Global fashion brands they’re fighting billions of dollars” value of unsold inventory. Primarily, these brands avoid reselling in key markets such as the UK and the US to prevent market cannibalisation. Meanwhile, emerging markets such as Africa rely heavily on second-hand clothing imports, but 30% to 40% of these items are deemed unusable upon arrival, leading to environmental degradation due to discarded fabrics.
The situation highlights a paradox: A glut of new, unsold inventory in developed markets coexists with ecological damage caused by used imports in emerging markets. But this dynamic also creates unique arbitrage opportunities for startups in the global resale market — also known as resale — which is expected to reach around $350 billion by 2027.
Trying to take advantage of this opportunity is PHARAOHa South African upstart who emerged last year and recently raised $6 million to continue her vision of making fashion accessible by fighting textile waste across Africa.
Selling excess inventory to emerging markets
Here’s how it works: African markets can’t afford to support full-price retail stores for brands like Calvin Klein, Tommy Hilfiger and Zara. However, the desire for authentic products on the continent remains. FARO ensures that the excess stock of these brands gets a second life in South Africa, where they are in high demand, creating value for both markets and reducing waste.
Remarketing startup targets consumer returns with minor defects that brands often discard or incinerate due to high labor costs, co-founder and co-CEO David Thor he tells TechCrunch. FARO collects these items and restores them using its facilities equipped with industrial washers, steam tunnels and affordable labor. This approach prevents waste while enabling the start-up to buy stock at extremely low prices — sometimes as little as £1 apiece — and resell it through value-added processes.
Torr explains that the business operates on a fixed margin model that aims for 45% after all costs, including swing tags and processing. He also says that instead of inflating profits when margins exceed targets, FARO invests in better prices for its customers.
FARO currently has four stores, with ambitious plans to expand to 1,000 locations over the next decade across Africa, South America, Asia and the Middle East. His inventory includes approximately 40% repaired returns and 60% surplus items. FARO sources these garments through partnerships with major brands such as ASOS, Boohoo, G-Star, Jack & Jones and Levi’s, offering some at up to 70% off retail prices.
“Our core belief is if we can be the most compelling driver of great value for the customer, that’s how we build loyalty and stability, and how we get to 1,000 stores is to be 100% customer-centric,” Torr says. . .
South Africa’s retail market, unlike the rest of Africa, is highly developed, with more than 2,000 malls, making it a prime location for physical off-price retail distribution. This approach is necessary because off-price inventory—often returned by the consumer with unique pieces of a product—is too expensive to digitize and catalog online.
Even huge off-price retailers like TJX operate mostly offline, relying on established supplier relationships and legacy profit systems that leave little incentive for innovation. However, inefficiencies in these systems are becoming increasingly apparent, as inventory management is still based on outdated, labor-intensive processes, with planners manually handling mass events in Excel.
Torr says FARO is developing AI-powered agents designed to break down these complex buyer workflows into manageable micro-tasks, thereby streamlining operations.
“Some brands have over 15,000 people employed at the head office level just manipulating data in Excel,” he says. “If you look at what AI can do, you could build an AI agent for that, and that’s what we did. We started developing our first market models that could do this — not in hours, but in seconds. And his accuracy will be infinitely better than the man who would otherwise do it.’
According to Torr, the startup also plans to add personalized shopping tools. For example, customers interested in specific brands or items could be notified when similar products are about to arrive at one of its stores, improving the shopping experience.
It could prove to be a significant differentiator if it works. E-commerce continues to face obstacles in Africa due to logistical challenges and population density, making delivery models costly. While platforms like Takealot and Jumia have held their own for years, the rise of ultra-cheap, trendy platforms like Temu and Shein threaten not only their dominance but also that of fast-fashion brands operating in South Africa and catering to the continent’s price-sensitive consumers.
Street for a thousand shops
By eschewing e-commerce altogether to optimize its internal operations and partner supply chains and targeting aspirational buyers who value name-brand goods for their status and perceived quality, FARO is finding its niche, Torr says.
FARO launched in 2023 with an experimental pop-up store in South Africa, earning $100,000 in its first month. Initially, the company expected it would need seven stores to reach $2 million in annual revenue, based on traditional retail benchmarks.
By contrast, FARO, which operates in urban hubs, mid-market centers and formal retail spaces, says it reached that milestone — $2.3 million — with just four stores, achieving a 20-fold increase in revenue last year. Now, the remarketing startup aims to grow fivefold this year, according to Torr.
As for its plans to expand to 1,000 stores, these depend on how it effectively creates local price profiles tailored to regional demand and the specific brands available as it looks to expand into other emerging markets. Consumer behavior and preferences are not universal and can vary significantly between regions. A strategy that thrives in South Africa may not resonate in Kenya or Nigeria.
Torr started FARO with three other co-founders: Will McCarren, Chris Mahaniaand Amber Penney-Youngwho collectively gather experience from Amazon, Jumia, UCOOK, Superbalist, Spice & Roots and Zumi.
JP Zammitt, president of Bloomberg, led this investment. VC firms such as Presight Capital, Gharage Ventures and E4E Africa and individual investors such as Mato Perić (MPGI), Leonard Stiegeler (Pulse), Oliver Merkel (Flink), Vikram Chopra (Cars24), Tushar Ahluwalia (Razor Group), Sudeep Ramnani (Featuring 885 Capital) and Kresten Buch (88mph).
