Saturday, September 29, 2012

The Economics of Secondhand Lulu

Most newbies to the lululemon brand grumble about the high prices but what a lot of savvy lululemon collectors know is that they can often get a good portion back or even make a profit on their "investment" in the clothes when they sell them on ebay, Craigslist, Kijiji or private Facebook Swap groups. Some examples:

A new with tags black Studio Jacket recently sold for $217 + shipping. Original cost: $128

 Used Unicorn Tears Print Cool Racerack sold for $102 + $11 shipping. Original cost: $42$39

A more typical auction - Tango Red Cool Racerback sold for $27. Original price: $42.

If you are addicted to having the latest lululemon items, you can wear your clothes a couple of times and resell for only a few dollars less, or sometimes more, than what you paid. One commenter on here declared she spends $30,000 a year at lululemon doing just that. Her net out of pocket costs are a tiny fraction of that number.

People grumble a lot about the "scarcity model" lululemon employs but it also benefits lululemon re-sellers. It keeps prices high on the secondhand market. Checkout the sale price of any Paris Pink or Flash Cool Racerback or Define Jacket on eBay.
 
A recent article on Businees Insider.com entitled Lululemon's Strict Return Policy Has Created a Huge Black Market couldn't get the secondhand market for lululemon clothes more wrong.  In the article an analyst name Brian Sozzi claims:

"While this strategy [the narrow two-week return window] might work in the short-term, there's a possibility that the plethora of items available on eBay could devalue the brand. 
"Along with that underground market for basically new goods that undercut products in the store price-wise, they are also cultivating a pool of unhappy yoga-goers," Sozzi said"

New-with-tag items on eBay very rarely undercut the store prices. The only people able to get the current lululemon items in the stores for a discount are employees and reselling is strictly prohibited by the company. Termination is the result if you are caught. There are a number of lululemon eBay Power Sellers who make nice incomes combing their local outlets and thrift shops for bargains and then reselling on eBay at a profit. No one is giving away lululemon.

The secondhand market spreads the brand awareness even further across the globe. Cheaper prices for used luluelmon clothes enables the people who don't have as much disposable income as the target lululemon demographic to buy the brand. It spreads it to the foreign countries that lululemon doesn't ship to or where shipping charges are prohibitively expensive. Ebay shippers often ship for cheaper than the lululemon website.

As for the two-week window working against them, I don't think it's is a huge issue. Anyone who shops there is made well-aware of the return timeline. Lululemon stores receive new items weekly. The majority of their competitors only update their collections on a seasonal basis so they can stretch the return time to 30 days. I think many people are willing to trade a tight return window for more frequent product updates. Furthermore, people who are comfortable buying and selling their lulu know that if they miss the return window they can often easily sell their new with tags (NWT) items elsewhere for full price and recover their money. This is especially true when the item is sold out in the stores and on-line.

The strong secondhand market for lululemon is a major advantage for the company over its competitors. It enables people to update their lululemon wardrobe on a frequent basis and is always figured into my calculations when I buy a new piece of lululemon.





38 comments:

tracy morris said...

Excellent article. love your blog so much!

RunItMyWay said...

Great post - and I totally agree. Just this morning I splurged on the Keep on Running Duffel when a return popped up in Bordeaux Drama and my rationale for buying it is that I will sell a few items I don't wear as much on eBay. I often order something I probably wouldn't otherwise have bought because I know if I change my mind I can always recoup my money on eBay or the Exchange. Same for items I've worn a few times and don't love! I would buy a lot less if I couldn't resell!

Anonymous said...

Thank you so much for the detailed post! Very helpful especially since I'm about to unload some of my LLL wardrobe (though I am scared by the 15,000 listings on ebay already)

I agree that to date, there have been items (hello Unicorn Tears-- how cool!) I would happily pay a premium for even when worn, b/c the name Lululemon was a novelty in a sea of nike drifits. The little LLL logo was relatively unique and discretely spoke "I'm fit, I care about looking good, and I have disposable income."

