Go ahead and get all the hate and steam out. Some of you already feel irritated just off the title alone. After you're done, we can get started on the defense of my thesis. You're good? Alright, let's start.
Let me first say that this topic deserves more than a post but I'm going to try to get through this quickly and just express the main points.
Who Makes Up The Resell Market
It's no secret that the clothes reselling market is growing. You can find charts that express this in a lot of articles including this one I found on ThreadUP.
Although the growth of the secondhand apparel market is important, I won't be focusing on that in this post. Rather, look at the teal and blue bars. Note that the teal represents resellers (people like you and me) and the blue represents thrift stores (e.g. Goodwill, Savers, Salvation Army). The teal and blue bars combined make up the secondhand apparel market. Keep this in mind as we move on.
The Changing Retail Landscape
The chart from ThreadUP below cannot be overstated because it ultimately affects the supply in the market. This chart shows where consumer behavior is going with respect to apparel.
This is important because less supply will be coming from the sectors that are currently supplying the bulk of Goodwill's donations while more people will be buying secondhand. I think this will inevitably lead to higher prices at thrift stores.
Porter's 5 Forces
My favorite author is Harvard Business School's, Michael Porter. His legendary 5 Forces of Competition Framework plays a huge role in business decision making and it applies in this market we're in. Although there are 5 forces, I'll only focus on two:
1. Bargaining Power of Suppliers
2. The Threat of New Entrants
The bargaining power of suppliers is essentially the power suppliers have to raise or lower prices. The threat of new entrants is exactly like it sounds. And since reselling is a low barrier of entry market, this threat is a real threat. Moving on...
Down the Pipeline
Things just don't end up at the Goodwill Outlets (The Bins). They usually go through a process and I've made a simplified flowchart of how they end up there.
At first glance, this looks like a flowchart but I see it as a filter that gets finer as you go down the supply chain meaning there's always more items at the top than at the bottom.
Again, this is a simplified process and I need to keep it simple because it's about to get real in a bit. So far we know who makes up the secondhand apparel market, where retail is going, the 2 forces and how things end up at the bins. All we have to do is put everything into 1 complete thought.
Oh Yeah, I Forgot...
Goodwill is creative, very creative. Beyond selling things at their retail stores, Goodwill has Ebay auctions, live auctions on their website and "Buy it Now" items on their website. Oh and one more thing, since the resale market has been growing faster than it's ever been, Goodwill store employees including managers are also getting into the action by back-dooring items to people that will pay up to have the items held for them. You're just going to have to trust me on this one.
My Analysis
Because there's a lot of gears going on, explaining this in bullet points will make it a lot easier to understand than explaining it in a paragraph.
- Growth in this market would imply that more people will enter the market
- Low barrier of entry means a lot of people will join
- Those entering the market will not donate clothes they can sell themselves to thrift stores. Essentially they're acting as a supplier that is cutting down their supply to Goodwill
- More people will embrace buying secondhand in the future while buying less from retailers (e.g. Nordstrom's, Macy's)
- Supply is NEVER infinite in ANY market
- Goodwill is now a supplier and a competitor (this is not good at all)
- Whatever supply comes in, Goodwill will have first dibs
- Premium pieces will be sold via in-house auctions or Ebay auctions
- Prices at Goodwill Retail stores will rise due to lower supply
- Whatever is left will have to survive for about 4 weeks in Goodwill Retail stores without being sold
- Whatever is not sold in about 4 weeks goes to the bins
- The most aggressive and persistent bin shoppers will be the winners at the bins
- The casual bin shoppers will wonder why there's nothing good at the bins
Combine the above bullet points with this flowchart I made below:
Taking It All In
I totally understand if all of this is everywhere and I apologize. The reason it seems everywhere is because so much is changing in the secondhand apparel market and it's difficult for me to get it down in words but trust me, all of this makes sense in my head. But to conclude, I don't think the future looks good for the Goodwill bins in about the next 5 years because the bins are at the very bottom of the life of a donation. The last step beyond the bins is things getting packaged up and ending up in 3rd world countries but that's out of the scope for resellers like you and me.
With so much pressure from lower supply and more demand for second-hand clothing, resellers will have to find new ways to get inventory in. I want to be clear, all of this I just wrote is from the standpoint of a reseller, not a consumer. This is a huge point because resellers can only buy something to resell if it has enough upside room. To the average customers, prices don't have to be that low because they're not reselling.
I Know, I Know...
"Here's another person spewing out doom and gloom"
"Reselling has existed for decades now and nothing has really changed"
"I've been successful at the bins for years, what the hell is this girl talking about?"
