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 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.

Product Alerts Heads Up & More

Some new goodies have popped up in the store product alert emails. There are Tender Violet Wunder Unders on the way.

There is a new Polar Cream Rose Herringbone No Limit Tank coming.

There is a new Silver/ Polar Cream Herringbone print Scuba jacket coming. I would like this in a black and gray version.

 A great comparison of Black Swan to Black. (Thanks to Ms. L. for the photo.)

Check it out - the Specialized Lululemon Team bike. From what I understand this is newly available to purchase. (Thanks to Ms. A. for the photo.)