However, fast forward the past 2 years of rapid store expansion not just by LLL but copycats (some are legitimately good like alo, BY, and I've been seeing a lot of Body Language - socal) and now frankly I am seeing just too much of this look on everyone and literally their mothers. And most of these women are not at the gym, increasingly. It almost reminds me of how Juicy pants spread in the 90s.

I still do love their (OLD) stuff. But I think they are randomly hiking up their prices and compromising on quality because they are overestimating the sexiness of their brand. It is not that hot anymore, especially when I see less than athletic types trying to pull it off as workwear or date night wear (I'm really sorry if this is offensive, but a lot of my male friends are pointing this out). This is the typical lifestyle of anything that booms as a trend.

I am taking the time to write this b/c I assume strategists at Lululemon must read these comments. If you want to win in the long run, take care of your loyal customers and the original base-- the true athlete. Do a sanity check against your competitors when making pricing decisions. When the gap grows too much between a secondhand CRB and a brand new competitor's item at 50%, you really do wonder if that intangible brand image is worth it nowadays. Right now, it seems to me that the brand is at its first brink--it is no longer edgy / special and at the same time negative feedback is mounting.

I am actually afraid I won't get good prices for my used lulus anymore (I used to be a MANIC for the past 5 years). I offered my younger friend if she wanted my scubas and she actually wrinkled her nose and said no thanks! (Granted she works in fashion).
Worse so, my triathlete type colleagues who used to wear lulu now call it "kinda cheesy." What am I doing to do now??

So, don't chase a million things at once and stay true to your quality like the way Under Armour does with their men. Once the reseller market starts cooling (and it will, it is inevitable in every growth cycle) it's going to be a very different playing field.

Just a few words of advice from a concerned customer who wants to fall in love with LLL again!

M.E.L.R. said...

A garage sale across the street from me was selling nearly brand new wunder under crops for $5 today!! There were lots of colours so I bought all they had even though they were size 2 and will never fit me lol. My mom and my sister-in-law will fit them. I thought I was dreaming. The lady selling them obviously had no idea how much they were worth. That was my excitement for the weekend haha.

Anonymous said...

I agree, love being able to sell items that I'm not loving, especially considering Lulu's strict return policy. I especially love the groups on Facebook. There is even one for damaged or super worn stuff! I sold a NLT with a bleach stain on it for $40 one time. I can't think of ANY other brand that you can do that with.

Anonymous said...

I love eBay for this reason! I just sold a Peacock Dot cool racerback for $70 including shipping... And i did not list it for that much... It had a reasonable starting bid of $42 because it was a rare print... Otherwise I usually start my racerbacks around $32... I love that if I buy something Lulu and a few months down the line I see I'm not wearing it or I change my mind, who cares about Lulu's return policy, I KNOW somebody out there wants what I have and I can sell it on eBay pretty easily.

Anonymous said...

http://www.cnbc.com/id/49212054

The video in this article with Christine Day shows what I think are new items in a line she called fluff off. -Jenn

Anonymous said...

The UT was actually $39 haha even worse! That was before CRBs were upped to $42

sophia said...

well...employees and r&d members. i'm sure that if you're caught re-selling using the r&d discount, you're also probably going to get the shaft (from the discount program). i know that when i got enrolled recently at my local store i was told that the discount was for "personal use only" - not for friends, etc. i'm pretty sure re-selling would also be nixed. however, it also seems that these would be harder to track than employee re-selling......i wouldn't be suprised if *someone* was doing it in large volumes, but i doubt that's the majority of "power sellers"

anonymous me said...

I think the price gauging on ebay is insane. It's especially unfair to people who have no access to a brick and morter store because I'm sure some ebayers buy out a bunch of stuff on the uploads and people who can only get their lulu online are then doing the midnight scramble to snap up things they may or may not end up keeping.

I haven't tried to sell there (on ebay), but I did make a sale on FB group and got what I thought was a fair price on a gently used pair of trousers (I hope the recipient feels the same! They're still on their way in the post), about $30 off the retail, and though I didn't recap PST and paid for shipping, a rate like that for a year old pair of yoga pants is imo pretty amazing.

