Circular economy providers are looking to the public market for funding and liquidity, as global fashion brands outsource the “dirty work” of recommerce sales.
By Dayna Fields
Listed companies like Waste Management collect glass, plastic and paper, but you may soon have the opportunity to invest in a company that recycles clothing and textiles.
According to the Ellen MacArthur Foundation, less than 1% of the materials used to make garments are now recycled to make new garments. This is an annual loss of $ 500 billion in used goods, and about 70% of garment material goes into landfills or is incinerated.
Meanwhile, a coronavirus pandemic is accelerating this trend, according to a report commissioned by online resale company ThredUp.
Second-hand fashion online marketplaces are already taking advantage of the savings campaign. This is now in vogue thanks to young Gen Z and Millennial consumers looking for discounts on designer unexploded ordnance.
February, California-based Poshmark Published and raised $ 277 million with a valuation of over $ 3 billion. ThredUp raised $ 168 million, following March. This summer, Rent the Runway, an online rental service for designer dresses based in New York, filed for release.
These companies only connect consumers who want to buy and sell used fashion, but new companies are emerging to collect, certify and repair used clothing and accessories for resale.
As members of the Circular Economy, they aim to build logistics and infrastructure from scratch, expand globally and continue to serve global fashion brands. The scene of their recommerce site.
For example, Patagonia has been selling used and repaired apparel at half its original retail price since 2017 through its recommerce site WornWear. Lululemon recently followed in the “Like New” category, as well as Levi’s via the “Second Hand” segment.
All of these brands outsource their resale operations to California-based Trove (formerly known as Yerdle). Trove secured $ 77.5 million in Series D funding last month, led by G2 Venture Partners.
According to a recently commissioned ThredUp report, 60% of traditional retailers plan to take advantage of recommerce sales through partnerships with outsourced resale businesses, but only 8% say they want to buy. I am. A limited pool of strategic buyers suggests that IPOs may be their best option for financing and liquidity.
For example, California-based Fashion Feel is a seller of used luxury handbags that buys and certifies used designer handbags from consumers, and founders see IPOs as a very attractive exit strategy. Sara Davis said recently. Marger Market..
According to Davis, the company is “shifting to economies of scale” and could one day be “100%” public. This year’s Poshmark IPO was “very exciting and exciting,” she said.
Marque Luxury, an inter-company supplier of used designer accessories based in California, said: Marger Market We may consider going public in the United States or the United Kingdom within five years.
To maintain a global fashion brand as a client, these companies need to build the ability to collect, clean and repair garments on a global scale.
“To get ahead of government intervention, global brands are raising their hands and asking how to do this. The problem is the lack of infrastructure,” said ReCircled, CEO of textile recycler. Scott Kuhlman said.
Companies building infrastructure to keep clothes out of landfills could one day become as profitable and essential as companies doing the same with paper and plastic. there is.
Dayna Fields is a Chicago-based Mergermarket journalist covering food, beverages, beauty and retail.She can reach at Dayna.Fields@iongroup.com