LOOPED IN with Carl Warkentin

From Patagonia to Archive: Scaling Re-Commerce with Alex Kremer

• Carl Warkentin • Season 1 • Episode 7

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Alex Kremer takes us on a journey through the rapidly evolving world of branded resale, sharing hard-won insights from his pioneering work launching Patagonia's Worn Wear program and his current role as VP at Archive, which recently secured $30 million in Series B funding.

What truly sets branded resale apart from generic marketplaces is the trust factor. Customers consistently pay premium prices when buying secondhand directly through a brand they trust, knowing the items have been properly inspected and authenticated. This creates a powerful value proposition for brands looking to capture revenue that would otherwise flow through third-party platforms like eBay or Poshmark.

One of the most fascinating insights? Resale attracts customers nearly a decade younger than the typical buyer. These “aspirationalists” find an entry point to premium brands they couldn’t otherwise afford — and often become long-term loyalists. At the same time, existing customers use resale to responsibly manage and refresh their wardrobes, creating a truly circular ecosystem where community and commerce intersect.

We also dive into the operational reality: from product identification and pricing models to warehouse processing, software integration, and returns management. Archive’s technology is helping brands treat resale not as a side project, but as a profitable business channel — and the results are proving it.

Surprisingly, Alex shares that even smaller brands with strong communities are seeing success in resale. It’s not only about scale — it’s about engagement, product quality, and brand trust.

We close with a global perspective: why Germany’s existing sorting and collection infrastructure gives it a unique head start, how return culture and customer expectations vary sharply between regions, why the U.S. is leading in resale innovation and brand adoption, and how Asia’s vintage obsession may unlock a different type of circular opportunity altogether.

Ready to discover how branded resale can drive growth, loyalty, and real environmental impact? This episode is a masterclass in turning circularity into a competitive advantage.

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Carl:

Welcome to looped. In, the number one podcast about circular economy and regenerative business models, we bring behind the scenes conversations with investors, founders and corporate leaders into the spotlight, exploring how to scale impact, build profitable business models and redesign our economy for a better future. So let's get started with today's guest our economy for a better future. So let's get started with today's guest. Today's guest is someone who has been shaping the future of circular business models from inside some of the most iconic brands in the world. I'm thrilled to welcome Alex Kramer, currently Vice President of Strategy Operations and Finance, as well as employee number one of Archive, a leading branded resale platform that just announced a 30 million series B funding round.

Carl:

Before joining Archive, alex had an incredible journey at Patagonia, where he launched and ran the brand's groundbreaking second-hand business, warnware. He also opened Patagonia's first brick-and-mortar store exclusively for second-hand and upcycled gear and helped launch the recrafted product line made entirely from post-consumer materials. Alex was also part of the team that invested in Trove, a major e-commerce player, bringing deep operational and strategic insights into the growing resale economy. At Archive, alex has taken all these learnings to the next level, helping brands across different industries turn e-commerce into a profitable, scalable growth channel. Today we'll talk about his journey from Patagonia to Archive, dive into what it really takes to scale resale successfully and explore the future of branded resale technology and circular consumer behavior. Alex, welcome to the show. It's great to have you here. Before we dive into Archive's incredible growth, can you take us back to your journey at Patagonia? What initially drew you into the world of circularity and re-commerce?

Alex:

Yeah, sure Thanks, carl. Thanks for having me. Yeah, I arrived at Patagonia kind of fortuitously. Previously I was in different investor roles investing in kind of traditional energy financial services, but got a glimpse of what impact investing could mean or investing for not just the financial bottom line and so during my MBA I really focused on what impact investing could mean, who was doing it in different ways, and one issue I kept running into was trying to figure out when push comes to shove, will the investors focus more on the financial return or will they think about what is the impact long-term of this business for the planet and for the people? And so that's where I really struggled to figure out who was going to put their money where their mouth was and make some of those hard decisions. And then, like I said, fortuitously found out that Patagonia had an investment arm, which was news to me. And when I thought about that, like, patagonia has such a strong mission that they were using this, what we call Tinch Adventures, to support that mission, to enable more entrepreneurs to jump a gap that maybe traditional venture investors would overlook because it's capital intensive or too risky. But they really wanted to push that needle, as they have been with their business since inception. Really so kind of an interesting option to join a venture fund as part of a big apparel company, which is what people know it for. But it's really amazing because they have a food business called Patagonia Provisions which has a big role in promoting regenerative, organic agriculture. They have a really close tie to all their supply chain partners and that goes to the farm level, and so that provided them with a lot of power, not in a negative sense, but in a strong sense, like we want to work with you to promote these practices and supply chain traceability and doing everything the right way practices and supply chain traceability and doing everything the right way. And so we really got to leverage all that expertise within the company as part of our investment model at Tinshed Ventures. So it was really amazing to have all that expertise around us, even though we were a very small investment team.

Alex:

And then as part of that, we invested in a company called Trove which had a marketplace to keep things in use. So at that point it wasn't even apparel or wasn't exclusively apparel, and as they were a startup, they were thinking about new business models. We recognized that, hey, a lot of Patagonia stuff was selling on eBay. We had no idea who was buying it, what exactly was being bought and sold. And then Trove also did a few tests and they said and actually then they were called Yertle and they recognized a similar thing they said, hey, there's a lot of Patagonia stuff that sells very quickly on our marketplace. Maybe they're you know what does that mean for us.

Alex:

And so together with Trove and as part of, like, the investor at Patagonia that worked with Trove, we said, hey, let's, you know, maybe we should start doing something owned by Patagonia. And that's when Patagonia REI, an outdoor apparel company in the US, and Eileen Fisher were kind of the first three partners to say we want to put our name on top of this secondhand program. And so that was the foray into it. And so that was the foray into it and so very quickly shifted from the investor partner with Trove to the internal business owner of what we called Warnware, which I'm happy to go into is obviously a big initiative of Patagonia and even bigger now to really own this secondhand business. And so did that for about four years which, yeah, a lot of, a lot of learnings, a lot of tweaks to the model and ultimately brought me to archive. So again happy to go deeper, but maybe I'll stop there.

Carl:

Thank you so much for sharing this, and I think you have a pretty unique insight into the whole market, like being an investor in Trove and then starting Warnware, which I think is probably the best practice example to look at when it comes to re-commerce. So I'm happy to dive a bit deeper into the whole experience that you have with Warnware before we go into Archive and your solution today.

Carl:

I've shared this with you before. I was running a project together with Gore and a local player here in Germany operating in Europe called Bergzeit, which is pretty active in the e-commerce space as a retailer and a player Reverse Supply which was just acquired finally by Trove, I think a month ago by Trove, so Reverse Supply is basically the operating company for Bergside in the re-commerce market. So that was a pretty interesting project where we really tried to understand the whole re-commerce market who are the people who sell secondhand and who are the people who buy secondhand? How do you look at this? What were your biggest learnings when it comes to Warnware?

