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Trove founder and CEO Andy Ruben joins Yahoo Finance Live to discuss the state of the resale market, including how brands benefit to own their resale channels, why more consumers are shopping secondhand for holiday this year and the future of resale.
JULIE HYMAN: We were just talking about sustainability with Tesla analysts, and talking about clean energy as well. What about when it comes to clothing manufacturing and retail? Want to bring in Andy Ruben. He is the founder and CEO of Trove. He's also Walmart's former chief sustainability officer. Our Melody Hahm is joining us as well.
And what Trove does basically is help companies buy back their own stuff that they've sold, and then sell it again. So I guess, Andy, start with what kinds of trends you're seeing right now. I mean, you work with companies from Patagonia to Eileen Fisher and REI. What kind of changes have you seen over the year in terms of demand?
ANDY RUBEN: Resale continues to explode. It is such a fad. Actually, the fastest growing segment of US retail. And it's growing based on, it's a customer-driven trend. It's growing based on sustainability, as you mentioned. It's growing based on value and experience, especially for next gen customers.
MELODY HAHM: Andy, as we look at this space, I know you focus specifically on logistics and sort of the back end to really help these brands that we just mentioned. But we saw on Thursday, Poshmark filed for an initial public offering. Of course, RealReal's already public, thredUP is also poised to go public. What are you sensing in this space? How does this really impact your bottom line and your ability to continue to accrue customers?
ANDY RUBEN: Sure. I mean, as I mentioned, what's driving this is a customer shift towards just a smarter way to shop. And what we've seen is this third party marketplace, is the ones you mentioned, have that really credentialized the space. And brands are recognizing that this is a significant shift. It's going to take a significant share of retail. And these are the customers that, these are the brand's customers, it's their revenue. And so as brands realize this and brands start participating in the marketplace, brands will bring this revenue back in-house and they'll stay closer to the customers, both new customers and with loyalty.
BRIAN SOZZI: Andy, Nike on its earnings call last week, they teased some new sustainability efforts. Unclear exactly what they are, but how pleased have you been by the actions taken by some of the biggest brands, Nike, Under Armor, you name it?
ANDY RUBEN: Sure. I mean, brands are doing some, sustainability and ESG in general has become a lot more significant, especially for young gen customers. There are a lot of activities. There is nothing, there's nothing that we have seen as impactful as resale. Because no matter how you cut it, we make 100 billion items each year for seven billion humans on the planet. So the brands that we work with are producers of these goods.
What resale does, is it allows you to take a high quality item that's already been made and get more use out of it. And we find, especially younger customers, are no longer satisfied with kind of the platitudes or the marketing messages. They're looking for real business innovation. And so a brand like Nike with the Resku program they're running is a fantastic program.
We've mentioned Patagonia's program, REI, Eileen Fisher, Arc'teryx, the brands we work with are really serving customers in the way they want to interact with the brand, which is sell me a high quality item I aspire to, let me enjoy it. When I'm no longer interested in it, let me hand it back for a gift card. You pass it on to the next owner. We make less and get to enjoy higher quality items.
MELODY HAHM: And Andy, just kind of checking back with your multiple years of experience at Walmart, you were the VP of Private Brands, you were VP of Global E-commerce. Of course, now you founded a re-commerce company. What are some of the lessons that you learned at Walmart or some of the applicable practical ways given your purview back in the day and how it's really helped with this brand, with Trove?
ANDY RUBEN: Sure. I mean, the way that we shop is fairly standard. And what I'm watching right now in resale and why I'm so excited about the shift, is that it is customer-driven. And why it's working for customers is the same reasons things work in Walmart or any other retailer. It's easy for customers. It provides value for customers. And it makes sense. The shirt I'm wearing right now is a Ted Baker shirt. I bought this on a third party platform. I would have never, I would never experience Tom Baker. I probably would have walked into a Gap.
And it turns out that the Tom Baker shirt, better designed, better quality, finer details. And at some point, when a brand like Tom Baker is in resale, by making it easy for me to access, to experience the brand, I just won't to go back. Right? And as they keep me captive with a program like this, brands are able to attract new customers, especially young customers, and they're able to keep them in the brand by the willingness to bring these items back when customers are done and hand them a gift card back.
JULIE HYMAN: Andy, finally, I want to ask about sort of the cost of this business and the margins of this business. When you're taking back these items, you do sort of a little refurbishing, checking over to make sure that they are in good enough shape for resale. Put them back out there to be resold at a lower price point. So what then becomes the retailer's cut and what becomes your cut at that point, given that it's at that lower price point?
ANDY RUBEN: Sure. And this is, we work with premium brands. This is not for, this is not for brands that are selling T-shirts for $6 to start with. So the brands that we work with, and there are hundreds of brands that make this type of quality, we provide, we're the platform. We provide the engineering, all the logistics, the data, instrumentation. And that allows us to work with the brand and make this profitable for us and for the brand.
We are seeing margins right now that are approaching the same margins that brands have on new items. And over time, as our efficiency increases cross brand, we see that coming in line with what brands are experiencing now, only with significant benefits of being able to serve a broader range of customers without degradating the quality of their brand or their items.
JULIE HYMAN: Interesting stuff. Andy Ruben, thank you so much. Trove founder and CEO, and our Melody Hahm as well. Appreciate it.
ANDY RUBEN: Thank you.