For the last few years, luxury brands have been fighting an uphill battle with gray market importers and unofficial distributors for visibility on the critical first page of Google search results. Within luxury watches, gray market sellers captured 40% visibility in search results during Q1 2017 across branded terms like “Rolex watch,” forcing both official distributors and brand sites towards the bottom of the page or out of the results completely.
However, the market took a dramatic turn between Q1 and Q4 2017 with the astonishing rise and success of resale sites such as TrueFacet and Tradesy. Unlike most secondhand marketplaces such as eBay, these luxury resale sites provide a safe and trustworthy environment for buying and selling pre-owned prestige watches and jewelry by offering guarantees of authenticity. Their land grab within organic search results has been achieved through best-in-class SEO. TrueFacet has been especially effective at optimising its site for popular search terms. For example, it mentions “Tiffany” 121 times on its Tiffany gallery page and over 50 times on each Tiffany product page, far more mentions than the actual tiffany.com brand site itself.
This smart search engine optimisation has helped resale sites leap in their share of Google search results for branded terms, taking 30% of text results for watch terms and 15% across jewelry in Q4 2017. The situation is even more extreme among Shopping ads, with many popular brands like Rolex, Hublot, and Roger Dubuis seeing over 60% of Shopping ads for their brand terms driving to resale sites. Because these ads include a price and direct link to an e-commerce page, pricing expectations among consumers are being set far below the retail price for new items.
This threat is now expanding into luxury fashion. In the US, resale sites grew their share of Google Shopping ad ownership against fashion brand searches from 4% in Q4 2016 to 12% in Q3 2017, taking share directly from official retailers whose visibility fell from 50% to 22%. Louis Vuitton and Hermès are the most impacted brands, with 77% of Shopping ads on their brand terms directing to resale sites. Brands without direct-to-consumer e-commerce on their site are most at risk. Within the past year, almost 40% of paid search traffic on Céline’s branded search terms has gone to resale sites, while the brand site only receives 18% of that traffic. Similarly, Goyard only receives 17% of organic clicks on terms like “goyard wallet”, while resale sites receive 68% of organic and 73% of paid clicks on these terms.
The acceptance of buying pre-owned fashion is being further accelerated through disruptor off-rack shopping apps like Poshmark (for mainstream staples) and TheRealReal (for designer labels). However, it is UK-based app Depop that has is shaking up fashion shopping for under 25-year olds, winning 9 million users who are forecast to collectively trade $460 million of clothing through the app in 2018. By placing community, reuse, and recycling at its center and by adopting an Instagram-like design, Depop is appealing to young shoppers who are more interested in crafting a unique and authentic look than simply showing off the latest high street trends.
By breaking down the stigma of buying secondhand, these resale disruptors are creating further headwinds for high street retailers and brands who rely on the continuing appeal of new.