The Implications of Resale Channels in the Apparel Industry
Publication Date
11-30-2025
Abstract
There is widespread perception that resale platforms that allow consumers to buy and sell used apparel play an important role in reducing production and waste. Many consumers possess clothes that they rarely use because their individual utility has eroded, due to changes in fit or personal tastes. Nearly all existing resale channels, both those operated by branded apparel manufacturers and those that operate independently, promote themselves as helping to get clothes out of closets or landfills by finding new homes for them. While resale channels seem well-positioned to transfer products from consumers who no longer value them highly to those who do, whether they will necessarily benefit branded apparel manufacturers, or reduce the quantity of new units produced are open questions. We develop a game-theoretic infinite-horizon model in which a brand chooses production and pricing while interacting with resale channels. We first consider brand-operated resale and show that resale increases the quantity of new units only when it is also socially efficient. We then consider the impact of a third-party resale channel on a brand that does not operate its own. In this case, the brand never benefits from resale, and the possibility of resale increases output of new units for a range of intermediate transaction costs for which this is not socially efficient. Finally, we extend the analysis to competitive resale markets. While competition can replicate brand-controlled outcomes, it can also exacerbate overproduction for a range of intermediate transaction costs. Our results demonstrate that resale channels are not uniformly beneficial, especially when operated by third-parties. Without well-structured relationships between brands and resale platforms or clear policies about which products a resale platform will trade, resale may encourage overproduction. This insight should inform decisions made by brands, resale platforms, and regulators.
Document Type
Article
Keywords
product reuse, resale platforms, utility erosion, apparel industry, sustainability
Disciplines
Business Administration, Management, and Operations
DOI
10.2139/ssrn.5836964
Source
SMU Cox: IT & Operations Management (Topic)
Language
English
