How The Upside Is Tapping Into The $24B Resale Industry

Akshara Subramanian

Welcome to a brand new episode of The Vue Podcast. A significant macro shift is happening right now in retail. And that's the growth of the second hand resale market. Our guest for today is someone who has carved a niche for herself in the e-commerce market for luxury fashion consignment. We have with us today, Lauryn Vaughn, the founder and CEO of the Upside. A consignment e-tailer specializing in sustainable fashion by selling affordable luxury. Welcome, Lauryn. It's so good to have you here today.

Lauryn Vaghn

Thank you for having me.

Akshara Subramanian

So talk to us about your story with the upside and the whole idea of consignment retail. What was the driving factor behind launching a high end resale e-commerce site?

Lauryn Vaghn

Yeah, so I actually went to university in Calgary, Alberta, Canada, and I got my business degree here and I majored in marketing. And throughout that, I worked for Canada's largest at the time fashion designer, and his name is Paul Hardy. And so I interned for him. And how I got paid was I got to travel to New York and Paris and London and Toronto to all the fashion weeks. So that was my first intro into the fashion industry. And from there, I fell in love with Paris. So I definitely had rose colored glasses on. And once I graduated university, I bought a one way ticket. I took all of my money that I had saved from serving through university. And I go to Paris. So it was really their living on a budget and having a finite amount of capital. I didn't, my French was never good enough to get a job.

Lauryn Vaghn

So it was it was the true test of how to look fab and still really appreciate fashion. But on a budget and I noticed that they just a really great second hand stores and retailers and and some vintage. And it was I just found that their mindset was different than perhaps in North America. So after the money ran out and I couldn't get a job, I moved back and it was there that I started looking around and in the Canadian marketplace at the time. And, you know, still minus, you know, the upside and a few other smaller businesses, there was just not a lot of options. And my aunt was actually working for a traditional consignment store. And so I would go and she'd pull all these great pieces and I would find so many things. And I just thought, you know, there has to be a way that we can elevate the customer journey in resale and not habits. You know, the thrifty or consignment that, you know, traditionally saw.

Akshara Subramanian

Wow. That sounds like a pretty incredible journey to me. I can only imagine what it was like to translate this from an idea to an actual business. In fact, you made some great points about resale. It doesn't always have to be a thrifted or an expensive item. Right. There's definitely a change that's happening now because of the pandemic. Not everyone wants to buy the kind of money they did pre pandemic, but they also don't want to compromise on fashion or a good quality item. So is the upside filling that interesting gap. You know, something that we can almost call a luxury resale?

Lauryn Vaghn

Yeah, I think you really you know, you made a great point. We've seen this and it's been a few shifts that have been slowly happening. And then I think with the pandemic, it just expedited all of these things where, you know, you're taking into we've had this over consumerism and fast fashion, you know, for the past 10 years. And we've just seen the downfalls of that from an environmental, you know, from a humanitarian perspective. And so and then you take the idea that, you know, less is more so than we have, you know, the Marie condos coming. And then we had the pandemic where you couldn't anymore go into these stores and buy. So really switch to e commerce. And then I think we really saw what came out of this is just the value proposition, right. Is what are you what are you standing for as a company, as you know? What are you. Are you. What good are you doing globally for the environment? So. So I think yeah. With everything you said, you have all of these kind of macro shifts that were happening and then you threw a pandemic on it. And I do believe that resale when we look at the future of fashion and it's not sustainable, we can't keep going the way we are. And I believe one of the solutions is looking at a circular economy.

Akshara Subramanian

I agree that definitely a mindset shift. Fashion needs to make as an industry. As a company, I feel like you're already on your way back. So can you take us through what that process is like at the upside? How do you on board an item? Do you work with consumers to pick up items? What does luxury thrifting really look like?