I take good care of my lulu so a lot of it is still in excellent shape and much of it close to new looking. Some of it I barely got to wear myself because I dropped several sizes very quickly. I hope more sells on our little 'black market'! lol

As for ebay again, I have a pair of worn for 2 hour hard-to-find crops on a FB site listed for just a little below retail and others are listing them on ebay for twice the price and more. As much as I'd like the money (and kind of need it, since I'm saving for something specific), I just can't justify asking for a price like that.

-anonymous me

LuluAddict said...

@ anon 12:26 pm - I totally agree. I think they are verging into over expanding / becoming over-exposed. The fact that they retire colors and prints very quickly and bring some colors back every couple of years certainly helps keep resale high. I think Cool Racerbacks sell very well, especially in popular colors that sell out quickly and are seen only every two or three years - e.g., Angel Blue, Pow Pink (until it was re-released). If lululemon can keep the great fit and quality they will retain their edge over the competition. However, they have monkeyed with both of those things over the past 18 months and I hope they correct the course they're on. Their clothes also offer a lot of functionality, which distinguishes them from their peers. Try to find compression-style run shorts/crops or a run hat with zipper pockets (or holster pockets) from other brands - they're not out there.

Kate said...

Excellent blogpost, lulu addict!!

LuluAddict said...

@ anon 1:11 pm - what is the FB group for the damaged lulu/super worn? I have some really old stuff I want to sell.

LuluAddict said...

@ anonymous me - I refuse to pay over retail for lulu so I empathize with you on the gougers. I usually put a starting bid on my stuff below retail and if it hits an insanely high number, it wasn't me who set it but the market. If you are patient and set up an ebay alert or scan craigslist/kijiji and the Facebook groups you can usually find your coveted item at a price you can live with. It may take a couple of years and by then you're probably over the print/color/style so it usually works out in the end. I never get too worked up over a piece I can't get since 1)it's only clothes, 2) I know no matter how much I love/lust for it today, I'll be tired of it a year or two down the road, and 3)there is always something cuter coming out.

Anonymous said...

The FB group for old/worn stuff is Lulu Bones. It doesn't have as many members compared to the exchange, trading post, or bidding wars, but stuff seems to sell fast at good prices. (Usually about half of retail)

LuluAddict said...

@ Anon 1:11 pm - Never Mind - found out the group - Lulu Bones.

Anonymous said...

Vanessa Hudgens looking good in Lululemon tank:

http://skinnyvscurvy.com/general/knock-knock-whos-there-255.html#comment-1854418

(another of my fav blogs)

HPSauce said...

I can't seem to find the FB groups for swapping/selling etc... What are their names?

Kathleen said...

OMG... Vanessa Hudgens was at the studio I go to when I am working in LA! That's the piloxing gym by Universal!

LuluAddict said...

@ HP Sauce - the two big ones are lululemon trading post and lululemon exchange. Also, Lululemon Bidding Wars is kind of like ebay except 24 hour auctions.

Anonymous said...

Loving all this helpful info! Why isn't LLL sold on amazon like it is on eBay?

Savasana said...

Thank you for the article! I am very happy that folk are able to share and recycle their Lulu online- especially to accommodate the changing needs of their sportswear wardrobe. It's great that these clothes are durable enough to be wore for more than a season. It's even better because Lulu customers care so much for their clothes, whilst caring for their own health goals.

It's a big plus for me this isn't disposable fashion. I enjoy Lululemon's consistency (pardon the occassional dye or fit miss). This all adds up to an environment that resellers could very much capitalise on, so it's great to see lulu groups form their own networks away from that. May I call it a Lululemon underground, as opposed to a black market?

Anonimouse said...

I must be the only person I know who wears out their Lulu. I'm a dance and fitness instructor and work some days from 9.00 until 9.00. I have got to the stage where some of my stuff gets to look really ratty, ok, it takes several years instead of just a few months like with all of the other brands I've worn (out) but it means I really don't get to sell much stuff.