Alex:

Yeah, a few different points there. And it just reminded me we used to call those two the suppliers and the buyers, the loyalists, the folks who had like a ton of Patagonia stuff. They loved the brand, they wanted more of it, but they also had a lot of it, so they wrestled with I don't want to consume constantly, what else can I do with my stuff? And then we also thought of the aspirationalists, the folks who I want Patagonia stuff. It's really expensive, so how can I get into the brand? Maybe when I'm younger, and a lot of those aspirationalists were younger. They just didn't have the money yet. So I think this may be dated, but I think the core Patagonia customer was relatively old when you think, and I think a lot of that was due to the price point. So we were able to bring that down by about 10 years with Warnware because it was an additional entry point. So we always tell brands the supply-demand balance is so critical and a lot of times e-commerce folks at brands or marketers at brands are really in charge of making sure we have demand. But for resale they're really important for making sure we have supply. Because that is saying how do you get customers motivated to bring back stuff if it's a trade-in program or list stuff if it's a peer-to-peer program. So it was really interesting with Warnware and we did this in partnership.

Alex:

It was kind of like a little cohort with REI and Eileen Fisher and Troke to say how do we make these people move in different ways? And I think all of us REI, eileen Fisher and us had different pricing for our trade-ins. I think Eileen Fisher was a flat number for any type of item. We tried to be really specific with the type of item. And then REI was a retailer so they had, you know, hundreds of brands, I think, much bigger of a challenge than what we had, and I would say ours was even a challenge. And how do we price these things that come back to us that we then mail to the third party to clean and repair and sell and try to make everybody make a little bit of money in the meantime? And that's really important, right?

Alex:

Patagonia, I think, always leads mission first and their founder would say every time I've done something good for the planet, it's been good for my bottom line, and so they lead with mission and it really works. And they've proven that At the same time with resale. Not every brand thinks that way, or at least not in that order, and so we really, really, really wanted to make the profitability case so, even if a brand does not care about the planet, they see it as a really good business opportunity. That's where we've really gone deep with archive. I'd say we kind of take it to another level today, because that is what will make it scalable and you said that was. You know, that is something that will keep brands from investing in resale is, if it's not a good business opportunity, it'll be a program, not a business, not a channel.

Carl:

Right, you have now a younger customer group by 10 years, right? Is that like in basically an entry level for the younger generation to be able to afford Patagonia products and then later on they may actually become customers for new products as well?

Alex:

A hundred percent. Yeah, we saw a lot of folks that was their entry point and it was a lot of kind of multi touch points. So those who sold also bought used, also bought new and so that truly was like cyclical. We weren't sophisticated enough to kind of create a pretty journey of those folks, but we saw a lot of data points that showed us the folks that engage with Warnware in one way or another are just engaged with Patagonia a lot as a brand, including the new side of it. So it was a really powerful customer. It was really eye-opening for the brand, which, again, they already knew Warnware was really important.

Alex:

I haven't mentioned the whole repair initiative, which is the start of Warnware, which is so core to Patagonia's values. This was really an extension of it. And then I think where there's always opportunity is making it feel one. So making it feel like one Patagonia experience as we see more brands who have repair programs or have secondhand programs. Patagonia started with almost two distinct brands Patagonia and Warnware and a lot of brands are like we want to be like Warnware, but that took almost two decades to develop that Warnware brand and so I'm really interested to see how brands, secondhand programs, get branded, get recognized either distinct from or together with their core mainline brand. Obviously there's a connection, but there also is something interesting about like a unique community that's buying and selling from one another and keeping gear in use.

Carl:

So I don't, I don't, I don't know which one I'd bet on how challenging was it to at the same time attract like suppliers to sell their products because it was especially back then a pretty new thing to the market and to attract also buyers yeah, we were.

Alex:

What was interesting is we started with the take back or trade in at retail stores. Patagonia had about 35 retail stores which we thought, okay, we're going to take back our gear. We're not going to take back underwear or certain items like waders which are really difficult to test their quality. We wanted to set the precedent if it is functional, it can be bought back, and so it doesn't have to be perfect, doesn't have to be like new, but it has to serve the purpose of the garment. So a rain jacket should be water repellent and that was kind of the criteria. And we thought, okay, we'll give five price buckets $10 up to like $100, I think it was for what we would give these customers. That was a total not total guess, but it was a pretty much a guess of like will this draw enough folks back? And what we realized was there were some really good deals. So people would get, I think, the same for a short sleeve button down as they would for a pretty durable sweater like a fleece, and so we got a lot of button downs. We did not get a lot of fleeces back and when we put them on the site we realized it was kind of overflowing with short sleeve button downs in the winter and not enough fleece. So we're like, all right, we need to tailor this a little bit differently. And the other piece that we found, or one of the way people are interpreting those price buckets, and so it was really difficult because it was pretty manual. We had a really good plan on paper, but then there's real people involved. There's turnover at retail stores where you got to educate them once a month really on what is this thing. And oh, by the way, they deal with a ton of returns and other issues in stores. So this is just an additional thing that they have to do.

Alex:

So, luckily, at Patagonia, everybody was really excited about it. But there was a lot of stuff that just made it difficult, made it less profitable, or we had a lot of supply that we didn't want, and so I think we tweaked that pricing model two or three times to add buckets, to create nuances, to create carve-outs and even enable retail associates to pay more if certain very special garments came in and they said, hey, we need this thing, we'll give you 50 bucks more or something, because they recognize, they know the product best. But yeah, it was those types of things and then you send it to a store and you say, hey, this or sorry, you send it to the warehouse and you might recognize, hey, like 50% of the stuff they bought back actually was really damaged. They, you know, they're moving too fast and so that training aspect was really was really challenging.

Alex:

Like I said, we had 35 stores which had a pretty good breadth across America, the country, but there were also really, you know, strong pockets of Patagonia customers that were like eight hours away from a store If you think, like the Rocky Mountains, colorado, montana, like that whole line. They were like we love Patagonia but we can't really trade in because it's not practical for us. So ultimately we launched a mail-in piece which had its own challenges and additional costs. So all those things piece which had its own challenges and additional costs, so all those things we really just had to learn and luckily, patagonia, we were willing to do that and maybe pay a little bit more upfront to learn it. But yeah, it was a lot of those things which felt very startup-esque, obviously with the support of a big company. But that foreshadows kind of where I ended up at Archive.

Carl:

In our project, we realized that transparent pricing is super important, especially when it comes to supply. So one thing that was really important is that the suppliers have the feeling that they get a fair value for their product, and the second thing is the payment. Initially it was a commission-based concept where you would just send in your product and once it's sold, you get your fair share, whereas actually what was really unlocking supply way more was once the customer immediately got his money back.

Alex:

And at Archive. Some brands decide to do both like a take back program, which is kind of immediate credit for giving us that thing, and some operate a peer to peer offering which is like listed with us when it sells, you'll get a portion of it, and we think customers and brands kind of like both. Some people are willing to wait. Typically that commission payment is higher than what the take-back payment is. Some people may say, hey, I have 10 of these things. I just want to make sure they get a good home. I don't want to throw them away. So that convenience factor makes them willing to take a lower payout.

Alex:

And the other learning that is non-financial, which is important is people really cared what was happening to the items and even across Patagonia people sometimes knew what warmer was.

