Today on THE ROCK FIGHT (an outdoor podcast that aims for the head) the secondhand conversation continues with a real life secondhand retailer.
Barruch Ben-Zekry is the founder of Out&Back, an online secondhand website. Today Barruch sits down with Colin to discuss the importance of brands engaging with the secondhand market and how consumer awareness is growing, leading to increased demand for resale options. They also talk about the structural challenges of branded resale and the need for a more integrated approach to foster a circular economy in the outdoor industry.
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Chapters:
00:00 - Welcome to the Rock Fight
00:52 - The Recent Surge in Secondhand Discussions
02:05 - Introducing Barruch Ben Zekry
03:19 - Overview of Out and Back
03:39 - The Importance of Supply in Resale Market
09:00 - Differentiation in the Secondhand Market
13:33 - Consumer Engagement and Shift in Trends
16:39 - Challenges in the Secondhand Space
22:21 - Brands and Their Role in Secondhand Initiatives
33:07 - Future Perspectives on Industry Production
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Episode Transcript
Colin True
00:00:00.640 - 00:00:49.616
Welcome to the rock fight, where we speak our truth, slay sacred cows, and sometimes agree to disagree. This is an outdoor podcast that aims for the head.
I'm colin true, and today we're continuing the secondhand conversation by welcoming the founder of an outdoor focused online secondhand retailer. But first, please subscribe to the Rock fight by clicking follow wherever you're listening and leave us that five star rating. Guys.
That is the way to help us out the most. Click follow. People, please. Also, are you following the other podcast we have here on the Rock Fight podcast network? It's called Gear and Beer.
And you know what? We talk about gear and beer. You can follow and rate gear and beer and listen to it wherever you're listening to the rock fight.
And also, we'd like you to sign up for our mailing list. Head to Rockfight Co. And click join the mailing list to sign up today. All right, let's start the show.
Chris DeMakes
00:00:49.688 - 00:00:52.376
Welcome to the Rock fight. Rock fight.
Colin True
00:00:52.528 - 00:02:23.962
Rock bite guys, there's a lot of chatter about secondhand happening in the outdoor industry these days, and to that I say, thank fucking God. The first episode of the Rock Fight on the topic of Secondhand was on April 20, 2023.
That episode, titled Secondhand first, was with environmental fashion journalist Sophie Benson, who will be coming back on the rock fight in the coming weeks here.
And then on August 9, 2023, gear Trades owner and president Aaron Provine came on the show to talk about secondhand as part of the solution to the industry stuff problem.
And Aaron is also scheduled to come back on the show soon, but that's been about it until the past few weeks, when I kicked a hornet's nest by positing that the recent surge in recommerce sites by outdoor brands weren't enough to address the sustainability and circularity problems our industry faces. Now, there are a few notable players in the outdoor secondhand space that are defining where the category is going.
The aforementioned gear trade is one and another is out and back, which was founded in 2020 by Baruch Ben Zekry, who spent seven years at VNEF working on some of the original recommerce initiatives for brands like the North Face and Eagle Creek. And Baruch is here today, and we're going to talk about out and back, but also the role secondhand will play in the future of the outdoor industry.
Welcome back to the Rock fight, where today we are going inside the outdoor secondhand marketplace with Baruch Ben Zekry.
All right, Baruch Benzekry, I said it right for the first time in my life is joining the show. He's the founder of out and back, an online secondhand retailer. Welcome to the show. Baruch. Good to have you here, man.
Barruch Ben-Zekry
00:02:24.146 - 00:02:26.950
Yeah, thanks, Colin. Appreciate it. It's good to be here.
Colin True
00:02:27.330 - 00:02:48.618
Yeah, the. The secondhand conversation's been, well, you know, you've been. You've made your bones in it now for a few years, but it seems like it's gained.
It's getting some heat. So it's been a.
It's funny, we, we scheduled this, I think, before the last couple episodes where I talked about it on other episodes of the podcast with producer Dave, but lots of feedback. It seems like the time is coming when for second hand. Are you starting to feel that way?
Barruch Ben-Zekry
00:02:48.794 - 00:02:57.070
Yeah, absolutely. That seemed to be very lucky. In our first quick little 30 minutes phone call, we were like, yeah, this could be interesting.
And then all of a sudden, it's very prudent.
Colin True
00:02:57.730 - 00:03:21.860
Yeah, definitely. And look, that's a good thing.
Like I said, I think on Monday's episode, it really wasn't that long ago where we were just all high fiving because there was like, it had 10% recycled content in a piece of fabric or something. Right. So now, okay, well, we, second hand is a real solution to some things, so let's dig into it here.
First of all, give us an overview of what out and back does. Who is out and back, and what do you guys do?