I just wish they would make up their minds what they are, there was a time when Lulu meant good, practical workout wear, now it seems to be going much more for fashion and the look rather than practicality. I want and need practical work clothes, yes it's a bonus that I can look smart but if my top starts to bleed into my skin as I'm teaching or my pants are see through you can bet that I'm not happy, that's my professionalism that's been put on the line. It's like my husband buying a pair of safety boots that look great but have no steel toe caps, what in Gods name was the company thinking! They look great but they don't do the job.

LuluAddict said...

@ Savasana - I wouldn't call it an underground. That means all of eBay is an underground market. Reselling lululemon is no different than reselling some other brand. I don't see the need to dramatize something that is very ordinary.

Focus said...

I wish I were able to get in to the Lulu exchange, I've tried to get in last year, and then again recently, but I guess it is closed.
That said, I would love to sell some of my NWT lulu that I "had to have", which sadly has never been worn.
I've never tried selling on eBay because I want my beloved Lulu to go to someone who truly wanted it, and could get it at a fair price. Now don't get me wrong with my next statement, I'd love more money in my life to spend on things like...um...more lulu:) But I have a hard time with the fact that an individual, who really wants my Lulu to add to their collection, may have to bid against someone who wants to buy and then resell it at a higher price. Just as an example, I have watched two paris pink run: back on track skirts sell on eBay in the last week, a used one for 102.00 and a new one for 142.00 that's a 68.00 skirt if my memory serves me. Crazy! Yea, I could make some bucks, but I'd rather trade mine for something cool that someone else has

Anonimouse said...

Once I've bought it with my own money and as long as I don't wear it out I reserve the right to sell it if I wish to. That's not underground or a black market.

If I was making Lulu knock offs and selling them cheap that would be an underground black market and I could expect to be sued if (or rather when) I was found out.

LuluAddict said...

@ Focus - I do the great majority of selling on eBay these days, mostly because the process is so straight forward, relatively anonymous, easy ways to weed out bad buyers, and a defined process to follow when there is a problem. I think many people who buy their lululemon stuff on eBay want it, too. Granted there are people who buy to flip but that happens a lot on the Facebook groups, too. Did you try getting into the new Lululemon Bidding Wars or the Trading Post group?

@ anonimouse - Exactly!!

Anonymous said...

@Focus - I asked to be in the Exchange this week and was approved. Maybe you should send them a message? Maybe there is something weird with your FB account?

Anonimouse said...

Thank you LLA :)

Anonymous said...

@Focus. Good question on the Exchange. I'm a member and love it! There are some wonderful people out there and I've been really happy with my trades.

A tip: Perhaps check your facebook security settings. They have a quick check of your public page (as part of working through their waiting list) and members need to have suitable settings to able be pm'd- for purchases etc.

The security settings can't be super high, but I don't recommend them being too low either.

Good luck, hopefully see you there soon!

Anonymous said...

Hahha! I'm the gal with the $30,000 dis. Income who buys, then wears a few times and then resells to buy more!! This business type of thinking, has really worked for me over the years. I see LOTS of people who sell Lulu for $30 less than what the store sells and no one bites! I'll buy Grooves, wear once or twice and sell for $90 and within 1-3 weeks of reposting my ads, daily....the items sell! :) I've had $50 ladies tops, I was asking $35 for and they would not sell, so I put the price up to....$45 and WAM! SOLD! :) I'm convinced, no one wants to snag up cheap Lulu, even if it is new! People wanna pay, so LET THEM PAY! I will gladly take your money, for my next upcoming Tues. upload! :) Show me the money, honey! :) OK, now I have more money for shopping!! LOL....

LuluAddict said...

That's really interesting about raising the price helped sell the item. Maybe people think something is wrong with it if the price is too low. I'll have to try that on my next batch of stuff to sell.

Anonymous said...

