Shopping Online Gives You Lemons? The Sour Truth About Second-Hand Fashion.

 

Have you ever purchased a second-hand jumper or a pair of jeans online on a whim, only for it to look nothing like what was promised? Maybe it’s got hidden stains, loose threads that weren’t mentioned, or the shade doesn’t match the photos. You are not alone. According to The Guardian (2024), 32% of consumers who purchase second-hand clothes online wind up disappointed, claiming they’ve been scammed, with 57% of the victims occurring on Depop. Welcome to the incredibly ‘tangy’ lemons problem in the online second-hand fashion market—an economic dilemma where bad products drive out good ones!

 Predictions for Second-hand Apparel Market. Source: Statistica

With the rise of virtual platforms such as Depop, Vinted, eBay, and Poshmark, it’s now possible to buy and sell pre-owned clothing with a few taps on your phone. Gen-Z is buying second-hand more than any preceding generation, and pre-loved and vintage are trending. While these apps enable users to create unique personal styles and experiment with various aesthetics at an affordable price, there’s an ongoing economic phenomenon that causes a rather sour market inefficiency that affects both customers and sellers. The unassuming culprit? Asymmetric information.

Before we dive deeper, take a moment to participate in this quick poll (click the link below) and compare your shopping experience with others!

FASHION SCAMMED ?

 

Economic Problems

Akerlof (1970), explains how markets can break down when buyers and sellers don’t have access to the same information – in economic terms, asymmetric information. A classic example of this is the used car market. Sellers have detailed knowledge of the cars they sell, and know whether they are high-quality ‘peaches’ or low-quality ‘lemons.’ However, buyers can't distinguish them just by observing.

Whether buyers realize it or not, when making a purchase, they are calculating what economists call expected value by weighing possible outcomes and assessing whether the risk of paying without knowing its true quality is worthwhile. If the likelihood of receiving a lemon seems high, their expected value decreases. As a result, they worry about overpaying and so offer lower prices to all the sellers. This behavior discourages the sellers of high-quality cars from participating in the market. Over time, the number of lemons grows, replacing the peaches – this is called adverse selection.

Application to Second-Hand Fashion

But how exactly does this relate to seemingly harmless apps such as Depop or Vinted? Let’s break it down. Sellers on these apps often know a lot more about an item's true condition compared to buyers, as they can see every smudge, spot, or tear while buyers rely on the few photos and short descriptions posted online – a classic case of asymmetric information!

Let’s be honest, sellers have every incentive to downplay imperfections for a better price. It’s easy: simply tag an item ‘like new’ instead of ‘good’ or edit a photo to hide a smudge or two. It also helps that currently, many of these platforms don’t have clear or standardized return policies. In fact, returning clothes sometimes requires the seller’s approval! Additionally, many buyers, don’t leave bad reviews or return items either due to sunk-cost fallacy (the reluctance to return the item after investing time and money in buying it), inertia, or blaming their own misjudgment.

Platforms such as Depop not only sell pre-worn everyday apparel but also sell second-hand designer items. Again, asymmetric information along with improving technology in recreating highly convincing dupes leads to another, more scandalous issue: counterfeits. Over time, these dynamics weaken the trust between buyers and sellers on these apps – think of the trending hashtag on social media a year ago ‘#depopscam’ (TikTok link), or how eBay was held liable for selling counterfeit Tiffany jewelry (Tramatm, 2022). In fact, some sellers even go so far as to slap "vintage" on mass-produced items from Shein or Zara to hike up their prices (The Cheese Grater, 2022).

As sub-par quality and counterfeits persist on these apps, customer trust declines, and they hesitate to pay higher prices. This discourages honest sellers and just like in the used car market, they may decide to leave the market until these platforms are left with a plethora of lemons and a shortage of peaches.

Solutions

Now that you know your lemons from peaches, let’s play a short game of ‘Find the Lemon’!

A: source DailyMail

 

B: Source Indiatimes

C: source LegitGrails

If you guessed both A and C are lemons and B is a peach, then congratulations! You are correct.

Watch this relevant video on how to avoid lemons on Depop!

Evidently, determining whether an item is a lemon can be challenging, even for the keenest eye, and seller reviews and ratings have their limits. So, how can these platforms fix this problem? Well, according to economic principles, the answer may lie in standardization!

According to Jones & Hudson (1996), standardization reduces information acquisition and search costs, lowering uncertainty. While higher quality standards may increase prices, overall market standards can improve due to competition. Some platforms like Vinted and Depop already have condition grading, however, many others still need stricter implementation. Additionally, standardized measurement, material, and photography guidelines can resolve sizing inconsistencies, reduce information asymmetry, and enhance transparency between buyers and sellers. After all, transparency is the best policy!

Beyond standardization, technological innovations in AI and blockchain may very well hold the key to revolutionizing these platforms by verifying the authenticity of items and tracking their history. In addition, stricter enforcement and penalties for sellers who sell dupes and defective items, along with more accessible return policies across these platforms can reduce information asymmetry and uncertainty while increasing the customers’ expected values – a way to ensure a more market-efficient peach-to-lemon ratio!

Conclusion

For now, second-hand shopping online remains a gamble. However, by applying economic principles and innovation, these resale platforms can reduce information asymmetry and ensure high-quality sellers and apparel remain available. Until then, shop smart, and don’t let the lemons get you!

References

·         Akerlof, G.A. (1970) 'The market for "lemons": Quality uncertainty and the market mechanism', Quarterly Journal of Economics, 84(3), pp. 488–500. Available at: https://doi.org/10.2307/1879431 (Accessed: 28 March 2025).

·         Jones, P. and Hudson, J. (1996) 'Standardization and the costs of assessing quality', European Journal of Political Economy, 12(2), pp. 355–361. Available at: https://doi.org/10.1016/0176-2680(95)00021-6 (Accessed: 28 March 2025).

·         The Guardian (2024) 'Click, clic … boom! How secondhand clothes shopping turned very sour', Available at: https://www.theguardian.com/fashion/2024/dec/22/click-clic-boom-how-secondhand-clothes-shopping-turned-very-sour (Accessed: 27 March 2025).

·         The Cheese Grater (2022) 'The Damning Depop Divide', Available at: https://cheesegratermagazine.org/2022/03/01/the-damning-depop-divide/ (Accessed: 27 March 2025).

·         Tramatm (2022) 'Secondhand Fashion is on the rise – and so are fake luxury products’, Available at: https://www.tramatm.com/blog/category/fashion/trademark-and-secondhand-market (Accessed: 27 March 2025).