Circularity in Fashion E-commerce

As a circular business model, the online second-hand clothing market is currently growing. How will consumer attitudes towards this model evolve?

Master's thesis by Tabea Fürnsinn
4th semester, 2022
Prof. Dr Lars Rademacher

Problem and initial situation

The fashion industry is currently dominated by the linear economy model, which is based on the principles of producing, using and, at the end of the life cycle, disposing of garments (Esposito et al., 2017; Wilts & Fink, 2016). Within this system, e-commerce is booming (Bertram & Chi, 2018). By reinforcing the fast fashion trend, the online sale of clothing contributes to an increase in the number of garments that are quickly discarded and, consequently, in textile waste (Bertram & Chi, 2018). The concept of circular fashion, based on extending the life cycle of garments for as long as possible and ultimately closing the production cycle, is seen as an alternative economic system (Urbinati et al., 2017; Wilts & Fink, 2016). One business model within circular fashion is the online resale of second-hand clothing, for which there is currently a growing market (Deges, 2020; Pradhan, 2020; ThredUp, 2020, 2021).

Methods

To gain a better understanding of consumers’ perspectives on the business model, mixed-methods research is used to investigate consumers’ current and evolving attitudes, as well as the prospects arising from the business model. The qualitative part of the study, conducted through expert interviews, provides an overview of the latest expert knowledge on the topic, whilst the quantitative part uses a consumer survey via a written, online questionnaire to assess the expert knowledge provided in the qualitative part.

Figure 1: Self-generated visualisation of the mixed-methods research process.

Research questions and hypotheses

The aim of the master’s thesis research was to investigate the prospects of the circular business model for the online resale of second-hand clothing in terms of consumers’ attitudes towards it. The following research questions were therefore addressed:

1. What are the prospects for the circular business model of online second-hand clothing resale in terms of consumer attitudes?

1.1 What is the current consumer attitude towards online second-hand clothing shopping, and what factors determine it?

1.2 How will consumer attitudes towards online second-hand clothing shopping develop in the future, and what are the resulting prospects for the business model?

Results

In the qualitative study, four experts with theoretical and/or practical knowledge of the circular economy, fashion e-commerce and online second-hand resale were interviewed. The experts, comprising both researchers and practitioners, come from the fields of consultancy, business and specialist journalism. In the quantitative study, 430 participants took part in the survey and completed it, resulting in a sample size of n = 430. The results of the two research methods used show that the overall affective attitude of the consumers surveyed is currently positive and is developing in a positive direction.

Although there is generally a positive attitude amongst the younger target group, no significant correlation was found between age and the positivity of the attitude. The attitude is influenced by various beneficial as well as challenging factors. In terms of determining cognitive attitude, consumers primarily perceive beneficial factors such as the aspect of sustainability and the discounted price of clothing in connection with the business model. Although the aspect of sustainability is at the forefront, this awareness is not sufficiently established to the extent that it is unaffected by negative effects on attitudes resulting from an increase in the price of clothing. The development of consumers’ attitudes is further influenced by two main factors: providing consumers with a deeper understanding of the business model and enhancing the shopping experience, improvements to which could lead to a more positive attitude.

Conclusion and Outlook

In conclusion, it can be said that consumers’ overall affective attitude towards online second-hand shopping is currently positive and continues to develop in a positive direction. This attitude is shaped by various beneficial and challenging factors that relate to consumers’ attitudes at different levels. The evolution of these influencing factors also partly determines the development of the business model; consequently, these factors should be taken into account when considering the prospects for the business model.

References

Bertram, R. F., & Chi, T. (2018). A study of companies’ business responses to fashion e-commerce’s environmental impact. International Journal of Fashion Design, Technology and Education, 11(2), 254–264. doi.org/10.1080/17543266.2017.1406541

Deges, F. (2020). Fundamentals of E-Commerce: Strategies, Models, Tools. Springer Fachmedien Wiesbaden.

Esposito, M., Tse, T., & Soufani, K. (2017). Is the circular economy a new fast-expanding market?: Identifying fast-expanding markets. Thunderbird International Business Review, 59(1), 9–14. doi.org/doi.org/10.1002/tie.21764

Pradhan, S. (2020). Stepping towards circular & sustainable fashion. Fashion Sustainability and Circularity, XVII(1), 181–185.

ThredUp. (2020). 2020 Resale report. ThredUp. www.thredup.com/resale/2020/

ThredUp. (2021). ThredUp Resale report. ThredUp. www.thredup.com/resale/static/thredUP-Resale-and-Impact-Report-2021-980436a36adc4f84a26675c1fcf2c554.pdf

Urbinati, A., Chiaroni, D., & Chiesa, V. (2017). Towards a new taxonomy of circular economy business models. Journal of Cleaner Production, 168, 487–498. doi.org/10.1016/j.jclepro.2017.09.047

Wilts, H., & Fink, P. (2016). Germany on the path to a circular economy. Müll und Abfall, 6, 3. doi.org/10.37307/j.1863-9763.2016.06.03