Gal with dis. Income here--re Luluaddicts last comment. yep, seems to work for me! I even had a few expensive jackets from Lulu, I was selling. new with tags. I posted the items up for $30-40 less and these were near $300 jackets. no bites at all. got a few offers, offering me $75, even after posting that the price was firm. Weeks and weeks passed--no one seemed interested. I finally put the price up to within $10 less than what it was to buy in the store and SOLD! like it literally was sold, 24 hrs after I put the price up! :)

Be careful with eBay....there are A LOT of dishonest sellers, selling items that are not as described!! I've had people say in "excellent condition" and the hoodie was ratty looking with a stain on the sleeve. (hidden in a pics) I also had a girl, sell me a vintage après yoga jacket and LIE, saying she was sure it was a size 8 and when it came, I knew from the looks of it, it was a 10!!! the material all ripely, because she probably threw the coat in the dryer!! She advertised on Ebay...in like new condition. I felt super ripped off..... lesson learned. if seller says tag fell off, or they aren't sure if it's a 4 or 6, you are probably getting a 2 or an 8. It totally RUINS it for all the awesome sellers! I personally, don't buy second hand, unless I know the seller now. I've had bad luck with buy used Lulu on EBay. If its now new with tags, forget it!

sophia said...

@anon 5:52 - yes, there are bad sellers on ebay. but that's actually one of the amazing things i like about ebay...is that because of feedback, you can pretty much avoid bad sellers. i don't buy from anyone with negative feedback or from anyone who no or very little feedback. newbies ask all the time why their items aren't selling...and the thing is, it's probably because you're new. people don't want to buy from someone who doesn't have a history (and yeah, it's a catch 22). but if you look at the feedback carefully, you can usually avoid such situations. and if you happen to be in a situation, then that's what the resolution center is good for! it's much less risky than facebook, craiglist, etc.

Anonymous said...

I would never buy used workout gear. I also would not sell something I have worn a few times, even if it is washed. buying stuff that other people have already sweat in is kinda gross. at least in my opinion. I bought two lift and separate bras 2 years ago from ebay and they were still in the bags you receive of items from the LLL website. I also did not pay extra.

Anonymous said...

Also....I would like to add, the women/men, who sold bad lulu on EBay had 98-99% percent feedback. I did look at that, BEFORE buying. So this is not always accurate... :( Some sellers have 400 transactions and 2 bad ratings. I think if the 2 bad ratings are because they sold an item "not as described" you should maybe pass on that seller. I didn't and I paid for it!

Anonymous said...

I respectfully disagree. Clothing is not a good "investment," not even high-end designer couture, which LLL is not. LLL is merely a RETAIL fitness wear company. Ebay is full of scalpers, price gougers, and most importantly, people falsely advertising something other than what the buyer will get. I have seen Ebay sellers who advertise an item as the wrong style, wrong color, or even worse, as an authentic LLL item when it is actually a knockoff. Ebay offers inadequate customer support, especially buyer support. IMO Consumers should only purchase LLL pieces that they love and intend to use for years. Most consumers, especially in light of all the recent LLL quality problems, would prefer a normal 30 day return policy like other retailers. Athleta actually accepts returns anytime, if there is any problem ever with their merchandise. Now that’s a company that stands behind its products with an amazing return policy! My local LLL stores (more than one) have had old merchandise hanging around the store for 1-2 months+ more recently and cannot move the old merchandise. I used to read the LLA blog on a regular basis and have also read the online articles about the blogger. I am quite surprised and, frankly, disappointed in this recent blog entry. Thank you for your honesty which is a revelation of sorts. Since comment moderation is activated here, I'm not certain if this will even be posted in the LLA comment section, but it’s worth the time to find out about freedom of speech, etc. Time will tell.

LuluAddict said...

@ anon 4:02 pm - I know clothing is not a good investment, that's why the word was in quotes - because I meant it ironically. With most clothes you just put them in the goodwill bag when you are done, but with certain "hot" high end/quality items in good shape you can get some of your money back.

The point of this post was to point out that you *can* get some of your money back if and when you tire of your clothes, if you desire. You can also put them in the Goodwill bag and take the write off. However, be aware some savvy eBayer is combing the store for your castoffs to resell.

Of course eBay is buyer beware. There are lots of fakes for every brand. If you are cautious and prudent you can buy authentic decent used lululemon on eBay/Craiglist/ etc.