Lauryn Vaghn

So up until the pandemic, it had been, I'd say, about 95 percent personal consumers based in Canada where they didn't have an option. So there's quite the U.S. is a very busy, busy marketplace for this. But as a Canadian consumer, you could not sell with them due to cross-border restrictions. So and as a buyer, it was never advantageous because the Canadian dollar is very low to the US. You have duties and shipping on top of it. So it just never really made sense as a Canadian consumer.So what we did at the upside is we took a managed marketplace solution so different from peer-to-peer such as Poshmark, where we because we were dealing with, you know, higher end brands and, you know, one designer, we wanted to make sure that as a brand, we were offering the consumer something that had been vetted and authenticated and we knew the quality. And so there was building that consumer trust that was so important to us, which in a peer to peer marketplace is a lot harder to handle, like an eBay or a Poshmark. So we have one warehouse based in Calgary and we are looking at at a more East Coast warehouse and something like the GTA in the future where we actually hold everything in that space. And now what we've really seen a shift since, I'd say post pandemic or isolate the pandemic, post-covid and the and the shopping habits have shifted is we're actually starting to work with brands now because they have an overstock, you know, that they've never seen before because of covid. So we've really been focusing on onboarding some, you know, really great Canadian brands to help them move through some of their overstock.

Akshara Subramanian

Wow, the process sounds pretty elaborate. There's so many factors in there that have to be done well. But now that we've got some background on how things work at the back end, we've seen enough to understand a little bit more about your shoppers. What are they currently buying? Is it clothes? Is it bags? What are the most popular categories right now?

Lauryn Vaghn

We've definitely seen all the quarantine closet clean out is a real thing. We've seen a massive, massive influx of incoming items. And then from the buying habits, you know, a lot less business casual. You know, people are buying more casual or more kind of just, you know, transitional pieces that that they could wear during the day. But if they did have some kind of a small business meeting resume called that, it would transition to that. So we've definitely seen a move away from the business attire. But people are slowly investing in bags and shoes. And I think those that those little luxuries. Right, that you still feel really good in that we're seeing that people are coming back to buying them.

Akshara Subramanian

That's pretty cool. I wouldn't mind a bag myself. So but yeah, it's pretty incredible to see that these are the consumer trends that are coming out of the pandemic. You know, for me, what's interesting is all these big shifts that we're seeing in retail. There's been some high-profile bankruptcies, there's been furloughs and really difficult times for people in retail. But with resale, the narrative has been a little different. We just recently read the threadup reports. And just in terms of the category itself, reason seems to be going strong. In fact, companies that thredUp, Depop and thrift+ are doing so well. So the sentiment has been pretty positive. What are your thoughts on, you know, with resale stories are headed?

Lauryn Vaghn

Yeah. And you said, you know, when when we're reading the reports and, you know, threadUp saying that, you know, they're expecting this to be a 24 billion dollar industry by 2020 and the effects of covid are just going to expedite it and then it's going to double again, you know, by 2028. You know, the facts are out there that it's growing at a rapid pace. And I, I do believe, like you said, there was that initial fear of other people's items. And for the most part, I believe these have been, you know, more or less debunked and that, you know, they're safe.You know, for the most part, as long as it's not transitioning immediately from one person to another. And so I think, you know, and, you know, really understanding the best business practices of what that looks like when items are in warehouse, when they're unpacked. People wearing gloves and just taking precautions. You know, I think I think these items we everyone can agree at this point that they're safe. Like you said, because they are so growing.

Lauryn Vaghn

And then it's really coming back to your the value that you're getting out of these items from both a value standpoint and a sustainability standpoint. We know that if you buy one item, second hand, it can reduce the carbon footprint by up to 80 percent. So for me, I see resale continuing to become a part of people's everyday life because it's such an easy way to make a difference. You know, I think pre pandemic, no one would expect that you maybe wouldn't take a flight to your family vacation you've been looking forward to because of carbon emissions. But if you can make small changes in in our everyday life, I don't really see anyone that would be against that. So so for me, it's a really tangible way that we can start to make to make a difference and still feel great while doing it. And so how I see this industry progressing, is it just becoming more and more mainstream. And we've seen some retailers get involved already. I think we're going to continue to see retailers get involved. You know, from their standpoint, I think there was a fear that that it was cannibalizing their industry.

Lauryn Vaghn

But really, I do believe that that the way forward is that retailers and re-sellers work together and it kind of becomes one. Right. There's not as much of a distinction between the two. So I yeah, I think that the future of retail, it's really been taken out at the knees. And I just I think the pandemic just brought everything to light that was broken before really quickly. So so I do see there being a synergy between the two moving forward for bird survival and betterment of everyone and the consumer and the environment.

