Why Most Resale Programs Fail Before They Start (And It's Not Demand)

Here's what the report doesn't tell you: most brands that launch resale programs will lose money on them.

Not because demand isn't there. It is.

They'll lose money because their operations weren't built for unique inventory.

And that's a very different problem.

The Demand Side Is Solved

The BoF/McKinsey report nails the consumer story. Resale has moved from trend to default behavior.

Vinted became the number one retailer in France by sales volume in Q1 2025. Not the number one resale platform. The number one retailer. Period.

For brands, the economics look compelling. 43% of consumers who first discover a brand through resale go on to buy full-price items. That's an acquisition channel hiding in plain sight.

Knowing customers want something doesn't mean you can profitably deliver it.

Only 31% of fashion executives cite resale as a priority. Not because they doubt demand. Because they've done the math on operations.

The Operations Problem Nobody Talks About

Resale operations are fundamentally different from retail operations.

In standard retail, you have SKUs. Every size-medium black t-shirt is identical. You order 500, stack them on a shelf, scan them at checkout. Simple.

In resale, every item is unique. That "size medium black t-shirt" might be slightly faded, have a tiny stain on the collar, or be a rare vintage piece worth 10x more than a new one. You can't batch process. You can't automate with a barcode.

We've seen this pattern across dozens of resale operators we work with.

One store had 300 items come in over a holiday weekend. Each one needed photos. Pricing. Condition assessment. Seller tracking. Payout calculations.

Their spreadsheet crashed. Literally. Excel gave up.

They were processing items at 4-7 minutes each with their legacy workflow. That's 10+ hours just to list 100 items.

The RealReal figured this out years ago. Their solution? Cut items valued under $100. If the processing cost is fixed, only process high-value goods.

But most resale operators can't do that. Thrift stores, consignment shops, branded resale programs - they need to make money across all price points. Not just luxury.

The Three Operational Bottlenecks

After helping process hundreds of thousands items across our customer base, we can tell you exactly where resale programs die. Three places: intake, pricing, and payouts.

Intake

The average thrift store spends 15 minutes per item from drop-off to floor-ready.

That includes sorting, cleaning, photographing, tagging, and shelving. At scale, this destroys your margins.

Think about it: 15 minutes per item × 100 items per day = 25 hours of labor. Just for intake.

A mid-sized consignment shop can process 200-300 items weekly. The bottleneck isn't storage or demand. It's intake capacity.

Pricing

No two items are alike. A black leather jacket from Zara and one from Versace can look nearly identical on the rack, but one resells for $40, the other for $400

Manual pricing doesn't scale. But automated pricing needs data. Lots of it.

Most operators end up with one of two problems: they underprice and leave money on the table, or they overprice and items sit for months.

The RealReal reports 75% sell-through within 90 days. That's exceptional. Most operators are happy with 50%.

Payouts

Consignment math is surprisingly complex.

Different sellers might have different commission splits. Items might have price drops over time. Returns need to be handled. Consignment periods expire.

Most stores track this in spreadsheets. Errors drive away your best sellers.

Why Traditional Retail Systems Fail

Every unique item needs a unique identifier.

The problem isn't having thousands of SKUs. The problem is that traditional POS systems were built for batch inventory. They assume you'll have 50 units of SKU #12345, not 5,000 SKUs with one unit each.

We've seen stores try to force resale into their existing systems. Inventory reports become meaningless. The POS slows to a crawl. Staff spend more time fighting the software than helping customers.

Traditional retail systems assume:

Products have standard prices
Inventory is fungible (one unit equals another)
Margins are predictable
Items don't have individual sellers attached

Resale breaks every one of those assumptions. You need systems built from the ground up for unique inventory, where every item is its own SKU, and that's a feature, not a bug.

What Actually Works

At Circular, we've worked with hundreds of resale operators, from single-store consignment shops to multi-location chains. Every feature in our platform exists because we saw an operation break first.

Here's what actually moves the needle:

On intake: Standardized workflows with automatic data capture cut processing time by 60%. The key is consistency. Every item follows the same path.

On pricing: AI pricing suggestions work when trained on your own sales data, not market averages. A vintage store in Brooklyn has different optimal prices than a consignment shop in Oslo. PS: With Circular you get a personalized machine learning model trained on your own data

On payouts: Real-time seller dashboards eliminate 90% of payout questions. Sellers can see their items, status, and earnings. No more end-of-month surprise calculations. And sellers can request payouts directly in their seller portal.

Stores using purpose-built resale infrastructure process 3x more items with the same staff.

It all comes down to unit economics. When you can process a $50 item profitably, you can say yes to more sellers. More sellers means more inventory. More inventory means more sales.

Infrastructure, Not Marketplaces

The first era of resale was about marketplaces. Vinted, The RealReal, Depo. They aggregated supply and demand. They won.

The next era is about infrastructure.

Every brand wants branded resale now. Every retailer is exploring take-back programs. Every thrift store is trying to compete with online platforms.

They need the operational infrastructure to run resale profitably within their existing business.

The State of Fashion 2026 talks about resale as a growth opportunity. It is. But growth without operational infrastructure is just expensive failure.

If you're a retailer considering branded resale, start with operations. Not marketing.

Figure out how you'll intake 100 unique items a day. How you'll price them consistently. How you'll pay sellers accurately.

Solve those problems first. The demand is already there waiting.

From Thrift to Retail's Operating System

Circular Resale powers resale operations for hundreds of resellers worldwide. See how it works →