How AI is reshaping resale

The main topic at the recent inaugural ReCon, which described itself as the only conference focused “exclusively” on the resale industry, may have been used clothing, but much of the discussion was about new technology.

Many of the executives—from resale marketplaces, brands that have launched resale e-commerce sites, and so-called resale-as-a-service vendors who build and administer those sites—weighed in on how AI is transforming the market for secondhand products.

Here are a few things they saw when they peered into their gently used crystal balls.

“Digital closets” will spur both supply and demand

One sign of the health of the resale industry is that sellers, from huge marketplaces to your Aunt Martha on eBay, are scrambling to keep up with demand.

A perennial challenge for the industry is that countless consumers have clothes hidden in the back of their closets that may not suit (or fit) them anymore, but that some would-be purchasers would crawl over broken glass to buy.

“The biggest piece that we’re watching is AI enablement, particularly of seller services,” Colleen Baum, senior partner at McKinsey & Company, said during her presentation.

Baum was referring specifically to the notion of “digital closets,” which a growing number of startup apps are tackling with AI. Whether you take photos of your wardrobe’s labels and let AI dig up the metadata associated with them, enable the apps to scan your email to document your purchases, or copy and paste details from product listing pages, the apps create a digital inventory of your closet.

Then, when it comes to selling what you no longer wear, the apps can easily create listings across multiple platforms.

Here’s the question AI is increasingly answering, per Baum: “How do I make it as easy as possible for me to identify what I’m not wearing in my closet and getting that up on one of the [resale] sites?”

It will move from a research tool to a shopping tool

While retailers are licking their chops over the fact that consumers can now purchase products within AI chat platforms, Aleksija Vujicic, who co-founded the ReCon conference, said that such purchases still are not common.

When it comes to AI, “the reality is that it’s still being used primarily as a research tool,” Vujicic, who is also the founder and CEO of Tata Bazaar, which partners with retail brands to build AI commerce agents for their apps and websites, said.

On a recent earnings call, Amazon noted that customers who used its shopping agent Rufus were 60% more likely to complete a purchase than those who didn’t. One feature worth emulating for recommerce sites, Vujicic said, is that on product pages Rufus has buttons with likely questions about the products, a one-click way for shoppers to acclimate.

“They’re using buttons, which is always easier than chat,” she said. “They are pre-recommending questions that you are likely to have about the product given their data about the product.”

In the keynote presentation that opened the conference, ThredUp CEO James Reinhart agreed that while in-chatbot purchases are “just not mature enough as a shopping channel,” he thinks “it’ll get there, and it’s just a matter of time.”

AI advancements on the new-product side could cost resale

McKinsey’s Baum noted that brands are now using AI in the preproduction stage “to better forecast what people will want in the firsthand market,” which will likely mean that brands end up sitting on less overstock.

Retailers now rely on the resale channel to unload overstock and—here’s the rub—resale marketplaces have in turn counted on their inventories swelling with all that merch.

“On the whole, AI is a huge enabler for resale,” Baum said. “[But] there are going to be some other forces which mean there could be less inventory to be had, particularly on some of the liquidation channels.”