Barruch Ben-Zekry
00:03:22.240 - 00:03:59.410
Yeah. Yeah, absolutely. Okay, so we're out and back. I'm Baruch, founded the company back in 2019, but probably you get how this thing goes.
Like, started in 2019. Things actually started in 2021. So we spent a while sort of working through it before things ramped up a bit.
So for us, and I think this is true of actually resale in general, but supply is really what matters to. You could talk to anybody about how quickly this market is growing. You can read the thredup reports.
Like, the resale market is sort of blowing up in terms of demand, but frankly, there's no factory in Asia you can call to get stuff that's used made. It's not a thing.
Colin True
00:04:01.150 - 00:04:04.410
Stress it. Poke some holes in it. There you go.
Barruch Ben-Zekry
00:04:05.390 - 00:06:15.980
Exactly. I could tell you a story about my time at Levi's working on denim finishing, about distressing things.
But anyway, so for us, really, supply is what matters in the resale market. It's what matters in the outdoor resale market. And frankly, that's where we put our stake in the ground, too.
So our supply model is quite different than a lot of the other folks that are out there. And that's not just for outdoor resellers, but just like resale manage marketplaces in general.
So for us, think of us like we're almost like a vacuum that sits over top the outdoor industry.
And what we do is we'll take secondary product from basically any source that we can find it with the idea being that if you can't get enough stuff for a resale business to actually have a, well, merchandise environment, that you don't have a business. So what do I actually mean when I say that? So we work with a couple different kinds of people.
We work with individuals, meaning like you, Colin can go to our website, use our little sellback tool. You'll get an instant offer for your product.
You can like mail it to us, you could drop it off at a public lands, which is one of our retail partners. And you can sort of work through the system that way. But we'll also work with brands.
So we power Rafa, the cycling company, we power their trade in program. We power Nemo tents trade in program. We're working on a couple others in specialty tent where we'll have probably most of that market pretty soon.
In terms of powering the trade in programs for those folks, what that means is basically the brand is opening up almost their CRM and saying, hey, you can work with out and back to sell back your nemo tent. And by the way, we'll either do a gift card or cash for that or whatever. So we work with brands in that way.
We also buy samples and be stock from brands. So we'll work with reps who are sometimes selling us at the close of a season, like thousands of dollars in products.
We'll buy, like I said, bee stock from brands. At the end of the year. We buy customer returns from brands and retailers. We buy demo fleets and secondhand product from Outfitters.
So for example, like we buy tons of Aspen ski coast skis at the end of the season. So when I say vacuum, I mean, I mean vacuum.
We sit a vacuum on top of the industry and we suck up as, as much of the secondary product as we possibly can.
Colin True
00:06:16.520 - 00:06:26.752
So in close outs, are you competitive with Sierra or is it, you know, I'm just kidding actually. Are you guys, I'm making a joke, but are you guys actually, would you consider Sierra?
Barruch Ben-Zekry
00:06:26.816 - 00:06:57.916
Not really. Not really. Because if you, if you go on our website like 97% of the stuff isn't new, so you're not really like in that space. Exactly. With closeouts.
I will say the market dynamic occurrent is a little bit weird, because you've got, like, for the first time, we actually are buying some excess inventory from folks. And these kinds of relationships, we hope will then parlay into other trade in programs and other types of businesses. But this is a new thing for us.
Like, we haven't had the ability to do that for a whole lot of time. And then in terms of. Go ahead.
Colin True
00:06:58.028 - 00:07:06.836
Well, I was gonna say. So the then.
And you, when you were working with a brand, like you mentioned, Rafa, are you then you warehouse those goods, or are they still warehousing the goods they send you? Or they're.
Barruch Ben-Zekry
00:07:06.908 - 00:08:15.870
Yes, this is what I was gonna say, actually. So we actually pay cash and front, basically, the capital for those products upfront.
So we take the inventory risk, which is very different than most of the other folks that are out there, like, this entire industry, in large part because of the funding mechanisms, because venture capital was the way some of these guys got started, like Poshmark and those, they had inventory, like inventory absent models, because venture capital didn't want to play in that space.
Some of our strategic investors and the venture capital that we took was okay with that, which gave us this advantage that we could actually pay cash and take inventory, which I know that may sound like it's a burden. You're like, why would you want to do that?
Well, the fact of the matter is, if you have the technology stack that we do, that helps us to price these items. I'm not taking much of a risk. Like, the business is growing in a massive way.
We have healthy margins, and it's not in spite of the fact that we're not a consignment business. It's because we're not. That's actually how we go to market. And also, by the way, our sellers love this individuals.
