Myth-Busting Resale Cannibalization: Separating Fact from Fiction
Brands and retailers are navigating new ways to extend the lifecycle of their products. Yet, there’s one persistent myth in the industry that makes many hesitant to explore resale as a business strategy: resale cannibalization. Resale cannibalization is the belief that by offering a resale channel, brands risk eroding their own primary sales. Let’s dive into this myth and uncover why resale can actually boost brand loyalty, increase revenue streams, and contribute to a more sustainable future.
What is Resale Cannibalization?
Cannibalization is typically understood as the negative impact a new product or channel might have on existing products, where the new option “eats into” or reduces the sales of the primary offerings. In resale, this would mean that selling used items could discourage customers from buying new items, thus reducing a brand’s main revenue stream. But does the data support this belief? Surprisingly, no. Studies and industry examples are increasingly showing that resale, rather than undercutting new sales, complements and even enhances them.
Myth #1: Resale Hurts Primary Sales
One of the biggest myths is that resale will take customers away from the full-priced market. However, consumers participating in resale often represent a different demographic than those buying new, or they’re existing customers who are looking for a sustainable alternative for items they may otherwise buy secondhand from another source.
Data from brands with successful resale programs, such as Patagonia, shows that resale doesn’t discourage primary sales but actually attracts more customers. Many buyers are motivated by the opportunity to try a brand at a lower price point and later become loyal, full-price customers. Resale can create a new customer segment that may not have considered the brand otherwise.
Which department(s) believe this myth most:
Sales and Marketing—the dynamic duo that sees resale as the sneaky younger sibling threatening to crash their full-price party. Sales are out here panicking, imagining customers saying, "Why buy new when I can score it slightly used?” Meanwhile, Marketing is furiously trying to protect the brand like a parent shielding a toddler from a muddy puddle, insisting, “Resale will cheapen our image!” Meanwhile, Operations is just in the background, sipping coffee, and muttering, "It's literally just more sales, guys…"
Myth #2: Resale Cheapens Brand Value
There’s a misconception that resale programs dilute the exclusivity or luxury associated with a brand. However, when done well, resale can enhance a brand’s reputation by showing commitment to sustainability and product longevity. Brands like Eileen Fisher, who pioneered take-back programs and resale initiatives, have seen their brand equity grow, with consumers associating the brand more strongly with values of environmental consciousness and responsible production.
Additionally, offering resale channels allows brands to control the quality and presentation of their products even in secondhand markets, preserving their image and standards. Rather than cheapening the brand, it reinforces the message that these products are built to last.
Which department(s) believe this myth most:
It’s typically Brand Management and sometimes Product Design that cling to Myth #2, thinking resale might somehow turn their carefully crafted brand image into a yard sale. They imagine their precious products getting a “second chance” look that feels a little too casual. Brand Managers, in particular, picture resale as if it's a second-tier version of their premium lineup, worried it’ll make their flagship items look like they’ve had one too many rides in the washing machine.
Meanwhile, Sustainability and Customer Loyalty teams are on the other side, grinning ear-to-ear, saying, “Relax, folks. Resale just proves our stuff is so good, people want it twice.”
Myth #3: Resale is Just for Luxury Brands
Another myth is that resale only works for high-end or luxury brands, where buyers seek savings on designer items. While resale has indeed seen success in the luxury market, brands across a wide array of price points—from fast fashion to outdoor gear—are entering the resale space with great results. Outdoor retailer REI, for example, has successfully integrated resale into its business model, proving that brands known for functionality and quality can thrive in resale as well. As long as a brand has established quality and durability, it has the potential for resale success.
Which department(s) believe this myth most:
Marketing and Strategic Partnerships are usually the biggest believers in Myth #3, convinced that resale is the exclusive playground of high-end brands, where only luxury handbags and designer jackets dare to roam. They picture resale as something that only appeals to status-seekers who want to snag luxury for less.
Meanwhile, the Operations and Sustainability teams are shaking their heads, saying, “If it’s built to last, it’s built for resale!” They know that customers value quality and sustainability across all price points—whether it's luxury, outdoor gear, or even a favorite mid-range brand.
