Across the world resale websites struggle to conduct this business profitably. So many have shut down in India in the last few months. While there is enough demand to sell and enough demand for buying preloved, truth is, managing the cost of resale is the biggest challenge of this operation.
Let’s look at what it costs to resell an item -
1. Pick up - 45 Rs
45 Rs is the average cost of the pick up of an item from home to resale warehouse.
2. Warehousing - 18 Rs
A warehouse that costs about 30K in rent can house and process about 5000 garments a month. Thats 6 Rs per garment per month, an average garment will be housed for 3 months. Sometimes more.
3. Unboxing & QC - 5 Rs
So many fakes come in, which means authentication of the garment being from the said brand is key. Documentation of Defects is important, so if we see fading or stains or disfigured stretched garments, we take pictures to document.
Defects are marked with a star, and the garment is graded as A+ New with Tags, A - Good Barely Worn, B- Faded & C - Stained, D - Donate, E - Recycle
Every reselling business's motivation yoyos between seeing garments in great condition and unboxing them with stains that we question why would someone send this to us :)
4. Measurement, Tagging & Listing - 2 Rs
Each garment needs to be tagged and listed in the system as soon as it comes in to be checked or it may be lost. This physical tag costs about .5 Rs and tagging and entering it in the system costs about 1.5 Rs. Checkout - Reel
5. Ironing - 5 Rs
Before shooting a garment it needs to be ironed, to avoid any harm to the garment, a steam iron is used. Ironing a garment for photoshoot means it needs to be perfectly done, which is a slow process with a steamer. Checkout - Reel
6. Photography - 20 Rs
We are about to shoot and upload images of 100 garments a day, lighting, framing, dressing the mannequin, undressing the mannequin, ah you get it, it’s a tedious process.
7. Sorting for storage - 2 Rs
A person who can read and write (so basically uneducated labor is not very helpful on a preloved shop floor) needs to sort these photographed items in bags of their serial numbers and keep them in the right shelf of the warehouse, so we can actually find an order to fulfill.
8. Marketing - 400 Rs for an item that would sell for 1000 Rs in Resale - 40%
Yep, the biggest cost is marketing your preloved items, finding a buyer requires us to create engaging exciting content, boost posts, run ads, 40% is pretty standard marketing cost.
9. Packing and Shipping - 70 Rs
Should the item have to be shipped for sale or return, manpower in the warehouse needs to ship it to the buyer, should there be any issues or COD returns from the buyer, the costs go through the roof.
10. Customer Care - 15 Rs
Everything from coordinating pickups to emailing and chat support. Comes in at about 4 mins per garment. Be mindful if the buyer does have an issue with your garment after buying it, we also handle customer care post sale. Arriving at over 15 Rs per Garment
All of this does not include other company costs such as salaries, finance, accounts, software, legal, table chair and coffee :)
TOTAL COST OF RESALE of a 1000 rs item = 600 Rs + overheads + GST 🙂 + atleast 50 Rs profit to do all this :)
Conclusion: 65% of MRP is the average cost of Resale, sellers should be able to make 35%
Finally, we would love to explain a deeper concept.
Each item has two main costs 1. Making cost 2. Selling Expenses. When you buy an item you pay for both to every fashion brand in the world. When you resell it, the reseller has to incur the Selling expenses again. All of this results in low recovery in terms of what you actually paid for the garment the first time.
Sad but fair?
Join the movement - Relove!