They don't have to wait for the item to sell before they get paid. It's fantastic. Same thing with brands and retailers. We have the ability to basically pay them upfront. They're happy with that.
Colin True
00:08:16.030 - 00:08:36.010
So when you look across the spectrum, and including outdoor secondhand retailers, all the way through mainstream secondhand sites like Depop and things like that, is that the key difference in terms of how you engage with other brands, or you have more in common with folks like that? Or is there a real differentiation with what out and back does?
Barruch Ben-Zekry
00:08:36.550 - 00:09:09.810
Yeah, so, I mean, the main differentiation is going to be the supply model and the fact that we are. We're not consignors and we pay cash. That's. I mean, there's a technology stack that underpins that I'm not going to get into, like, the depths of it.
Thank you. But suffice it to say. Exactly, say it de risks our inventory.
But largely, I mean, paying cash and coming across from all those different sources means that the site is super well merchandised. So if you go on to out and back today, there's 34,000 things across 10,000 skus. That's a big store. Yeah, there's a lot of stuff.
Colin True
00:09:10.230 - 00:09:16.230
Yeah. What do you think you sell the most of? Like, what are people coming to the most for right now for secondhand and outdoor stuff? Is it apparel?
Barruch Ben-Zekry
00:09:16.270 - 00:09:26.690
You know? Yeah, there's kind of a, there's kind of a rule in the secondhand business which is basically like, the further from your skin, the better it'll be.
So, like, not selling a ton of underwear.
Colin True
00:09:27.270 - 00:09:27.798
Right.
Barruch Ben-Zekry
00:09:27.894 - 00:09:54.578
As you might imagine. Sure. And stuff like skis, snowboards, tents, backpacks, that's actually like your big clearing are going to be those items.
We spend a lot of time focusing on getting brand and retailer partners, particularly on the enterprise side, that can get us as much of that inventory as we possibly can.
And then inclusive of individual sellers who want to sell those things to us, they're going to get a pretty good deal just because those are items that we can clear really, really quickly.
Colin True
00:09:54.714 - 00:10:12.258
When you look at out and back and you kind of filtered it in with the landscape of other secondhand dealers, is there a differentiator?
How do you differentiate, is there a way to say this is what we do and not to say that anybody else is doing anything wrong, but it's just to say this is what is unique for the consumer I'm talking about than maybe somebody else.
Barruch Ben-Zekry
00:10:12.354 - 00:11:41.860
So for us, I mean, the big thing that's differentiated, if you're a buyer, you're coming down back to buy, not necessarily to sell. There's a couple of things. So the first thing is actually just the sheer volume of stuff, which I realize is a function of supply. Right.
So, but, okay, so the sheer volume of things, you're just not going to find too many secondhand outdoor retailers, or for that matter, just even secondhand outdoor product in other markets like eBay and stuff that have the volume that we do. Like I said, 34,000 things across 10,000 skus is a lot of stuff.
You can almost shop out and back like you're shopping Rei, which is in and of itself very rare in the secondhand space.
The second thing that differentiates in a meaningful way for those buyers is actually just that we review everything so, for example, if you're using the peer to peer side of some of the folks that are out there, like in eBay or whatever, you might be able to find a similar looking product, but the person who's selling it, you're effectively vetting them alongside the product itself. Like, do I even trust that this person has profiled the item? Right?
Like, did they take enough pictures of it to make it look like something I can actually vet? Et cetera, et cetera? And to that end, we're actually looking at every item and we're cleaning it.
Like, if you were to be in the warehouse right now, you would hear the constant hum drum of washers and dryers going basically 24 hours a day, right? This stuff is churning out product and making sure that it's, like, clean. And I would say smells good.
But actually, we use non scented detergents so that they don't smell.
Colin True
00:11:41.900 - 00:11:43.660
But anyway, no smell is a good smell, right?
Barruch Ben-Zekry
00:11:43.700 - 00:12:25.404
No smell is a good smell. Exactly. So anyway, as we kind of, like, go through each item, we're cleaning it and making sure that it's, like, up to snuff.
But I think probably the biggest thing, if you're a buyer from us, is that we actually stand behind this with a 30 day return policy, which is, like, unheard of, that you could be able to have free returns. And just to be clear, I want to call this out. Our return rate is, well, sub 10%.
I'm not going to tell you exactly what it is, but for a retailer that's very low in our space, especially given that, like, 50% of our sales, or 50% or so, are outerwear and footwear. So the idea that we have a sub 10% return rate with that guarantee means that what we say we're selling is actually what we're selling to.
Colin True
00:12:25.482 - 00:12:38.928
I am curious, like, long term, if we'll have to update the metrics for that, because I would think if you're shopping secondhand, your inclination was going to be that. I'm not going to send this back. But you're right. I mean, it is. Imagine being like, hey, you know, there's a hole in this.