Alex:

I remember we did a survey where we were surprised by how few people knew what warmer was. And then even fewer knew that when we're bought back your old products and we're like, oh man, we thought this was a huge initiative but there's still so much opportunity to inform. But when we did have that conversation in store that said, hey, you're getting $50. And, by the way, we're going to send it to this warehouse. It's going to get clean and then we're going to list it on a site where somebody can buy it. They're like, oh wow, that's like amazing. And that actually really helped when some people said, hey, I think I should get more for this item, and we would say, well, you know, we have to do a few things before we can get back into the world, and of course I'm sure it didn't always work, but that held a lot of value to me that people want to be part of something and contributing to something that is not strictly a transaction. That's not everybody, but there is value there and that's also value to the brand.

Carl:

I understand that, especially because Patagonia is such an emotional brand right. Where customers are very attached to the products and the idea of the brand, so I totally understand that we also looked into repair, which obviously is something very manual, very labor, cost, intense and most of the times not a profitable business case yeah.

Alex:

So patagonia was. It is well known for what they call their ironclad guarantee, which means if your item fails after they call it reasonable use, they'll repair it for free. They want to make sure that thing lasts you for for what you want to use it, for what sport or whatever you want to use it for they're pretty loose on it, meaning they're very, very they stand by it. So if you have something for 10 years that you say, hey, this is not waterproof anymore and you believe it should be, they will repair that, and that is really in their mission of one. If we don't repair it, you'll probably throw it away or give it away. Maybe you'll donate it, but we know donations don't always end up in the right hands. So they'll repair that thing and while that specific act has a cost, you're mailing it to them.

Alex:

They have an amazing repair team in Reno, nevada, where they have, I think, one of the biggest repair facilities in the country.

Alex:

They know that if they don't do that, you might kind of not do the ideal thing with it, and so that cost it's a lot, it's very expensive. To do that they need to have a wall full of materials. They have, I think, like a hundred repair and seamstresses there. But in the longterm, and even anecdotally for me, I've heard so many people just be like I just went to the store, asked them about this repair, more like how to do the repair, and they took it from me and they sent it back to me in four weeks and it was better than I had it before. So there's this really really, really strong brand loyalty that comes with that kind of thing, whether it's because they connect to the mission or because they've kind of understood that, hey, I'm going to pay more for this item up front, but it's going to pay for a future repair, it's going to pay for, like, the enduring power of this garment and when that takes hold it's super strong for the company. Patagonia, I do think, is, you know, a very good model of that.

Carl:

Yeah, I'm sure about that, and I mean Patagonia is so well known for its mission. Do you think there's a clear business case at Patagonia about that repair service in general, or is it more like it's our mission, it's our values and we are certain about? You know what you mentioned brand loyalty, etc. Or can you really put a price tag to that?

Alex:

I think I have not done that math. I don't know if somebody's done the specific math, but I'm sure you can make a business case for that. I think everybody in their hearts which is maybe more Patagonia brand thinking than most business thinking, knows that that thing has provided a lot of value to Patagonia and produced more sticky, more loyal and new customers when they learn about that kind of thing.

Carl:

And tell me a bit about, like, your experience with Trove. I mean, you analyze Trove very well. You decided to go for a competitor, in a sense, to Archive. Where are the differences between both companies?

Alex:

Yeah, I think Trove started the branded resale movement, if you will. So they were in partnership with the brands I've mentioned, figuring out how this whole thing worked. They built our worn wear site, they did the logistics and everything in between, and so that was really important to get brands into the space and everything in between. And so that was really important to get brands into the space. And one of the reasons I was so compelled to, like, stay in the resale space was because that experience led to a lot of phone calls from brands that just said hey, what are you doing with Walmart? What is this thing? How does it work? Can we do it? And through those brand phone calls I learned like, wow, no brand is the same. Everybody's questions are slightly different, they're focused on the different aspects of resale and they just don't understand all the aspects of resale.

Alex:

So my personal brain went to wow, there's like a huge opportunity, interest, this wave swelling about this industry. We're going to need to support them in different ways. And so where I also admittedly have least experience but thought there was the biggest opportunity, was we need software technology that meets brands where they are and meets, is up to par or better than what they're using for all their other systems so in-store point of sales, all their ERP systems, all their supply chain planning like we need something equivalent there for resale. And so that's where I was really interested in, like focused on that piece of the world. This was during COVID, so I was, you know, drawing my own business plans.

Alex:

Thinking again my personal journey, I was like I really got a very small piece of the operating bug with Warnware and thought, okay, maybe I start something on my own someday and fast forward. Ultimately, there were a few smaller players popping up in this space who seemed to have a similar opinion of me as, hey, there's this really strong software opportunity for branded resale. And I came to the decision, hey, am I going to compete against these people or join one that I feel is very strong? Ultimately, I joined Archive because I really liked the co-founders and felt we had a very similar vision and complementary skill set. So, yeah, it was a lot of different factors both personal, professional, industry-wide that thought, hey, I really want to build something from pretty much the ground up because I think this space is right for it, and that led to that change.

Carl:

And I mean it looks like you bet on the right horse with Archive just raising 30 million in Series B. Congrats for that. Where does Archive stand nowadays?

Alex:

Yeah, so we I mean a lot of things that you alluded to is resale is great, but if it's not a good, strong business case, it will only be great for so long before other things on. And I think resale has shifted from or branded. Resale has shifted from an engaging experience for users where we will figure out the stuff on the backend as a brand to, okay, it's a great experience for users. But now, because there are so many, both from brands and you know the Poshmarks, the Vinteds, the Vestaires there is a level of expectation that consumers have, and so brands have to meet that. But then when you think of resale, it is not just an initiative, it is not just an e-commerce thing or a program. It involves a lot of different stakeholders at brands. So the accounting teams, the operations teams, e-com, marketing I haven't said sustainability yet, but that's obviously one of them but really those other folks are crucial and so when we have conversations with brands, it is much more sustainability plus some of these other folks, because oftentimes sustainability teams alone cannot drive all the impact that we want to have and that we believe resale can have. So all that to say is a lot of our platform is not just a pretty user experience. It's giving the power to all those different stakeholders for them to get what they need.

Alex:

I just remember at Patagonia working with very understanding and flexible tax finance ops, folks that are saying, all right, right, this is getting big, you know, how are we going to get this report? How are we going to do this when it gets bigger? And so those are the questions that really stuck with me, and so at archive, we're really building the software that says hey, you know, when this thing scales, this isn't going to be a blocker like you're going to get the information you need when you need it, in the form you need it, and so that is through integrations with ERP systems, again really providing the information in the way they're used to getting it, so that they see this as all right. We've just added a channel. We're not doing this whole new side business that we got to figure out and add it to our current day job, and that's where I think we've been really effective at brands.

Carl:

I think you're very right to immediately include all these different departments within a company. One of the learnings that I had was that this new division of re-commerce often from a marketing point of view, a sales point of view, cannibalizes the other division trying to sell new products when it comes, for example, like who gets the space in the newsletter or in our marketing campaign? Yes, we want to push re-commerce and there's a space for it, but at the same time, we can only send out so many newsletters or do so many campaigns and we still make more profit and money with the setting new clothes. How's your experience with that with your clients?