Akshara Subramanian

Yeah. You almost want to say that resale is on its way or should be on its way to being the new normal.

Lauryn Vaghn

100%. Yeah, I totally agree. It should be the new normal. There's you know, there's no reason why we always say, you know, it's all upside, no pun intended, but pun intended. It's kind of our ongoing joke in the office. So it's great.

Akshara Subramanian

It's a great name. I think there's so many different workplace that you can do with that. Yeah, absolutely. Anyway, we know we keep going back to the pandemic, but we're also still in the middle of it. So it's kind of hard to ignore that retailers had to change the way they do things overnight and they've had to adapt it in some way, really get ahead and the general theme globally seems to be that digital majority really isn't an option. And that's such a big role for technology to play in redefining this new normal and new kinds of customer experiences. So you are looking at ways to meet the upside's customer experience far more efficient and memorable.

Lauryn Vaghn

That's a great question. And we're the answer is yes. And where we really see there's opportunities is doing our best to remove any friction from from the sell side. So if we can incorporate digital micros that already exist and say image recognition, data analysis using AI and things like that, to be able to offer the seller the opportunity to just remove any friction from it, from being able to know what what that item would go for, what they could earn from that item, how to seamlessly get it to us. So really just making it, making that whole journey from beginning to end really seamless and enjoyable for the seller as well as full transparency. You know, this is an industry that for the longest time, I believe that consignment stores could kind of do what they want and say what they want, and and there wasn't that same understanding that these are actually latent assets that that people are no longer using. But there's value with them, you know, and you cannot not provide that transparency to the consumer. So all of those things I see as there's so much opportunity to explore. And, you know, as the industry gets bigger, I think there'll be a lot of fun.

Akshara Subramanian

Yeah, absolutely. And I also think it's a little bit about bringing some sort of accountability in structure and transparency to the whole process as opposed to what it's like right now with consignment stores. Right. Where you don't really have a sense of the inventory or what's available to customers. There's another part to this, which is the physical store itself. Right. And that's its own experience. I know for a fact that people are always really excited to go to the thrift store and, you know, kind of go through the whole touch and feel aspect of items. But how do you think that whole physical store angle is going to unfold?

Lauryn Vaghn

Yeah. So we took a different approach. We created a very new concept to the first of its kind in Canada. And you and you could say, you know, I think the real real has done has done this quite well in the US. I've been to a few other stores where we really wanted to create an on brand experience. So we actually we're under construction during covid and we are open, limited retail hours and all of the precautions surrounding it to have a a smaller portion be a boutique. And we have a consignment bar and it's just really great representation of what the retail brand is. So I am not sure if it's going to be business as normal for these really big box stores that that their whole you know, the whole reason that they were able to be successful is it was just moving as much product as possible and having as many people through the doors. You know, I think it'll be a long time before we see see, you know, being able to get that many people that would make that feasible. You know, in that system. So but for us, you know, we do believe that there is a, you know, a medium between e-commerce and retail and what there's value to both. And how do you bring them together to really make it a great customer experience. So, we are trying to elevate that that journey from a retail standpoint to have a retail and e-commerce mix.

Akshara Subramanian

Right. You just said something kind of interesting there about customer experience, Lauryn. You know, things are already looking different. The expectations are changing, how and where people shop is changing, what they prioritize year on year is changing. And there's also a lot more information about how things are made. And a lot of resources on how to shop more sustainably and be smart. But if you had to sum it up, what is a good customer experience look like in the future? Now that, you know, we're all kind of moving into that forced forward phase.

Lauryn Vaghn

You know, you brought up so many good points there that that there's so much information out there now about from the supply chain to brands to to what they stand for. To who, you know, incorporates their company and what that looks like. So I believe that the consumers now are becoming just more aware and making those decisions based around who they want to support. And they don't because everyone has power. You know, everyone is an investor in a company. And where you're spending your disposable income, you are investing in that company, you're investing in the team. You're investing in the people who run the company. You're investing in that. You know, you're with the shareholders. So, consumers have such a responsibility to make sure that where they're spending their money is who they want to be empowering. So if that's, you know, people of color, if that's women, you know, you really just have to be so aware of I think, where you are putting your power, which is your money. And yeah, I kind of totally got off topic there, but I agree with you. I think that consumer empowerment is huge and people are hopefully now realizing what kind of power they have to shift and support the people and the companies that they want to support.