Like, yeah, we told you there's a hole in it.
Barruch Ben-Zekry
00:12:38.984 - 00:12:40.500
Yeah, exactly. It's used.
Colin True
00:12:42.320 - 00:13:35.420
Like, what? How did I not know this? Looking at the category broader. Like broad, just more broadly. Right.
So Sophie Benson, who's an environmentally focused fashion journalist, and she comes on the rock flight regularly, and she has said the phrase secondhand first is paramount to change the fashion industry at large. And anyone listening to this the fashion industry includes outdoor apparel. We all make things the same way.
And that's kind of when I'm on my soapbox, it's like, yeah, we all, this is a apparel problem. You can't just carve off the outdoors and say we're doing it well and no one else is.
But the sheer glut of goods being made right means that secondhand can be a meaningful part of our stuff problem.
So when you sort of look at where we are today versus 2019, and like I said, it does even feel like just at least from the rock fights perspective, we've had a lot of engagement over just even the last few weeks. What is consumer engagement like today versus the way it was in 2019? Are you seeing a shift as a shift happening?
Barruch Ben-Zekry
00:13:35.800 - 00:15:57.726
Yeah, definitely. And I think the shift actually is, like positive.
Whether or not, like, all of the execution that's going on around this from brands, retailers, even folks like myself, like whatever, everything's up for debate there. But certainly from a consumer perspective, you can see the engagement is starting to crop up in a way that's super positive.
And frankly, I give the brands credit for this in part, especially within the outdoor industry.
Like whether or not you agree that or you think that branded resale is a good thing or a bad thing, one thing it has done, even if it's not a meaningful part of the business, from a pure dollars and cents perspective, it has certainly increased awareness among that brand's constituency and brought, for lack of better term, brought resale into the limelight with folks that probably would not have otherwise considered it. So I will definitely say from an awareness perspective, people are asking about this search volume.
So if you're looking for hard data, you can see it in Google trends. This is something that's starting to take hold, at least in the psyche of the people that are there.
But I will also say it's a little bit of a chicken or the egg type situation. You can create all the awareness you want and people start to look for this stuff more proactively, et cetera, et cetera. All good things.
If you don't have the supply to meet that latent demand, then you don't have anything. Like you haven't actually built a meaningful change. You've got this awareness that's increasing.
You certainly have that proliferation that's starting to take hold across people, especially folks who are more price conscious that this is a viable alternative. Great news. But if they come to then market and they can't find what they're looking for, then what have we done. Right.
We've created sort of like this. Yeah. So these two things have to happen in tandem if we're going to see, like, a meaningful shift in the industry.
I think in fashion, particularly in, like, lower priced fashion, so fast fashion, if that works to describe it, this is a much more common behavior. It's a lot older. So folks like thredup and. And depop and others have been just, like, doing this longer.
So people actually do potentially look at it as like, oh, yeah, I could either go to h and M to buy this cheaper thing, or I could go to depop and get a slightly better version, but at the same price. Like, that's a more common behavior in outdoor. We're still working on it.
Colin True
00:15:57.878 - 00:16:17.170
Yeah.
There's got to be a gap, right? I guess.
You know, I was thinking about when Don Bushy from wilderness exchange was on the show a few weeks back and talking about the brick and mortar issues are, you know, it's inventory, of course, but then it's also just merchandising. It's like, hey, I got that, like, dingleberry pair of crampons just sitting there on a shelf.
But, you know, anybody a size twelve, you know, with a mountaineering boot.
Barruch Ben-Zekry
00:16:18.270 - 00:16:18.774
Exactly.
Colin True
00:16:18.822 - 00:16:30.196
Then, you know, it's great that you're ahead, have the low return rate and that you have 34,000 products in your warehouse, but it's still, you know, it's still online shopping. So there's the challenges there of, like, stuff that I want to put on before I buy it.
Barruch Ben-Zekry
00:16:30.228 - 00:16:30.348
Oh.
Colin True
00:16:30.364 - 00:17:07.090
And now it's also, I'm limited by, somewhat limited by inventory and color and things like that based off of what my size is. So are these, like, how do these challenges get solved over time? Is it just true? Is it, like, waiting it out?
Because, I mean, I kind of see that even with my own kids, like, they are so much more conditioned to think about secondhand stuff.
Some of that I feel like is just from me being in the space and talking about it, but I think a lot of it is actually has nothing to do with me whatsoever. And it's just what kids do now. They all love going to secondhand shops. My one daughter has sold stuff on depop and has bought stuff on depop. Right.
It's just now they're being a little more conditioned. But I don't think a lot of people my age probably are going there yet.