Alex:

yeah, I think. Um, it varies. So there are some groups that we from day one. They have a a plan in mind for how they're going to speak to their customers. Others don't have any, and so we're really supporting them.

Alex:

On where the plugins, what are the most effective ways to speak to your customers, either to generate supply or generate the demand we want? It all comes down to making a profitability case. So we have a handful of cases where the profit margin of their resale business is better than their new business, and so for brands like that, you know, we just let them know and let their leadership know. This is what you're seeing. You can make a decision and then, from a profitability standpoint, that helps with their decision. So I do think it comes down. They're thinking in business terms, they're thinking in their KPIs and we want to present the resale impact in those same KPIs. So I totally remember my Patagonia days where we were fighting for an email mention or a social media post.

Alex:

There's pros and cons to having a subset of folks who really care about the secondhand piece. That may not be your full audience, but are more higher conversion, higher click-throughs on things like that. But then there's also just like the tactical. So what's nice about marketing for something like supply is you know those folks have it right. You can really mine your data to say I know these folks have winter coats, if that's the thing, and be very, very specific to the exact coat and to the exact person.

Alex:

If you sell that thing, you can get this much Are you still wearing it? If not, we can help you list that thing. So it can be really specific. It can be free, and those are the tactics that I think marketers or e-com folks at brands are like wow, you know, we hadn't really thought of it like that, but if you give us that playbook, you know we can initiate that pretty quickly and oftentimes like I think resale is one of those things build it and they will come. Supply is certainly a huge thing. That fits that quote where you need to have it, and so when people come back to sites and it's the same as last time, that's going to have a really negative effect on your experience, and so we always start with making sure you can have that supply. And then the demand piece is relatively straightforward for the brands that we work with, but you got to really be smart about that supply and then the demand piece is relatively straightforward for the brands that we work with, but you got to really be smart about the supply.

Carl:

Let us go through the whole process of re-commerce maybe once and I think that helps us to understand where archive comes in but also a bit the market and your learnings about the market. Let's start with the supply how to unlock supply. You have your experience with Patagonia, which is supplied by Gore Gore-Tex products. I work with Gore-Tex. I worked and talked to a lot of brands supplied by Gore-Tex. We often ask ourselves where brands supplied by Gore-Tex.

Carl:

We often asked ourselves where are all these Gore-Tex jackets, because they're very valuable, very durable. We couldn't find them so much on the peer-to-peer platforms, so we were really wondering do people have them in their closets? Do they wear them for 20, 30 years until they have to throw them away? Do they just lie around in their closets? Do they wear them for 20, 30 years until they have to throw them away? Do they just lie around the closets? And? But on the other hand, there are so many new products sold every year that somewhere there must be, but they are not on the landfill as well, so nobody really seems to have access to them. But if you can unlock that supply of really valuable, resellable products, it will be amazing.

Alex:

what is your take when we start the journey from the whole supply side yeah, yeah, no, that's interesting and it is hard to get market numbers of of supply. Um, we do. You know, we analyze other marketplaces, different things to understand like, how big is this resale opportunity? So buyers and sellers, that includes. Yeah, the big marketplace is seeing what's on there, what is selling.

Alex:

The other thing that's interesting to your like, is it all sitting in people's closets is we have a fair amount of anecdotes and I think this goes to something with the trust with the brands that consumers have versus a marketplace, which may feel overwhelming. And, by the the way, I don't think brands are going to like run all the marketplaces out of business. I think people want different things and so they can work in harmony. But we have heard a lot of anecdotes where folks are like I've never sold anything before. It was really straightforward on the brand site and I think that's one. The actual listing experience or trade-in experience. It's also being able to work with the brand, with the product and customer data that they have to make that really straightforward. So, rather than having a blank piece of paper, you have a piece of paper that's 90% full and you got to give a few extra pieces of information. But that's really awesome that people are learning about resale through brands, or at least learning about a way that it hits them to take action and brands can hold their hand and brands can kind of gain trust through resale. So, yeah, I think that's where you know.

Alex:

When we pick brands to work with, we are trying to think, okay, how long have they been in existence? Are they a young but really growing brand? So there is enough inventory to be sold? Um, are these the type of products that people buy once and then they just keep for their whole life and that's amazing from an environmental standpoint, but maybe not the best resale case? Um, so I think you know one challenge that we have as a company is picking or working with the right brands, because, one, the product needs to be suitable for resale, the brand needs to be really all in on it, because ultimately, they are pushing the email button, not archive, in most cases. So we're relying on their commitment to resale.

Alex:

But, at the same time, the cool thing is if resale branded resale specifically grows as fast as it is currently and as we think it will be in the future as fast as it is currently and as we think it will be in the future, it will make it really hard for those cheaply made products to succeed in this space. And if consumers start thinking which anecdotally we've heard, but it's hard to put a finger on it say I'm going to buy that new Patagonia item because I know I can sell it in two years for half as much Now, you're really getting people to behave differently and they won't buy that cheaper product because they can afford it today. So yeah, a little bit of a ramble, but I get really excited about the effect that branded resale can have and the role that brands can play in getting people to think differently beyond their first purchase from that store.

Carl:

Let's say I'm a brand and I approach you at Archive and say, like I want to work with you, I want to build up my re-commerce store. What exactly do you support me with throughout the entire journey?

Alex:

Yeah, that's a great question and it really ranges. We want to be really flexible. I should also say we can't do resale alone. I think resale is just really dependent on a lot of different stakeholders at the company outside of the company, especially for global brands. I mentioned we are a software company.

Alex:

We're only software, but for a brand like Lululemon or the North Face, we use logistic partners that help process those items. They represent us and we support them with technology. So our software goes to the brand associates at retail stores, it goes to their e-commerce folks, it goes to their buyers and sellers, the customers, but it also goes to warehouses to help process these items in the right, most profitable way. And so all that to say is brands can work with us in different ways. Some brands say, hey, we have items in our warehouse that have been returned. They are too damaged to sell as new. We want to list them directly from our warehouse, and so that might be one way that we work with them and say great, we can help you process those. If you have repair capabilities, we can help you kind of track that with the platform that we've created so that you're only making smart, profitable repairs. Or we have 3PL partners, so logistics partners, where you can actually mail them in bulk, in smaller boxes, from stores, individually from customers, that go directly to our warehouse partners that use our software to process them for resale.

Alex:

And then, lastly or finally, if brands say hey, we know a lot of stuff is out there. Our consumers are really digitally savvy and want to buy and sell on their own. We want to have a peer-to-peer site great, and we will kind of take them through their options. Some brands come with a very strong opinion on what they want. Some brands are correct in that Some brands are. We differ in opinion on where they think we think they should start, but ultimately we say, great, let's find the right starting point, meeting your customers where they're at, and I'm not sure if our listeners can hear the baby crying in the background, but I think it's very charming, to be honest.

