Resellers win in economic downturn

Play It Again Sports buys and sells used sports and fitness equipment. There are 400 stores in the U.S. and Canada

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NEW YORK (CNNMoney.com) -- During her speech at the Republican National Convention, vice presidential nominee Sarah Palin said she tried to slash Alaska's budget by putting the state jet up for sale on eBay.

The plane never sold through eBay. After all, there's a limited pool of potential customers hunting for used jets online. But what is booming is the market for more practical used goods at an increasing number of stores that buy and sell secondhand products.

As the economy struggles, the resale industry has thrived. Not only are cash-strapped consumers discovering that selling their unused or unwanted items is a great way to pad their pockets, but heading to secondhand shops to buy discounted goods can also save a substantial amount of money.

"It's a win-win situation for the buyer who is getting what they need used and the seller who is making a little extra money," Marsha Collier, author of the book "eBay for Dummies," said of the growing secondhand marketplace. That adds up to big bucks for those in the business of bringing secondhand buyers and sellers together.

Tucson, Ariz.-based chain Buffalo Exchange has been in the business of buying and selling secondhand clothing and accessories since 1974. "In hard times, businesses like ours do better," said Kerstin Block, president and co-founder of Buffalo Exchange.

According to the company, revenue grew 11% last year and 16% in the first half of 2008. There are currently 33 stores and 2 franchises with more stores slated to open later this year and in 2009.

Sellers bring in bags of used clothing and walk away with store credit or a fraction of the resale value in cold hard cash. A pair of designer jeans might fetch anywhere from $25 to $75, depending on the style and condition. Buyers can purchase them for a fraction of the retail cost.

"We've noticed more selling taking place, our stores seem to be having no trouble getting merchandise in," says Vella Austin, a spokeswoman for the company.

Also contributing to the growing interest in secondhand shopping over the last few years is an increased awareness of the environment and the importance of reusing and recycling. Secondhand shopping not only makes financial sense but is better for the planet too.

"The whole green thing really does seem to be part of the success formula and, coupled with the economic times, is just playing out beautifully for us," Austin said of the Buffalo Exchange stores.

And though used clothing has always been a retailing niche, stores that cater to new corners of the secondhand marketplace are springing up. Once Upon A Child, Play it Again Sports, Plato's Closet and Music Go Round are just a few of the other growing franchises out there that sell new and used children's clothing, furniture, toys, musical instruments and sporting equipment.

Generally, items are bought for a fraction of their cost and resold for about half of the retail price. A customer can sell their $1000 treadmill to Play it Again Sports for $250 to $300 and the sporting goods store will resell it for about $500.

Steve Murphy, president of franchising for Minneapolis, Minn.-based parent company Winmark Corp., credits the economic slowdown as a major contributor to the company's recent success.

"More people are looking to get money for their goods to help pay for gas or buy milk," Murphy said.

The past two quarters have been Winmark's best in its history, with revenue up 50 percent this year over the same time period a year ago, the company said.

"When things are good people were out there buying $200 jeans and not giving it a second thought," he said, but "the last couple of years have brought people back to reality."