking them back from consumers when they're ready to part with them.

[Sarah Lebo]

Yeah, I think madewell does this with denim, maybe Levi's, also pretty common. So does this mean that like amid tariffs, resellers, circular economy, companies and brands should just be dusting off the pandemic playbook as we say, or is it a different strategy they're taking?

[Rachel Wolf]

I think a lot of it is the same. Right. You have a similar sort of supply shock where, you know, prices are getting more expensive and inventory could be more limited and people are price conscious. So I think a lot of the tactics that retailers used during the pandemic, especially when it comes to resale, are going to come into play now.

[Sky Canavez]

I think one area to consider is that at the same time, the big E commerce boom that we saw during the pandemic and the extra cash that consumers had to spend are no longer parts of the equation. So they maybe have to take a more measured approach to their expectations of growth. And as we saw a lot of brands jump onto the resale bandwagon, particularly in 2022 and 2023, and there's been a little bit of scaling back, but not very significant. There are still many more brands that are active in resale, but they really have to think about the role of resale within the organization and aligning all the different parts. Like, resale has a customer acquisition part. There's a marketing component to it, there's an ESG component, there's an E commerce component, and maybe even a physical component. So tying all those together and not just stuck in one silo that isn't interacting with other parts of the company.

[Sarah Lebo]

You guys know that meme that's like blank is a recession indicator. Are you familiar with this one?

[Rachel Wolf]

Yes.

[Sarah Lebo]

It's like Lord releasing a new album. That's a recession indicator. Like things that happened sort of last time we saw a recession. This is like people leaning into resale, people thrifting more and more. That's a recession indicator.

[Sky Canavez]

I think the resale and thrifting trends are really prevalent among younger consumers and Gen Z in particular. It's really mainstream, particularly platforms like Depop, because it's not even something that you have to think about, really. If you're a young consumer, you just think of fashion, and whether you buy something new or secondhand, it can still reflect, like, personal style. We saw a big shout out for resale or secondhand fashion at the Met Gala earlier this month when ebay got a few shout outs from Chappelle Roan. Her costume was made from repurposed styles on ebay. And the couple of celebrities, big influencers, Emma Chamberlain and the stylist Law Roach, they both accessorized with their ebay finds. And so it was kind of a big moment for ebay and resale more broadly to be on the red carpet. So to speak.

[Sarah Lebo]

Law Roach had a weird ebay find. What was his?

[Sky Canavez]

He had some of his accessories, like whatever his outfit was had. I think he had some pins. I want to say they were silver pins.

[Sarah Lebo]

We don't need it. We don't need it.

[Sky Canavez]

And Emma Chamberlain, maybe her glasses came from ebay.

[Sarah Lebo]

They were good glasses too. So resale is once again having a moment. Obviously very popular with Gen Z. Do we see this trend toward resale, toward the circular economy sticking around? If and when, if or when the.

[Sky Canavez]

Tariffs subside, I think we might see another dip in the more mainstream, broader consumer activity. As consumers feel that they're able to afford more new items, they may turn away from resale, particularly in categories like toys. But I think the longer term generational shift is here to stay, particularly as Gen Z ages up and become parents. And then they start thinking about, you know, what to do with their baby items. They buy things on Facebook Marketplace, they'll sell them there, they'll look at toys. Nobody wants a house cluttered with lots of plastic things they're no longer using. So they will turn to platforms or ways to reintegrate them into the circular economy. Because I think we all feel bad about just throwing things away and putting them in a landfill when someone else could find use of it, whether they're actually making money from it or just being reused through something like a buy nothing group.

[Rachel Wolf]

Yeah, I think, I guess I'm a little more skeptical about whether there will be a sort of long term uptick in adoption just because we talk a lot about Gen Zs and Millennials being bigger users of resale, but they're also bigger buyers of fast fashion. So I think if you look at it from a sustainability perspective, maybe it's not going to stick around for that reason. So if you take the price component out of it, is there a reason for people to stick with resale? I'm not as sure.

[Sarah Lebo]

And the idea being that if the tariffs subside, that's taking that price component out of it.

[Rachel Wolf]

Exactly.

[Sky Canavez]

But it also doesn't look like tariffs will entirely subside. At least we have a little built in increase in the prices. As you mentioned earlier, even lower tariffs are still tariffs that will have an impact and we could see something happen like what's happened in the UK where the cost of living crisis there has really allowed new players to thrive. Like Vinted, which is started out in Lithuania and really took off in the UK and other parts of Europe as well in the last, over the last couple of years and may well be on its way to making a push in the US next.

[Rachel Wolf]

Yeah, I mean even Bill Gates daughter is getting in on the resale action. Right. She just launched an app that's supposed to help price comparison shop across resale platform. So you know, I think there is definitely interest there. I'm just not sure whether the behaviors that pop up now during this time of economic uncertainty are sticky enough to last past tariffs.

[Sarah Lebo]

That's how I feel for electronics in particular. I think that people are willing to trade down and buy refurbished electronics. You see ads for refurbished electronics marketplaces on the subway all the time. But when if they have more money, I think that's one of the first places that people trade back up.

[Sky Canavez]

Yeah. But I think in the longer term trend, the other part where that could help spur more adoption or just overall usage is like in those tech tools like you mentioned, price comparison tools and also AI powered tools that can just help consumers find exactly what they're looking for in the heaps of digital listings for resale across platforms. So that's the next big challenge I think.

[Sarah Lebo]

Yeah, I mean that's the biggest challenge with resale consistently is how hard it is to scale both from a SKU level like taking pictures of products and listing which is one of the reasons why peer to peer depop type platforms are so popular. And from a search perspective, I am currently trying to find a bridesmaid's dress in a specific color on reseller sale platforms and I am finding that you can't really make that search and get the results that you want.

[Sky Canavez]

Yeah, there's still a much bigger investment from the shopper required into trying to figure out what the right keywords are, what the, what filters to use to narrow down to what you're looking for. And, and I think this is where AI tools can gradually help improve just like, like things like even visual search or image search where you can take a picture of what you're looking for. Maybe you'll be able to Dr. Image of what you're looking for or have generative AI create an image of what you want and refine that and then send that out to kind of scour all of the resale sites to find a match.

[Sarah Lebo]

We did it again. We started with the topic of tariffs and circular economy and we ended on generative AI. Congratulations. Well, that is all we have time for today. If anyone has a purple bridesmaids dress they're just trying to get rid of, let me know. Thank you for being here, Rachel.

[Rachel Wolf]

Thanks Sarah.

[Sarah Lebo]

Thank you Sky.

[Sky Canavez]

Thanks for having me Again, thank you.

[Sarah Lebo]

To our listeners and our team that edits the podcast. We'll be back next Wednesday with another episode of Reimagining Retail, an emarketer podcast, and on Friday, join Marcus for another episode of the behind the Numbers show, an e marketer podcast made possible by giphy.

[Sky Canavez]

Sam.