Alex:

Well, yeah, that's why we have to do this right. I mean, it's really building a world for the future generation.

Carl:

Exactly, we do it for the next generation.

Alex:

Hopefully it's very different. When my kids that are all under five are, I think about when they're my age. What's it going to look like? And hopefully these strong circular brands survive more than some of the other brands.

Carl:

Yeah, let's hope for that, and I think we're both working for exactly that goal. So I understand your software is a very, very valuable tool to enable re-commerce right. At the same time, I don't know how it is for you, but I feel a lot of the reasons why re-commerce right. At the same time, I don't know how, how it is for you, but I feel a lot of the reasons why re-commerce is not yet so widely accepted as a profitable and scalable business model, because a lot of operational topics and I mean you don't do the logistics yourself, like I think Trove does and Reverse Supply does or did, which is now Trove Europe, I believe but I'm sure you have also a lot of experiences with your partners that you're working with. What do you feel? What do you see are the biggest cost drivers and biggest reasons for that fact?

Alex:

Yeah, I mean I think that was one of the strongest things that we discussed early on in Archive's life was you can't make smart decisions with products if you don't know what they are. And so I think in phase one of resale, you'd send a box to the warehouse. You'd say, hey, list what you can repair, what you can clean, what you can. When it's on the site, we'll kind of cross our fingers that it sells. That is nice when you're testing things. It's not nice when you have tens of thousands of items that you're trying to sell through in a smart way. And so one, you know, the area that we're really targeting on profitability is identifying those products as early on as possible in the journey, so as soon as when they're traded in at store, which means we could say, hey, this used to be worth $20. We recognize it's not selling, so it's going to be worth $12. Now, maybe, or maybe we don't accept it as a brand. So those are parameters that brands can set. And then, even when it comes to the warehouse, our warehouse partners are really strong, but we really empower them with the technology to say, hey, they say this thing needs to be repaired and we pull in the information and say, okay, great, we know that your repair, based on what you're telling us, is going to be, let's say, $15. This thing actually will only sell for $15, let's say so. Then we pull in the brand rules and we say, okay, does the brand want to get through as much as possible, or as many items as possible to the end consumer, or are they really focused on profitability and will only want to, let's say, 20% profit margin on their sales? So, based on that, we can say, okay, logistics partner, don't repair that or repair that thing, but you're only allowed to spend 20 minutes on it based on your repair costs.

Alex:

And so that's a very nuanced example to say brands are making much smarter decisions about what they are selling and what they're buying back when they have the information that we can pull in and that we can feed to the logistics providers or feed to the brands.

Alex:

And then we can reflect on with the brand and say, hey, we're recognizing that you're repairing a lot of this type of item and it's costing you X amount. Do you want to continue to do so? Or do you want to say, hey, maybe we pause on that, maybe we pull back on the trade in value of those items. Or, in the best case, let's tell our product team, like are they aware that this type of product is coming back with a very similar repair every single time? Like, maybe there's a flaw in our design. So circular becomes much more circular when you can feed different groups the right information to make smart decisions. But all that leads to a much more profitable initiative when you can make smarter decisions and can only incur the costs that you are actively trying to incur, versus a hopeful or exclusively mission driven initiative I.

Carl:

I also faced product identification as one of the biggest challenges. Yeah, how do you? How do you best identify a product?

Alex:

Yeah, and that we work closely with brands on that too, because each are different. Their labels are different. In the, what we all hear about is digital product passports and those are lovely, but those are pretty new. Not all items have them. Even within those initiatives, their products are tagged differently, with different levels of information that are useful or not so useful to resale. In a perfect world it has all the product information. Every item is unique, so the item that has a repair is different than the item that does not need a repair for for when it ultimately sells.

Alex:

Um, but yeah, we work with brands and we work with brands products that go back 1, 5, 10, 20 years, and in some cases brands have even go back one, five, ten, twenty years, and in some cases brands have even different, uh, a brand name 20 years ago and so we really retroactively build their product catalog with them and then even build it up because, as you can imagine, maybe 10, 20 years ago they didn't have product images or don't anymore have product images for those.

Alex:

So we will continue to build it almost like an archive for the brands and that all gets used to help customers if it's a peer-to-peer program or the logistics partners identify that item and then knowing that we're never gonna identify 100% of items absolutely perfectly, we have a kind of a module where brands can still sell stuff that is, you know, worthy to be sold but maybe we don't have.

Alex:

That is the sky blue Wayfarer jacket thing Working with brands to say, hey, we have this essentially like a grab box or something in a digital form. But we're also starting to do a lot more with brands in stores. So we did a retail pop-up with Lululemon, and that's the kind of exciting or creative thing about resale is for stuff that can't be identified but is great, you know, I would buy it. Let's put that in front of a person. They don't care what the name is, they don't care what the color is, they see it. And so, as branded resale becomes more multi-channel, that's really exciting because just the way normal brands went from retail to e-commerce to wholesale, we don't see why that couldn't be the same with branded resale.

Carl:

And identifying a product for a brand is not, as you mentioned, not always possible, but it's way easier than for a retail store like Bergside in our case in Germany, which sells all different kinds of products and really has no further information about the product itself unless it was sold in the store. So here we realized if I buy something at the store and three years later I want to return it, and especially if I bought it online, so it three years later I want to return it, and especially if I bought it online, so it's still in my, my purchase history, I can give it back. And then the store immediately knows okay, this is exactly that product, same with the brand. If I buy it at that brand and best case, online, so it's digitized, then I can just return it. Or or the brand has other ways to identify a certain product.

Carl:

That obviously is the best way, right? Because yeah, um, in order to sell it again, right, you need to put it back on the, on the recommerce website, where the pictures and the product description and all and and so on, and a lot of times even the same exact product produced in one year and then the next year can still contain different materials. So it's super complex, um and again. As a brand, it's a bit easier than if you're multi-brand store, but how important is it or how is it now going forward? How do brands do it so that you don't have to recreate the whole database for them?

Alex:

yeah, I mean it, and recreating the database, as I mentioned isn't isn't a manual process, it's more.

Alex:

You know, I think we have a super strong engineering team that works with the engineering teams of brands to get that information in the most digestible way. But for the customer it's really almost like a reverse buying process, where you have that item, maybe that jacket and now you're trying to find it on the site to sell it, and so even if you don't have the order history, even if you don't have your receipt, we try to make it really straightforward to find that item and you say, okay, that is mine, and then we pair it with the product information that the brand has given us and that can be, as you know, typically it's really robust, as you can imagine. The more recent years is more robust than past years, but that will give you that nuance of hey, two years ago we made this with nylon, three years ago ago we made it with um, hdpe or whatever um. And that's where, like, as a customer, I might, I have no idea um, but if they give us the right information, that way, um, we can, we can identify it and if that gets sold immediately to a buyer, um, we maintain that relationship. So if something is way off, which it's could be it's human error, we'll handle it. And then, if it comes to a logistics partner, through a more of a take back program, we can build that up. And if there's a mistake you know, typically it's not a massive mistake where we need to make a big change, but that can happen, as at the logistics center, to make sure we are listing the item in the correct way.