Akshara Subramanian

Right. And like you said, I think it's always important to have the customer feels when they shopping on your side. So experience is definitely died very closely to that. But it's also interesting to know that you have some sort of a personalization technology with closets. And so can you tell us a little bit more about that? Yes. So we launched in March, a virtual closet edits where we were now being able to virtually go into people's closets and talk to them. And it's a really neat experience. We had a lot of success with it. And to be honest, we found a lot of people just wanted connection. So it was more than a closet at it. I think people just wanted to talk and have that connection, if even virtually so, so that we've continued with that. We've seen more and more people and more places are opening up now and people are getting out. And we still have our personal in-home pickups in Toronto and Calgary right now. So that has not been as busy, but just creating that step. And again, it's about removing friction for consumers. If people have questions about. About what would sell what we would, you know, what they would get for it. What, you know, just understanding consignment. There are still so many people out there, the first thing they say is I've never consigned before. So it's just creating that education around it and talking and getting to know customers that I think people really appreciate it. And it's that it's going that extra step in and customer service. Like you said, people's expectations are going to change. And how it looks is going to change. And so really leading into that. And just and getting to know your customers. I think it's going to be so important for brands.

Akshara Subramanian

That's actually pretty great because virtual closets is something I feel like I've seen done well by very few companies. But what kind of insights can the virtual clothes that give you as a brand? Do you use that to advise your shoppers on what to buy or what they need more of?

Lauryn Vaghn

So far, we've only explored this in the seller side. So helping them understand what to sell, what still has value, but to gift your girlfriends, what to donate. And really and really grasping, you know, the consignment process. And what that looks like. So but there is so much there on the buy side that, you know, we are hoping to explore as well. But it's you know, it's on the list. But I agree with you. I think on both sides, there's a time there that is to be explored and to discover. You know, I think it's just that lack of understanding of the industry and then just people, you know, learning about it and wanting to learn more. So from the seller side, you know, I would say more than anything, I'm still, you know, shocked and excited by how many people say I've never consigned. How does this work? Tell me about it. So that educational piece for consumers, when we talked about these shifts and these macro shifts in retail and it's happening and it's happening quicker and we're just doing our best to educate and empower as many women as possible to understand what's sitting in their closet. And that's, you know, there's value there. And, you know, we know that on average, a woman has not worn like 77% of their closet very much in the past 12 months. So so, you know, it's getting rid of anything that doesn't suit your lifestyle anymore. It doesn't feel great. It was from a different era. And just, you know, taking that in and being empowered to use that capital on whatever you want, buying something different, you know, reinvesting it in other in other areas in your life. So so we're really passionate about that education piece.

Akshara Subramanian

Absolutely, I'm in complete agreement with you. There is so much that you can do with data. I'm really excited to see how this concept evolves. So we're almost at the end of our podcast, Lauryn. But before you go, can you tell us why you feel like resale is a smarter investment at this point for shoppers across the globe?

Lauryn Vaghn

They make for a smarter investment because when we look at depreciation of any assets, it's it makes more sense to spend less, you know, on something that has value and will hold its value. So once you were it a few times or when it no longer suits you, you're going to get a lot of that value back and be able to reinvest it. So it's like driving the new car off a lot. You know, you're just never going to see that value back. So, you know, investing in pieces that will retain the value and that you can then reinvest in other pieces, I think is is why people should shop resale.

Akshara Subramanian

That's great, Lauryn. Thank you so much for being on our podcast. I feel like we learned a lot about the upside and really, you know why we feel it stronger than ever.

Lauryn Vaghn

Yes, me too. And thank you. You know, it was such a pleasure to talk to you, and I had so much fun.

Akshara Subramanian

For those of you who want to know more about how retailers are coping during the pandemic and prepping for the post-covid world, head over to The Vue Podcast. Until then, see soon.