Barruch Ben-Zekry
00:17:07.550 - 00:17:15.697
Yeah. Yeah. So you bring up a good point. Like, so first off, wilderness exchange is awesome. Store in Denver. We're in Denver.
It's a great it's a great retail location.
Colin True
00:17:15.753 - 00:17:19.669
We had 15 minutes before you mentioned Denver. Just want to call that out. Took you up.
Barruch Ben-Zekry
00:17:20.849 - 00:17:35.681
Well, no, but I think it's an important point, though, because a store like wilderness exchange or some of the other folks that are here on the I 25 corridor, like that is. This is a unique place. Okay, let's not kid ourselves. Like, you can do this in a place like this.
Colin True
00:17:35.705 - 00:17:36.713
Here comes the Colorado.
Barruch Ben-Zekry
00:17:36.761 - 00:17:38.749
Here it comes. Okay. Anyway. Anyway.
Colin True
00:17:40.849 - 00:17:44.149
I get what you're saying. It is. It is. It has established itself.
Barruch Ben-Zekry
00:17:44.850 - 00:19:30.492
You can. You can have a store because. Because the activities themselves are, like, nearly ubiquitous. Right. So you can do it.
This isn't possible necessarily everywhere. And this is. I'm just not even talking about, like, forget the mountain west.
There are other places in which this is also still difficult to engage in just because there isn't that proliferation of gear. I mean, a couple years ago, we made this joke and we did some analysis.
I felt like we were moving product from the I 25 corridor to the southeast United States. Like, that's what our patterns look like. It was like, sell in the mountain west and push it east into the southern abolitions.
Yeah, it was part of what was happening because, like, there was so much gear here that you were able to actually do that. But that's not the case in most places. And even in a place like wilderness exchange, great store.
But it exemplifies some of the problems associated with brick and mortar secondhand retail, namely that you just don't have enough literal space. Like, the box isn't big enough to put enough stuff in it so that you can actually get somebody who's not, like, treasure hunting for that thing.
Like, you're talking about your crampons size twelve. I mean, online, I can find 1000 people a day who might want that in that store. It's harder. That person may only walk in once every three weeks.
And then to the other point, the idea that you'd be able to find the right color and size of the thing that you're looking for. If it's not in that new category and it's all snowflakes, it's very hard to do.
So, like Costco size warehouse equals viable secondhand business, and that's tough to do. So, I think. So from a pure merchandising perspective, online re commerce, online resale, whatever you want to call it, solves that problem.
If you can get to quorum of inventory, which I think at out and back. I'm not saying we're perfect, but we've certainly made some progress there. We have a lot of stuff and we have the warehouse.
Colin True
00:19:30.636 - 00:20:23.810
Well, producer Dave is going to be really bummed that he missed this one because basically what you're saying, and I'm kind of kidding, but I'm really not, is actually for one of the things that solved this problem I just described is good marketing.
And it's because, and it is a good point because I still, I've sort of programmed to default to at least shop around secondhand if I want to get something first because it's still, it's not quite like just an instinct, just maybe to even look for things when I don't need something.
But my experience shopping for secondhand, whether it's with your site or, or gear trade or somebody else, is, I almost always find, find what I need.
Like, and it's, but even though there's still a little nagging thing in the back of my head, it's like, well, you know, if you go like rei.com or insert like outdoor retailer website here, you know you're going to find it. You still like, well, maybe I won't find it if I look in these other places.
So it's a messaging challenge probably, for, to kind of win people over more than it is a logistical or inventory challenge.
Barruch Ben-Zekry
00:20:24.350 - 00:20:53.196
Yeah, no, I think that that's a good point.
I mean, certainly in your local, your local retailers, it can be tougher because of the space concern, but online, I mean, that same sort of connotation really shouldn't exist, or at least doesn't have to, especially with the way that Google has changed. I'm using Google as a proxy for search engine marketing, but I mean, let's use Google. Yeah, so the way that Google. No, they won't mind. No.
And since they're 97% of the market, it's probably accurate.
Colin True
00:20:53.348 - 00:20:55.020
That's the way they refer to it, too.
Barruch Ben-Zekry
00:20:55.180 - 00:21:49.740
Yeah, exactly. But I mean, just like no joke, three years ago or, or four, I don't remember.
But either way, when we first started out and back, Google Merchant center, via their product feeds, did not allow for a used classification. I know that may seem small, but, like, wrap your head around that for a second.
That means that somebody like us, when we first started to build this business and tried to market through Google's product feed so that we could be part of, like, shopping results, we couldn't do it. They wouldn't let us. Not because of any other reason that they're just like, yeah, we don't know how to classify your thing.