Alex:

So the huge advantage is working with the brands. Sometimes it is as manual as look at the care label and it's, you know, seven random digits that need to be typed in. Sometimes there's a QR code, um, but other a lot of times, especially with these bigger brands that we work with, a lot of product knowledge gets, gets built by processing all these products, um. And then, lastly, you know, if we really can't figure it out, we always have chains with brands that say, hey, we're going to snap a quick picture with our camera or with our phone and say, hey, anybody on your side know it, and brand customer support teams really know their brand. So oftentimes they immediately can be like oh, that's the 2005,. Blah, blah, blah, and then we can do it that way be like, oh, that's the 2005, blah, blah, blah, and then we can do it that way. So that's hopefully a very small percentage, but that team aspect of it is extremely helpful because obviously the brand has the knowledge.

Carl:

Right, and it still sounds today like a very manual process, right Like? I hear a lot of startups working on ideas. But, like, image recognition, is that a thing? How do you look at that as part of a solution?

Alex:

yeah, that's definitely um, something we're looking into, both from kind of moderating what people are posting and more of like a peer to peer standpoint, but then also merging with the product information. So, again and for the same reason, working with the brand, we're able to feed certain pieces of information to improve that result. I think most places where I've seen image recognition for resale or for apparel specifically is a kind of category of garment and like really helps right. It still could really help the vintage or poshmark listing process where you do have that blank slate. But when we're trying to get that, you know, I don't know how an image can tell it's nylon or hdpe. That that's something where we need to work with the brand to add that to whatever that image is is recognizing. So something we're looking into. I agree with you. I think there's work to be done and I'm excited by where it will go. But to get that very specific, you know, robust product page that buyers expect and that is required is where it's really helpful, obviously to work with the brand.

Carl:

And I assume it's also one of the most efficient ways, today at least, when I'm able to go my account at whatever brand and see my purchase history and can say, okay, this is the product that I want to send back or sell, Because I probably get an instant pricing suggestion and the re-commerce operations. Basically, they immediately know what exact product is coming and can can relist it yep, yeah, that's that's totally right.

Alex:

That's that's the most helpful um, if that's a campaign experience or even in store, we have certain kind of kiosks where folks can do their trade in on their own. Um, and then, yeah, the brands have control over those parameters. So if you bring in New Balance shoes or North Face item or Lululemon item, each brand has a different way that they want to price those goods for the buyers. But, yeah, that's totally right. If you know what you have, it becomes much more accurate.

Carl:

Do you also see product identification as the biggest cost drivers and hurdles for re-commerce and if so, how much more efficient will the whole system be once a digital product passport is really widely spread?

Alex:

Brett, I'm not. So it's a cost. It's not our biggest cost. The biggest cost is ends up being the other logistics repair is really hard to make extremely efficient.

Alex:

Like we have good partners, I think it's helpful when brands understand that we want to repair these things to a functional state. A lot of brands have this mentality where, for a warranty, for example, if we repair something, it needs to get to the like initial sold state, which is just a level above resale. Like that is lovely, but people are okay buying something that it looks a little bit worn as long as it works and so that okay, now we've been able to reduce the cost of repair based on that. You know that that that those parameters, so I think it's those heavier, more like value added logistics steps that are the biggest cost impacts for resale, because it it's dirty work, it's not easy, it's not.

Alex:

You're getting a box of a thousand items that you just list on the site. They all are exactly the same. Product identification is one of them. I don't think it's like the most burdensome, given the way we do it and the given that we try to take, you know, most of the guesswork out for the logistics partner. So it's not something that we, that specifically is not keeping us up at night. It's more trying to make these, more getting the supply, getting the right supply so we don't want 100 items that need a repair that will hurt profitability and then trying to support the three PLs, the logistics groups, with that software so that they can be more efficient, which ultimately would reduce their costs.

Carl:

How much would it be, then, helpful to have a digital product passport, because there's so much talk about digital product passports.

Alex:

How much is it really going to help? If done in the absolute best way, it will help a lot. It'll be great. It'll be. You know, rather than taking an item out of a box and identifying it, that's the world where you scan the box, the barcode, and you know, hey, there's 100 of these 100 unique items in the box, and so it certainly will help speed up the process.

Alex:

We've spoken to brands where they say, hey, we're using a QR code or digital DPP on our items and we find out it's like one QR code for the entire line of items, so there's no unique factor in these. So it's not really a unique passport, it's more of some sort of tag, and it's only for a small subset of their product line. So I still think we're pretty far away from the majority of items having an absolute unique code. There certainly might be issues that come with being able to copy a code like that for fraud and things like that, and then, by the way, there's already billions of items that already exist in the world that probably will. It probably won't make economic sense to retag them. So I'm hopeful, but I'm not. We're not building our business around that. If that, if that makes sense, yeah.

Carl:

It'll help. That's probably smart. Yeah, yeah, that makes sense. You mentioned logistics being basically the biggest cost drivers. All very different kind of operations. What can be done, in your opinion, going forward, to make re-commerce a bit more profitable and scalable?

Alex:

Yeah, I think you know Archive is a mission-based company. We are founders, and myself I joined because we really want to change the way people consume or don't just consume but use products and obviously we think brands have a huge stake in it, and so it really helps if the partners specifically in this case logistics partners are aligned to that in some way. Partners are aligned to that in some way. We've spoken to logistics partners who are, you know, think of your big traditional, maybe the folks who drop off at your doorstep, and they have a very successful model that's very efficient, and resale is a really scary to them because, whoa, we don't know what we're going to get, we don't know what needs to be done to the products. We need to, you know, kind of make those decisions real time. It's a new logistical process for them. We see those folks starting to really think about what role they can play in resale, either because they really believe in it or because their brands are asking, hey, all our returns go to you anyways, then you send them out to somebody else. Can you do some of those things? Think on that. That gets me really excited that even the big logistics players are thinking about some of these difficult, slower but value-added services for items. And then we you know a lot of our partners. So tursis is actually a company based in denver that we were investors in at patagonia. We worked with at patagonia.

Alex:

Now we work with at archive and they started with a liquid CO2 cleaning technology which was waterless cleaning. It was amazing for reducing energy and water consumption and capturing microfibers and they kind of evolved into this space of hey, we can also clean down jackets really well, like better than any other kind of cleaning. That led to repair and now they're like the backbone to a lot of re-commerce businesses that we work with in partnership. But they were a really small group, saw the opportunity, mission-based, where they really felt that you know doing. The work that they were doing was going to empower brands and keep gear in use and overseas. You know we work with certain partners in the UK and Germany and same thing they've been in business for decades. So they were either tailored to maybe the rental market and now we're seeing the resale opportunity. Some are more traditionals and see the resale opportunity.

Alex:

So I think it's been really exciting to see these businesses. They're not all startups like the space is new, but the services that serve it aren't necessarily new. It's repairing gear, which is an old skill, and so it's been fun where we're not really, as we engage in these partnerships, we're just holding hands and educating each other on what we do and saying, hey, do you see this opportunity like we do, because it is going to be difficult, but we're both going to be providing our set of services and we think if we do it right, we'll really well position ourselves for brands and in the market. And so, as you say, like your listeners, like I, think this can be applied to a lot of different markets, whether it's electronics or obviously we've seen in, like the auto market.