Myth #4: Resale Adds Unnecessary Complexity
Many assume that resale is complicated, expensive, and requires extensive infrastructure to manage effectively. While starting a resale program can have its challenges, new technology and third-party platforms make it easier than ever for brands to create resale options without building everything in-house.
Additionally, resale programs can be tailored to fit a brand’s existing logistics, using digital technologies to help facilitate product tracking, quality control, and seamless sales. This flexibility allows brands to make resale work without overhauling their entire operation.
Which department(s) believe this myth most:
Usually, the Operations and Supply Chain teams buy into Myth #4, worried that resale will add unnecessary layers of complexity to an already intricate system. They envision resale like a puzzle piece that doesn’t fit, bringing more logistics, reverse shipping, and quality control challenges. The fear is that resale could turn their smooth-running machine into a wild juggling act involving returns, refurbishments, and resale-specific tracking.
Recommended by LinkedIn
Meanwhile, Marketing and Sustainability are likely over in the corner saying, “Come on, it’s just a little remix!” They’re already sold on the resale benefits and keep pointing to third-party solutions or streamlined tech that make resale logistics easier.
Myth #5: Resale is Only for Sustainable Shoppers
It’s tempting to think that resale primarily appeals to eco-conscious shoppers, but the reality is that resale has broad appeal. Consumers are increasingly interested in value, and resale meets that demand by offering lower-quality products. Additionally, younger generations are particularly drawn to resale for its uniqueness and variety—meaning brands can access a whole new customer base by venturing into resale.
In fact, many shoppers are motivated by the idea of getting a great deal on a product they already love or are fans of “treasure hunting” for unique finds. Resale appeals to shoppers looking for great quality, rare finds, and attractive prices, making it an opportunity to engage a wider demographic.
Which department(s) believe this myth most:
It’s Marketing and sometimes Customer Insights teams who are most likely to buy into Myth #5, convinced that resale mainly attracts the eco-warrior types who won’t buy anything unless it’s organic, recycled, or comes with a “save the planet” sticker. They picture resale shoppers as carrying reusable tote bags and making every purchase decision with the environment top of mind.
Meanwhile, the Sales team is laughing, knowing resale attracts a far broader audience—everyone from bargain hunters to brand fans who want a good deal. They know that resale’s appeal extends beyond sustainability, tapping into customers who love a find, appreciate quality, or want to own a brand they admire without paying full price.
How Resale can=will Enhance Brand Loyalty and Growth
If resale cannibalization is a myth, then what’s the reality? Successful resale programs have shown that they can increase brand loyalty and customer lifetime value. Customers who buy from a brand’s resale channel are likely to return to the brand for new products as well. Moreover, resale keeps customers within the brand ecosystem rather than losing them to third-party resale markets.
Resale also provides brands with valuable data on customer preferences and product durability, which can drive future design and manufacturing decisions. And when brands demonstrate that their products are made to last and retain value over time, they build a sense of trust and credibility with customers.
THE QUESTION:
How do you control your “grey market”? Are there strategies you’ve found effective for keeping your brand’s resale and unofficial channels in check, or do you have a unique approach to managing resale in your industry?
STATEMENT:
Maybe you should consider your own Reverse platform - talk to us Tallgrass.ai contact ralph@tallgrass.ai
(NB. if you sit in any of the departments mention ;-) don't feel offended, we appreciate you too)
The grey what?
The “grey market” refers to the sale of genuine branded products through unauthorized or unofficial channels, typically at discounted prices. Unlike counterfeit goods (which are fake), grey market items are legitimate but are sold outside of the brand’s approved distribution network. This can include resellers who acquire products in one region at a lower price and sell them in another, undercutting official retailers.
Grey market sales pose challenges for brands, as they lack control over these unauthorized channels, which can:
Brands often try to control the grey market through strategies like implementing geographic pricing policies, tracking product serial numbers, or establishing strong distributor agreements. For those managing resale channels, balancing the grey market risk with the benefits of resale is essential.