Like, people searching for stuff they don't, they don't want you stuff now used results pop right up there in the merchant feed with everything else. Right. So there is a little bit of perception that's driving.
I'm sure some of that lack of search, the idea that people still think of use shopping as treasure hunting in your local thrift store, which is fun, but that's not how people tend to shop for their mainline needs.
Colin True
00:21:50.680 - 00:21:56.066
I need skis for this winter. It's kind of like I'm not just going to go bumming around town looking for a pair of skis.
Barruch Ben-Zekry
00:21:56.248 - 00:22:14.342
Yeah, exactly. Exactly.
So, and I'm certainly not going to, I'm not going to like take the time to do it, especially if it's a product that has like outdoor gear tens too. Like specific functional requirements that I'm not going to sacrifice on. Like I can't, I can't sacrifice on the waterproof nature of the jacket.
It has to be waterproof. I'm not asking that question we mentioned.
Colin True
00:22:14.366 - 00:22:45.070
Earlier about kind of your brand specific websites and there's been obviously a lot of news lately about brands entering the, you know, quote unquote recommerce space. You know, and for listeners who aren't sure what that means, you know, recommerce is a brand launching their own secondhand shop online.
I mean, I think they're probably the best. Best known example of that is Patagonia warnware, like I mentioned a couple episodes ago.
That kind of shook me that that's an eleven year old endeavor at this point. What's your point of view?
You mentioned, like, you kind of referenced it earlier, but like just what's your point of view on the brand e commerce sites, that movement?
Barruch Ben-Zekry
00:22:45.450 - 00:23:10.204
Yeah, well, a little bit of background on me, first off. So I was at VF before I started, before I started out and back. VF Corporation is the owner of the North Face vans, et cetera, et cetera.
For anyone who doesn't know and worked on the original version of the North Face, renewed the resale program that was for that. So I mean, this is something that I know a little bit about. This is something that I've been part of in the past and I want to.
Colin True
00:23:10.332 - 00:23:12.796
You were part of the empire now you're moving to the resistance.
Barruch Ben-Zekry
00:23:12.828 - 00:25:27.512
Yes, exactly. Yeah. Though it will undoubtedly be pointed out that VF was one of our first investors. That's true. That's right. Oh my God.
Who is Princess Leia working for? But anyway, yeah.
So this is something I certainly know a little bit about and I want to be clear too that like, I think brands have shed an amazing light on resale industry prior, second time I mentioned it so far in this discussion, right. Like they've done a tremendous amount to raise the profile of secondhand using their brand power to do it and you can't take that from them.
I mean, it's an amazing thing and it's great. But I've also already said that supply is ultimately what matters in these markets, right?
There's no factory in China I can call to get used stuff made. That's not a thing. So if I don't have this supply to sell, then I don't have a business and there is no resale.
So in that sense, unfortunately, there are some structural issues with branded resale that I ended up seeing firsthand at the north face. It's one of the reasons why I ended up leaving to start out and back. So just at a very basic level, by and large, people's closets are not branded.
And what I mean by that is like you, Colin, have multiple brands in your closet for outerwear. You have multiple brands of. Exactly. We don't have to argue about that. This is true.
And one of the issues is that it's a lot of work then to leverage these branded resale programs. Like just think of the mechanic.
Are you going to go to brand a, to sell product a, brand b to sell product b brand circumental to sell product c, all of which basically giving you a gift card, which is a different issue that I'll talk about. But all of these basically giving you a gift card, none of which are a high enough value that you can actually really do much with it.
So you end up, from a pure supply perspective, like one of the biggest sources of supply, which is, for lack of better term, mining people's closets. It's not really available to you. You've got these two primary reasons why people sell. Number one is purge and number two is upgrade.
On the upgrade side, these are great initiatives.
Like you call in, you know, you want a new Arcteryx jacket, you can sell your old one to regear and you'll get a gift card and boom, you already know how you're going to spend that money. Done.
Colin True
00:25:27.576 - 00:25:27.896
Right.
Barruch Ben-Zekry
00:25:27.968 - 00:28:00.360
But the fact of the matter is, that's not why most people sell stuff. Most people sell stuff because they're trying to get rid of it. Well, how does these initiatives work in that context? It becomes difficult.
So you've got this huge supply source that sits off to the side, which is why a lot of the supply associated with these branded e commerce initiatives is coming from customer returns. That's not to say that we don't use customer returns and damage and distress inventory is also part of what we sell. So like, whatever, it's a thing.
But that's largely why these initiatives are powered by that type of inventory.
So to that end, there's just that structural problem that's going to stop them potentially from growing into something that goes beyond their customer return stream. But I think it's worth mentioning the cash part of this too. So as an incentive structure, cash is king. I didn't make that up. Like, that's something.