Alex:

We think that's a good model to where brands have gotten into the second hand space or pre-owned space. But it's, you know, the the expertise is out there a lot of times. When it comes to logistics, it's more getting them to see the light and getting them to get on board and being willing to maybe do a little learning with us before it gets as efficient as right traditional logistics, if you will I want to pick your brain on two thoughts.

Carl:

You just mentioned value-added services and also the technology industry. So there are two thoughts, two just ideas. I just use it as an example of Gore-Tex, just because it's a well-known ingredient brand and it fits. The one thing is do you think customers are willing to pay more for, let's say, a recertified product? So if I, I can you know, on ebay I can find, let's stay with that gore-tex jacket.

Carl:

I can find a gore-tex jacket. I don't know the quality of it, I don't know if it wasn't in a smoking household or or something, but then I could buy it for a bit more and then it's gore certified. I get, I don't know another five-year guarantee, waterproof, etc. So that's the one thing. The one question is, let's say, recertification. The second thing is if you buy especially and not all of the products in e-commerce are like that but like you buy a gore text jacket for 800 euros or a thousand dollars or something which is kind of like an iphone, and in iphone you have an apple care right, you pay 200 extra and you get, I don't know you, you get certain things for free and there's a certain insurance, but you can, you know and let's, let's put this towards uh, this idea towards a gore-tex jacket.

Carl:

Let's say, I buy a gore-tex jacket, I pay 200 more, and then I can every year, let's say, you know, get an again the this, this whole washing program of my down gore-tex jacket for free, and if it's breaking I get a cheaper repair, and then I can even resell it. And the next person can also maybe buy a used Gore-Tex jacket. But then, even with the used Gore-Tex jacket, buy or like also have GoreCare or however you want to call it. Yeah, I just make this up. This is, by the way, not like aligned with Gore-Tex. So you know this idea and then, even with a used jacket, I can have this program and I can, you know, take advantage of it. Like, is there a way that a customer is willing to pay more for these kinds of services, which then also allows re-commerce to be more and more widespread? So, do you think these kinds of ideas or maybe you have other ideas do they make any sense, or is the customer not really interested in anything like that?

Alex:

Yeah, I think your first point we've already proven. So we've seen that with customers where what we thought the average selling price would be based on the market, we've been above it. And so we believe that's because, hey, buyers coming there with more confidence. So it's not an official certification program, it's just the fact that this garment is being sold on the brand site that they trust. Hey, they're not going to sell me a piece of junk, they're going to look at it, they're going to inspect it, they're going to make sure it's up to par. And that results in a higher price. So that's been really exciting. That's something we also tell sellers to say hey, there's opportunity here. If you position it the right way and you've taken care of your garment like, you will get the most for your money here.

Carl:

And buyers are willing to pay that because it's in that brand ecosystem. That totally makes sense. It's similar. Again, looking at the electronics market, do I buy my used iPhone on eBay or on refurbed or these refurbishing sites where I know, okay, it is clean again, you know, disinfected, it maybe comes with a new battery, um, and and, uh, you know, it comes again also in a nice box. Yeah, it's kind of an unboxing experience of something new versus whoever dude had this phone in his hand and now I get this, you know, all dirty, whatever, maybe broken product, um, and I'm willing to pay more for that totally, and I think you know when there are issues, the brand steps in right.

Alex:

The brand has a brand profile that they want to make sure is trusted, and so we help that in this in the few cases that that happens. But yeah, it all comes together and just like that. Some brands have special packaging for their secondhand program, which is fun. I'm excited to see, like I said earlier, how far brands take that. But yeah, and then the second piece. That's an interesting one.

Alex:

I think I wonder, from a new standpoint, if people are like hey, if you're going to, if you believe you're selling me a durable product, maybe that should be embedded in the price.

Alex:

That's probably kind of the approach Patagonia has taken, but I do really like it.

Alex:

For the secondhand item, where, just to boost that level of trust which is, yes, you're buying a used product but we really want to stand by it and we really want to make sure that this gets the longest life possible, I think there is something there that could be an interesting kind of subscription model to repair or cleaning or both.

Alex:

Yeah, I do like that Because I think that, at the end of the day, what I want is that people change their relationship with stuff that's something we always said at Warnware and that is not consumption I'm trying to be mindful of saying consumer, but I'm not thinking of a better word where people are buying, using and then relieving that use by giving it a different life to somebody else. And it is a mindset, it is just something that the second you buy it you say I'm not going to have this thing forever. So what is that next step? And hopefully these reuse programs become so well known that they just know exactly where they're going to go to sell it in the future and have a decent sense for, if they do the right things, what they're going to get for it.

Carl:

Does a brand need to have a certain size in order that it makes sense to go into the e-commerce business? I talked to several brands which are actually not that small, but they say, yes, we could maybe reach out to our customers for a take-back program and we could identify products, but we are not able obviously not for the whole operations therefore you have providers but also to actually resell the product, because we don't have, you know, that big customer audience in order to resell it. So, rather than your client of archive would rather be a retail store. So I'm sometimes thinking, hey, let's, you know, have one retail store and several brands working together and the brands can take back the product identified easily, have a good customer relationship and so on, but the whole selling part is then maybe done by the, the re-commerce store. Does it make sense?

Alex:

yeah, I think it could. It could make sense. I would. We've been surprised by some brands who and admittedly I'm not like a super brand savant, but I'm like I don't know, I've never heard of that brand. And we've been surprised by some brands who and admittedly I'm not like a super brand savant, but I'm like I don't know, I've never heard of that brand, and they've been really successful and I don't know if that's because it's not because of their size.

Alex:

I think it's because of their engagement and their community's engagement with the brand. And so we also don't see always that it's I buy new or I buy used and then it's done. There is this kind of thing that I discussed about Warner, which is, once you buy used, all right, now I can sell used and then I'll buy another. It does click something in this secular engagement where folks like the program, they feel like they're part of this thing, versus it being exclusively transactional, and so we do see a lot of repeat buyers and sellers on something like that.

Alex:

For the brands who think we're not big enough, I don't know, of course, maybe that will be the case for some, but I would challenge like some brands would be surprised. Sometimes it is helpful for us to show them what's happening on the other sites, to let them know. You know there are people engaging with your brand. You have zero control over it and there's value there. So I think in a lot of cases we talk to brands where we enlighten them on what's happening to their brand outside of them. But I do think that's where, you know, an aggregated kind of marketplace for secondhand goods could have value in the transactional front, but it's a little bit different than a brand, like you know, providing a circular experience for their customers. And that, at least for now, is where we're really trying to target, like creating this community, this ecosystem that complements your mainline brand and the products that you really want to stand by.

Carl:

that complements your mainline brand and the products that you really want to stand by. I really hope some of our listeners who are brands take this as a motivation to reach out to you Obviously your contact will be in the show notes and to maybe feel okay, I'm small, but maybe you know, let's get inspired, maybe there's something there and it could elevate the image of an entire brand, um, and the customer relationship.

