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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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]

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.

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.

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