That's, yeah, cash is king, right? Like if you're trying to buy something, you could trade for it or you could, you can pay cash for it.
Like nine times out of ten people are going to take cash because of the way that these rebranded resale businesses are architected. They're by and large architected in such a way that they benefit the mainline business, which is that they give these gift cards as a trade in value.
And with our brand and retailer partners too, we also offer gift cards. But giving the person the ability to take cash increases the potential reach of that program, like tenfold.
So for example, like we end up in a situation where we can say to a customer, like our seller, I should say in this case, when I say customer, in this case, I'm talking about seller, we get to a seller and we say, hey, you can trade in your jacket for beer money. That's a very rare value proposition that just doesn't exist in most of these markets and especially in a way that you can get it upfront, right?
If your branded program is giving out a gift card and there isn't a cash option associated with it, you're just going to limit the amount of reach. Now that's not to say people don't take the gift cards.
Like for some of our brand partners that we offer operate with, we have gift card acceptance rates that are like well above 50%.
So you've got this gift card that still sits out there that people are interested in, but actually the cash incentive is part of what draws them in because they then have the capacity to say, okay, my gift card offer is 20% more. Do I actually want this? Yes. Okay, I've got this relative comparison that I'm able to make and that can potentially draw somebody in.
But ultimately that incentive is really tough for a lot of people to get through and they just won't participate.
So you've got these factors, basically for the branded resale programs, that in large part are keeping some supply, or quite a bit of supply, I should say, locked up.
Colin True
00:28:00.660 - 00:29:36.220
Yeah. I just look at it as the consumer engagement and, like, where did they buy their stuff to begin with?
I mean, is some of this a hangover from the d two c boom of, like, the mid 2010s?
Because it's like, if most people are finding their stuff and they're shopping at a retailer, whether it's independent, it's Rei, it's online, whatever it is, it's like, why then are you going to require them to go specifically back to a brand to either trade something or buy something secondhand? And it's not that I think all of these brands are twisting their mustaches in a nefarious way, thinking they've stumbled onto some cash cow.
Probably it costs them more to set up these sites than they actually make for it, as evidenced by war and where existing for over ten years and still less than 10%, excuse me, less than 1% of Patagonia's annual revenue. So. But I've sat in those rooms and you just know how these conversations go, like, we should do this. What a great idea.
Oh, all of our customers will love us if we do this, as opposed to saying, this is why I gave Gear tray credit for the fly low thing.
It's like, at least that was powered by gear trade in that press release that came out last week, instead of Flylo, who's a very small brand, investing a ton of money in the infrastructure.
So on top of everything, you're saying in terms of how to engage and how to actually incentivize people, because then if you're saying, yeah, go to this retailer where you have.
If you want to spend your money at a retailer, you have all of these people to shop from, versus, well, you got the six items we have on our secondhand store today, and you've got $35 to spend, have at a kid, you know what I mean? It just doesn't work long term. And so I think it makes a ton of sense. Yeah.
Barruch Ben-Zekry
00:29:36.520 - 00:31:37.050
Yeah. And that's how we engage, too. So we run trade in programs. Trade in programs. Not necessarily branded resale.
We run trade in programs for the brands and retailers that we work with. Which, when I say that, what I mean is, is like you go to Rafa's website and you'll be able to engage with that.
Or actually, I guess for Rafa, you go to their clubhouse, one of their retail stores, and you can drop off your stuff. And when Rafa quote, buys it from you.
It's actually out and back buying it from you, which then gets merchandised in the context of all the other cycling product that we have. So we become kind of like the centralized intake point for all of the trade in programs that we want run with brands and retailers.
So you go to Nemo's website where they do offer the mail in function with us, I think it might say actually powered by out and back on there or something like that.
But either way, like you've got us buying Neemo tents, but also north face jackets from Nemo's customers that are then still coming back to our warehouse in Denver and being processed and so on and so forth here. So we become that centralized collection point. And ultimately, I mean, I think that's how it has to work.
You have to have that sort of central point of contact. And I think the brands that are engaging with us and the retailers that are engaging with us, they're still part of that story, right?
Like they're still engaging in the circular economy in a way that actually makes sense not only from a supply perspective, so that that customer who's shopping secondhand gets to see what they want, but they're also still facilitating the behavior that they, that these branded resale programs are facilitating. They're getting that person to take what they had in their closet they don't want anymore.
But that's still perfectly good and getting it back into circulation.
And from our perspective, one of the things that we think is, is so cool about this is that especially the way that our business model is structured is that actually we do this for free. Like, I don't get a check from Rafa each month for the software as a service that we offer 100% free. Because that's not our business model, Colin.
