Clothing that was once sold is becoming a new revenue source for the fashion industry. As the market for 'recommerce' expands, fashion companies that previously focused on new product sales are now broadening their business to include secondhand transactions.
Some companies are incentivizing customers to return used items by offering payment in the form of store points, encouraging them to make new purchases and keep them within the company's ecosystem.
According to industry reports, LF's secondhand fashion platform, Elimarket, launched in September 2022, saw its transaction volume in the second quarter of this year grow approximately 2.5 times compared to its initial launch period.
Elimarket allows consumers to sell used clothing, handling collection, inspection, storage, and resale, while providing sellers with 'Elie Rewards' that can be used like cash on LF Mall.
There is also a noticeable trend of secondhand sales leading to new purchases. The transaction volume from Elie Rewards used for repurchases on LF Mall increased by about 80% in June compared to September of last year, establishing a circular structure where selling used clothes leads to new consumption on LF Mall.
The number of sellers and brands has rapidly increased as well. The cumulative number of sellers has grown 5.4 times since the launch, and the number of brands available for sale has expanded from about 15 to over 170 within six months, now including contemporary brands as well as golf and outdoor apparel.
Musinsa is also accelerating its expansion in the recommerce market. The transaction volume for its secondhand fashion service, Musinsa Used, in July of this year was approximately 12 times higher than in its first month of operation in September 2022.
Musinsa is also expanding its offline presence. At the Musinsa Outlet in Lotte Mall Eunpyeong, which opened in March, sales exceeded 2,300 transactions within the first four days.
The fashion industry's interest in recommerce is driven by more than just secondhand sales. By keeping the second transaction within their platforms, brands aim to maintain customer engagement and link it back to new purchases.
Using Money from Selling Secondhand to Buy New Clothes
In the past, the secondhand market was dominated by peer-to-peer platforms like Danggeun Market and Bunjang. From a brand perspective, it was difficult to track where and at what price their products were being resold after the initial sale. Recommerce allows brands and fashion companies to reclaim this second transaction.
Kolon FnC was one of the early movers in the fashion industry, launching the 'OLO Relay Market' in 2022, where customers receive points for selling used items, which can then be used on Kolon Mall.
Initially focused on Kolon Sports and other in-house products, the company has significantly broadened its acquisition targets to include both domestic and international fashion brands this year.
In the first half of this year, transaction volume in the OLO Relay Market grew about 4.4 times compared to the second half of 2022, with the number of sellers increasing by 5 to 6 times since its launch.
Last month, Kolon FnC also released a separate mobile application to strengthen the connection between new purchases and secondhand sales within a single consumer process.
Ultimately, fashion companies aim for a circular structure of 'sale → use → collection → resale → new purchase.' By retaining customer and product data without losing secondhand items to external platforms, and by offering rewards in the form of store points, they can expect a 'lock-in' effect that brings consumers back.
This approach also has implications for brand value management. By directly involving themselves in inspection and product grading, companies can reduce uncertainties regarding quality compared to peer-to-peer transactions. They can also monitor the resale prices of their products in the secondhand market, allowing for better management of residual value.
Global Secondhand Clothing Market Expected to Reach $393 Billion
The expansion of recommerce is not limited to South Korea. According to the '2026 Resale Report' released by global secondhand fashion platform ThredUp, the global secondhand clothing market is projected to grow from approximately $289 billion this year to about $393 billion by 2030.
It is expected to grow nearly twice as fast as the overall clothing market over the next five years. Generation Z (born in the mid-1990s to early 2010s) and millennials (born in the early 1980s to mid-1990s) are anticipated to drive 71% of the market growth by 2030.
As inflation persists, consumers are increasingly price-sensitive, making the opportunity to purchase brand-name products at lower prices appealing. The prices of secondhand items sold on LF Elimarket typically range from 20% to 40% of the original retail price, depending on the brand and condition.
However, recommerce is not without its challenges. The condition of secondhand products varies, requiring individual handling for collection, inspection, cleaning, repairs, photography, storage, and shipping.
It is difficult to achieve operational efficiency compared to new products, and as secondhand sales grow, there is a risk that some customers may choose used items over new ones, leading to self-cannibalization.
The value of recommerce operated directly by brands may be more pronounced in indirect effects, such as strengthening customer relationships and reducing quality uncertainties, rather than in the profits from secondhand sales alone.
An industry insider stated, “Recommerce is now seen as a key touchpoint that goes beyond simple secondhand transactions, allowing for the accumulation of customer data and encouraging repurchases. As integrated models that encompass both online and offline become established, the competitive landscape among retailers will shift from new product sales to the entire circular consumption ecosystem.”
* This article has been translated by AI.
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