Though establishing circular protocols requires significant investments, apparel and textile supply chain manufacturers can expect to see long-term financial benefits like reduce operational costs and the opportunity to create new revenue streams. However, the supply chain is just the starting line. A new whitepaper reveals how the cost-saving benefits and financial gains of the circular economy do not end there.
Last week, community-powered fashion marketplace Depop and online marketplace Etsy published “Building Policy Pathways for a Circular Economy,” revealing how circularity is becoming an increasingly important way U.S. consumers manage expenses, earn income and build community.
No longer a niche hobby, the paper describes circular practices are a growing part of how consumers navigate everyday economic pressures. The research emphasizes how circular behaviors such as shopping secondhand, reselling items and extending the life of goods through repair and upcycling are becoming more embedded in consumers’ routines. And for many, these practices are driven by a combination of financial, social and environmental considerations.
The whitepaper found that among U.S. consumers who participate in circular practices, 92 percent say it has helped them save money and 80 percent say it has helped them earn extra income or cover expenses.
And when it comes to resale, consumers are sitting on hundreds of dollars’ worth of unwanted clothing in their homes. According to research Depop commissioned with Censuswide, 77 percent of Americans own clothes they no longer want or need, with closets holding approximately $400 in potential resale value.
Nationally, the whitepaper highlights how this “represents billions of dollars in untapped economic opportunity that many households are beginning to unlock.”
“What this research highlights is just how widespread these behaviors have become,” said Peter Semple, Depop CEO. “People are already finding practical ways to get more value from what they own, while building income streams and communities around it. There’s a continuing opportunity to make buying and selling secondhand even easier and more accessible, so it becomes a default behavior for even more people.”
In general, the practicality of circularity is winning over many consumers. The whitepaper states that 90 percent of Americans favor circular economy solutions after learning how it supports “everyday approaches to affordability and community connection.”
However, based on interviews with representatives from organizations that help shape sustainability and circular economy standards, the whitepaper reports that there are state and federal policies where current rules risk slowing down participation in the secondhand market.
The whitepaper notes that in some states, pre-owned items that were already subject to sales tax when first purchased may be taxed again when resold through a formal marketplace. This can reduce the cost advantage of secondhand goods for budget-conscious buyers.
Additionally, current 1099-K thresholds “can create administrative complexity” for people who casually participate in secondhand and has the potential to discourage participation or growth. While 36 percent of Americans sold personal items or handmade goods for extra money last year, the whitepaper says only 13 percent identify as a business.
A lack of local circular infrastructure for repair and sorting hubs can make it challenging for secondhand markets to scale efficiently. And rising logistics costs like shipping is another hurdle for small scale resale.
While the circular economy is delivering real economic opportunity for millions of Americans, Jeffrey Zubricki, Etsy global head of advocacy and public policy, said too many microbusinesses face reporting requirements and cost structures that weren’t designed with them in mind. “Policymakers have an opportunity to modernize these frameworks so that the rules of the road reflect how Americans are actually buying and selling today,” he said.
The whitepaper advocates for governments to expand access to grant programs and funding streams that help secondhand business owners invest in tools, technology, training and other necessary resources. Additionally, the whitepaper encourages policymakers to design Extended Producer Responsibility (EPR) frameworks that recognize the role of secondhand markets and maintain proportionate requirements for small sellers.
Other options like sales tax holidays or refund models that include secondhand goods could provide tax relief for resale items.
Policymakers are listening. In the paper, Rep. Sydney Kamlager-Dove from California say she looks forward to continued partnership with Etsy, Depop and other recommerce platforms to “bring these issues into the policy conversation and push for solutions that reflect what people are already demanding.”
Congresswoman Nicole Malliotakis from New York added that she is “proud to support commonsense policies that reduce unnecessary barriers for entrepreneurs and consumers who help drive the growing resale and secondhand economy.”