Carl:

One last question I have for you because obviously I'm based in europe, you're, you're in the states. I do talk a lot to the states and in a lot of these best practice cases like one where from from patagonia, but even on running uh, tried something out in in the us and only in the us, I think one where is still today only a, an american product. So there's a lot in the us happening. At the same time, I have the feeling that europe is a very strong re-commerce place. People love to buy secondhand. I even hear in Europe even more demand than supply, whereas sometimes what I hear is in the US there's more supply than demand for secondhand. Maybe Patagonia, in one way, is also like a very doesn't represent the entire country because it's such a specific brand. So what is your take on the US? Also, what's your experience with Archive going into the European market and the American market?

Alex:

Yeah, I mean at a high level. There are total nuances that we are learning. So we have programs in the US, canada, the UK and then a handful across Europe and we are learning the differences there and some of them are just really basic on customer expectations for payment methods or return rate expectations. I think where you are is you know big culprits of high levels of returns in Germany, which is you know if that is the same expectation for resale will add a huge cost and we don't see that, by the way, in the US or in most of our programs where the return rate for secondhand is higher, which is sometimes a question we get asked by brands. I think people know what they're getting in the resale program, so they don't you know they're not disappointed or something like that when they get a secondhand item. Yeah, I think where we see the consumers and one of my beliefs is the consumer feels like they are there in Europe, in different countries in Europe, where they are really excited to engage with secondhand items. At least from my expectation or from my understanding Most of that happens on the marketplace. I feel like a lot of the reservations happen from the brand standpoint. They end up being the blockers for what their consumers want. Perhaps it's just a more conservative mindset about cannibalization, which is a question we used to get a lot. We don't get it much anymore, definitely not from like American brands, maybe a little bit in like the super luxury, high-end brands. But I think perhaps that's something that we felt as a blocker in Europe is brands standing in the way and being unsure about it, maybe wanting to dip their toe into it, and so the way we've entered it is mostly by country, where a brand says, all right, we want to do this. We're going to pick a country, maybe not our biggest country to start, because we want to learn a bit about it and then, if it works, expand it to a large country. So I'm excited. We will be in Germany quite soon with a nice brand that I'm excited about, and we'll learn if that return rate is as high as what some traditional e-com returns are like in Europe.

Alex:

And that's the last thing I'll say is logistics is a thing. It is difficult. There is some cross-border stuff If it's into Switzerland or even across border. There's languages, there's currencies, and so that is stuff that has to be grappled with. Some brands are thinking more country by country. But many are saying we have e-com in Europe, we want resale in all of Europe and that's pretty straightforward if they're taking back items and selling it from a central location, which we can support. It's a bit more challenging if it's a peer-to-peer thing, where a person in Spain wants to sell to Switzerland, wants to sell to France and then back to Denmark or something. Those are just logistics that need to make sure are figured out.

Carl:

Yeah, like, depending on how you look at it, europe can be a very fragmented market, and one thing that you just mentioned, I mean it's very known that germany has huge return rates, which is obviously one of the the worst things that we can have on the cost side, but also on the environmental impact side. I've been once part of an investigative journalism project here in germany called sneaker hunt, where we track down even a new product that we bought at nike and we returned it with a gps tracker and obviously I really believed it was a valuable product. I don't know 150 sneaker and we returned it and it never went back to you know, the warehouse immediately was shredded in belgium and and oh man um, pretty horrible.

Carl:

Yeah, I think that still happens today because returns are so expensive to handle. It's a huge, a huge problem, next to the logistics impact, but also the the product impact with with returns. Why do you think in the us, the return rate is so much less? Do people just buy it and if they don't like it not only now, by the way, not only now for re-commerce products, but generally do they just buy it and if they don't like it, rather just throw it away? Or are they just buy it and if they don't like it rather just throw it away? Or are they just more satisfied with?

Alex:

whatever they buy. That's a good question, because I do remember like I don't know if you remember the old days of Zappos, where they were like the first to have free returns, and I think you know I'm throwing her under the bus I think my sister would buy like three pairs of shoes knowing she was going to return two. I don't think I have. I mean, I'm in a. I might be in a bubble in my sustainability friend group and everything, but I don't know many people who do that anymore. I don't have a good explanation for why the return rate is so much lower in the US than it is in, say, germany. I do know that brands are starting to think about hey, free returns was great. How do we place a bit more of a cost burden on the consumer for returns to disincentivize it? I think mostly that's driven by like a cost, not an environmental standpoint. But yeah, I don't really have a good reason for why that is the case.

Carl:

Okay, then I'll take that with me and maybe I'll dig deeper into that. It would be very interesting to see if, basically, the customers in the US are more satisfied with whatever they buy, or if it's just like you know, let's just throw it away if we don't like it.

Alex:

I'm very curious, knowing that I have a lot of German relatives that are very specific in what they want. It could be a version that, like if somebody in Germany doesn't get exactly what they want or doesn't fit perfectly, they're just much more inclined to say I'm not going to pay for it. Where there is a bit of that in the US, or the opposite of that in the US, where somebody says it's good enough, I don't think they would just throw it away if they bought it it, but they probably just make do and are slightly less satisfied with that end product. But they keep it anyways.

Carl:

Hypothesis we're way over time. But one last thing to add here and I would love your input what about asia, like we talk about? I mean, especially we talk a lot about? You know all these different regions in Europe, asia and the US. How interesting is Asia for a re-commerce market?

Alex:

Yeah, we've spoken to a bunch of brands about that and Asia is obviously huge, so the different regions have different implications. A place like Australia seems to be starting to think about it. One of my coolest trips at Patagonia was to Japan where they had, interestingly enough, the same number of Patagonia stores in Japan as they do in the US. So for that like a model could be much different, where it is much more in-person and they were really on board with like vintage Patagonia stuff. And we see that across some of our other brands, like the north face, where there's a seems to be a huge appetite for and this, this, this evaluation might be a little bit outdated, but like the vintage product which is different than just like a used affordable product, and so for a place like japan is like, are they ready for to buy used? I don't know, but they certainly are willing to spend on a unique vintage item that has a brand association. So that kind of market gets me excited.

Alex:

Think of like circularity um, where they're? You know there's take back models, there's recycling models, but then a lot of production happens in asia and so if you really want to close the loop on this circular textile to textile journey. Maybe there's a real opportunity for stuff to be gathered in asia, kept in asia and then placed back into the original production in asia, because that is one of the blocking points. When you have an amazing recycling initiative in the US, it gets collected, it gets recycled into a material input, but then if you really want to produce a new shirt or jacket, you know there's very, very few options in the US to do so. So now you're shipping that back over, so it could be actually a really great place for a true circular story, in the textile space at least.

Carl:

It has a lot of potential for sure. Thank you for sharing your insights about Asia, about all the markets, but generally. Thank you for taking the time and for sharing your journey in the re-commerce place. So thank you so much, Alex, for being here today.

Alex:

Yeah, thank you so much for having me.