Understand that the landscape for reselling is changing and like in almost every industry, technology is speeding up the process. Furthermore, I don't know how the Goodwill Outlet got started but I do know it's not Goodwill's primary source of revenue. And because it's not a primary source of revenue, this tells me that this arm of the company will be the first to be affected when all of these factors come into play.
This post represents my short position on the future of the Goodwill Bins and the resellers that relies mainly on the bins.
Now it's your turn. If I'm wrong or if I missed something, because I'm sure I did, leave me a comment below.
9 Comments on “The Inevitable Decline of Goodwill Bins”
Thank you for all this great info! Your time into this is valuable. It all makes sense to me! As the reselling continues to grow, the competition and the fight for supply will rise as well. I love reselling but is good to hv a back up plan. I hope it will grow for the good of every reseller out there! I worked in the fashion industry for years & love making clothes….I will hv to put that plan to work lol!?
Game recognize game. I am an accidental reseller newbie. My original intent was to clean out the 4 closets in my home but as items sold I gradually began the weekly treks to Goodwill. Early on I knew that at some point I would not be able to solely rely on Goodwill. I have spent a small amount of time researching other sourcing opportunities but have not come up with the perfect plan yet. I formerly worked in the fashion industry and have been a real estate agent for over a decade so your numbers and analysis make perfect sense. You are spot on! And now I sigh and go back to the drawing board to figure out next steps and a long term plan.
Yeah, I’m not going to argue this. This is something I’ve voiced before, too. Reselling is ultimately going to be a tool to help get to where I want to get, but I just see it becoming so saturated and even more competitive that it may not be as fruitful for the amount of time and effort I’m putting in at this stage. With more and more retail stores closing down, that’s the trend. I was talking to someone about it (and her response is people will always be buying stuff, sure, but with increasing competition and decreasing supply, it won’t be as easy later) because it only makes sense that if fewer and fewer people purchase new from retailers and high-end retailers, there’s less that will end up being donated, and that’s hoping that 1. They’re even going to be donated and 2. That they’re donated in awesome resellable condition and in style still and 3. That you’re even going to be able to find it with Goodwill pulling more and more from their stores. In Florida, there’s a GW outlet that has EMPLOYEES going through the bins BEFORE they’re even on the floor to make boxes. Every step of the way they’re filtering out things that you could potentially find and increasing prices in the retail stores across the country. I almost never source at GW anymore and it’d be important for EVERY reseller to DIVERSIFY how they get their inventory in order to be successful long-term. My inventory is made up of some thrifted, some retail arbitrage, some liquidated retail inventory, a little bit of everything, making sure I have these avenues set up so that my income isn’t halted all of a sudden because I have a few weeks of awful thrift hauls. /endrant haha
I totally agree overall. I will add as a successful reseller on other platforms for many years, resellers come and go. Once they figure out this is really work, they give it up. Those items from their inventory end up back out there. I would also bet, no stats available, that more fail than push on to become large closets. Just look how many inactive closets we can find on Posh any given day. Reselling is a job that requires dedication and perseverance. Those that have that true dedication aren’t relying on one source for their inventory. Just like most of us don’t rely on one income stream to make it in reselling. Those that are big sellers aren’t relying on the bins now. Too much time for too little return there.
BUT, I will add, the GW bins near me bring out numerous items that never make it to their retail stores. I will stop by them if I am in the neighborhood and my last 2 visits the clothes I sourced were NWT’s donated straight to the outlet. No GW barbs to cut off any of them. So, those that rely on GW can still find some gold but depending on their aspirations, that is not the basket to put all your eggs in. Just my opinion….
The next step of revenue making will then go to the ones with the skill to sew and recreate from their finds. Repurposed clothes have always been a niche market and I’ve watched it grow. What better push for it when that is the only thing left. Maybe a new push to put Home economics and other vocational skills will return to the schools in response to this, the insane college costs, and the return to simpler living for some.
Good thing I know how to sew myself!
Love the idea. I used to follow those thrift upcycle challenges on YouTube and that’d be a unique and fun way to be set apart in the business. The opportunities there are endless!
I completely agree with upcycling. I had made some reusable shopping bags out of tee shirts and threw them up in my botique. I think I had only been selling for two weeks. One got a host pick and in the next couple of days, I completely sold out. People seem to really love this stuff which is awesome since I also sew and am planning on starting my own line of upcycled items. I didn’t the this market existed on PM!
Wow that’s a great idea Lisa, do you have a picture?