Our business model is getting the product back and reselling it. We make our money when we turn that thing over.
Colin True
00:31:37.510 - 00:31:41.290
I think there's some value you're discounting there for these brands.
Barruch Ben-Zekry
00:31:41.750 - 00:32:30.718
Well, that's not our business model. What I need from them is the supply is about supply, as far as I'm concerned, everything, because I cannot get it made. So how am I going to get it?
Like, I explained this to somebody last week where they were, they were like, I don't really understand your sourcing organization. I was like, it's because it's more like a mining company. Like, that's actually how we operate.
We're basically, we have to harvest things that are already in existence. And so if that's the case, then you got to kind of do whatever you can to get that product.
So working with us then becomes like, okay, you can enter this, effectively enter the circular economy through these trade in programs at no cost to you.
The customer is behaving in the way that you want them to behave, and you still get the benefit of at least getting a crack at them with your gift card option. Like I said, we always offer a cash offer because that's really important to get people to engage. Right.
Colin True
00:32:30.894 - 00:33:06.750
But yeah, that's a good way to kind of segue into my last question, because you kind of have a stuff, not a problem, but that's your challenge. How do we get more stuff? The industry is more than happy to continue to make plenty of more stuff. Right. How has all of this shaped.
You're just kind of your larger view on the industry, like, our brands doing enough to curb the amount of stuff they're making.
Like, how do we address, I mean, we've talked again in the last couple episodes a lot about this and what probably needs to happen, but as a, and I imagine no matter what, we're not going to stop making stuff. But how is this working on out and back and creating this company shaped your view on how the industry produces?
Barruch Ben-Zekry
00:33:07.090 - 00:33:45.982
Yeah, again, a little background on me.
When I was at VF, I actually, for a time anyway, led a technical material team that was focused on developing, as you've joked before, basically performance fabrics with recycled polyester, et cetera, et cetera. But I think I've sort of seen this, I've seen this movie, if you will. I think whether secondhand solves the stuff problem entirely, I don't know.
There's a much larger, more ethereal conversation about consumption, what that means. I think actually you, you did a pretty good job of talking about this last week or. Yeah, I'm not sure when this podcast is going to air.
Colin True
00:33:46.006 - 00:33:49.206
So whenever it was Friday, it'll probably still be last week.
Barruch Ben-Zekry
00:33:49.358 - 00:35:26.744
Okay, cool.
Well, anyway, you did a good job of talking about this last week about like, what's the more, like, you know, consumer fundamentals around capitalism that are maybe more, more difficult here.
But I do think if you can find a way to split these two things up, that the brands and retailers are, in this case, you're talking about brands, but so the brands are still able to facilitate the circular side of this. You give them the ability actually to focus on what they really want to do, which is to innovate and build cool stuff.
And in a way that probably creates the feedback loop, which is this is how we talk about it with them anyway, that creates the feedback loop for them to build better things that actually last longer so that they can feed the market further down the line to folks like me. Right. So I don't think this ecosystem exists yet in a way that is, it's still subscale, for lack of a better term. Right.
It's like it exists, but not in, like, a meaningful scale. But if we're ultimately successful, like, I want to see a world where we handle the training and resale part of the business.
The brands sort of take cues from that, and, you know, we could feedback product quality characteristics. Like, you want to know how backpacks break? We could tell you a story about that. We see broken backpacks every day. You know what I mean?
Like, this is this. We have those. We have those anecdotes wholesale.
So being able to feed that back into product teams, having them focus on their core business around durability and innovation while at the same time having this as their corollary, the secondhand market as their corollary, that would be an ecosystem that, I don't know if it would fix the problem, but at least I think it would make it better.
Colin True
00:35:26.912 - 00:35:31.880
All right, man, we can wrap it up there. Thanks so much for coming on. Appreciate it. We'll definitely have to have you on again in the future.
Barruch Ben-Zekry
00:35:32.500 - 00:35:42.596
Yeah, thanks, Colin. I appreciate the time, and it was great to be able to get onto a podcast that I actually listened to. Yeah. All right, man.
Colin True
00:35:42.628 - 00:36:12.536
Appreciate it. Thanks so much.
All right, that's the show for today. Big thanks to my guest, Baruch Ben Zekary.
We'll be having more conversations about the secondhand market with other retailers in the coming weeks and months, so please send in your questions and feedback. You can email it all over to myrock fightmail.com. the Rock Fight is a production of Rock Fight, LLC. I'm colin true. Thanks for listening.
And here to take us out is my guy, Chris Demakes. He's gonna perform the rock fight song right now. We'll see you next time. Rock fighters.
Chris DeMakes
00:36:12.608 - 00:37:12.780
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