All About Lululemon Athletica Inc. (LULU)’s Underground Resale Market

That Lululemon Athletica Inc. (NASDAQ:LULU) is the Chanel and Goyard of athletic apparel has become apparent, given the massive size and business value generated by underground resale of Lululemon’s products.

The growing interest for Lululemon running shorts, or leggings, bras and tanks, at nearly 1000% markups, has been the story thus far. These are either cast-off by enterprising users, in invite-only Facebook Inc (NASDAQ:FB) groups, or auctioned at eBay Inc (NASDAQ:EBAY), for as much as $800 for running short to $500 for tanks.

Why are these products selling at inflated value?

The growth of the secondary, underground market for re-selling of Lululemon Athletica Inc. (NASDAQ:LULU) is due to the ‘great technical pieces’ that the company produces. Secondly, the great fit of these athletic-wear goad users to pay more for those which are no-longer sold by Lululemon or are limited editions. Many are known to regularly scout online sportswear trading stores for their favorite apparel and are willing to pay premium to acquire it. The growth of ‘CrossFit’ and similar organizations, which combine fitness with cross-platform workouts, are seen as driving the resale market for Lululemon products.

Athleisure Market Growth

As online consignment stores such as ‘Tradesy’ share, Lululemon’s demand trails Chanel and Louis Vuitton, but is far ahead of other brands such as Hermes or Tiffany.

However, a major issue with reselling Lululemon is ‘flipping,’ with many ‘professional’ sellers on eBay, unlike Facebook Groups, waiting to list their items and pushing for top dollar by auction. The least such ‘flippers’ can expect at such auctions is a minimum of twice the cost price.

Officially, Lululemon has banned resellers as of 2014. But fans and market insiders believe that the practice will persist, as long as there is demand for the products in the secondary market. While quality and limited editions are seen as driving the resale markets for the products, the strict 14-day return policy for full-priced purchase and no returns on discounted products too are regarded as encouraging drivers of the resellers market.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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