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    What Is Recommerce — And What Does It Mean for Brands?

    9 minute read
    What Is Recommerce — And What Does It Mean for Brands?

    Whether you’re in the market for a vintage clothing item, a deal on a refurbished gadget, or just something that catches your eye with a lower carbon footprint, you’re probably already familiar with the many benefits of recommerce.

    What Is Recommerce?

    Recommerce, also known as reverse commerce, refers to the reselling of used, refurbished, and overstock products, typically at a significantly lowered price and environmental impact.

    Secondhand shops and garage sales might not be anything new; however, the practice has seen some renewed interest in recent years — from both customers and brands alike.

    The number of brands and retailers providing their own “resale shop” offerings increased nearly threefold from 2020 to 2021 alone, a 2022 report from online consignment and thrift store thredUp found.

    “We are still in the very beginning of this trend, but the acceleration of resale adoption is a positive signal with enormous benefits for the planet,” thredUP founder James Reinhart wrote in the report.

    As more brands continue to discover the benefits of embracing recommerce — from both a profitability and sustainability perspective — it’s likely this trend will continue to accelerate year to year.

    Explore whether recommerce is right for your business and check out a few examples of brands that have embraced the concept for a significant advantage.

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    Recommerce: The Basics

    As you can imagine, recommerce underwent some rapid changes with the rise of digital services like eBay, Craigslist, and, later on, platforms like Facebook Marketplace. The ubiquity of those consumer-to-consumer marketplaces led to the emergence of more specialized niche spaces, like Poshmark and Decluttr.

    By shifting the consumer perception about the value of these products — often backed by a stern, reliable satisfaction guarantee — customers came to view these exchanges as potential gold mines rather than low-value repositories for other people’s trash.

    While it may be obvious why recommerce offerings would appeal to a large segment of customers, the reasons why a brand would open its own resale shop aren’t necessarily as clear: Why would a brand elect to sell its own used products — wouldn’t this just eat away at regular sales?

    On the contrary, proponents credit resale shops for a variety of benefits, such as:

    • A significant driver of incremental revenue;
    • A way to build loyalty with customers;
    • An avenue to improve your brand’s reputation for sustainable practices; and
    • A method to quickly move overstocked products.

    Brands Successfully Embracing Recommerce

    Check out a few examples of brands embracing recommerce, and doing so successfully.

    Verizon Helps Smartphones’ Smarts Last Longer

    For background, there are approximately 6.8 billion global smartphone users worldwide per Oberlo, and the carbon consequences are accumulating.

    The production of new devices can lead to an average of 85 kilograms of carbon emissions per device, as noted by Deloitte. However, consumers have become less likely to buy new phones every 18 to 24 months, and the refurbished smartphone market is growing.

    Deloitte analysis predicts the refurbished smartphone market will grow annually at 11.2% per year through 2024, at which point it will be worth $65 billion — a perfect opportunity for a telecommunications giant like Verizon.

    Verizon provides a robust resale shop on its website, offering “certified pre-owned” devices at four levels of cosmetic acceptability: “like new,” “great,” “very good,” or “good.” Customers are also assured that all resale devices have undergone a rigorous check for battery and port functions, as well as capabilities like Bluetooth and Wi-Fi connections — all backed by a 90-day warranty to establish trust.

    This trade-in program drives sales by encouraging customers to turn in their old phones (i.e., for credit toward a new purchase) while monetizing products that might otherwise be in a landfill.

    Ikea Offers Trade-in and Discount Program

    Ikea has long aspired to be one of the world’s most sustainable companies, as noted by Business of Home, and its “Buy Back and Resell” campaign has become a substantial element of that strategy.

    The company decided to make the program permanent at its 37 U.S. stores after a 2021 pilot test, allowing customers to return certain “fully assembled and functional” pieces to its store in exchange for anywhere from 30 to 50% of the original price in the form of a store credit.

    While the program excludes items like mattresses, sofas, and other home furnishings, products like cabinets, desks, tables, and others are all fair game for customers looking to make an update.

    Returned items are sold in the store’s “as is” section at a significant discount from the original price. 

    Levi’s Leg-up on the Secondhand Market 

    The fashion world is facing a serious sustainability crisis, per Bloomberg. Luckily, it’s also one of the best-positioned industries to take advantage of recommerce trends.

    Levi’s decided to create a resale shop of its own — Levi’s Secondhand — and allow users to send in their “vintage” jeans and receive vouchers toward a new pair. 

    Fashion customers love the rush of finding a “diamond in the rough” — especially younger consumers. As Levi’s chief marketing officer, Jen Sey, told Vogue, nearly 60% of Gen Z consumers already buy secondhand clothes. 

    “They love the hunt, they love finding a really unique item, and it makes it even better that it’s a sustainable choice,” Sey said.

    Is a Recommerce Strategy Right for Your Brand? 4 Points to Consider

    There are a few elements to consider before branching out and creating your own resale operation.

    1. Why Would Customers Re-shop Your Brand?

    Think carefully about the value you'll provide your customers by adopting a recommerce strategy. Do you cater to shoppers who are particularly concerned about sustainable practices? Are your products at a prohibitive price point for customers who would otherwise enjoy them? What is the market for your products on sites like eBay and Craigslist — is there a viable demand?

    An honest assessment of your brand, goals, and customers will help you determine if this is a valuable use of your company’s time. 

    2. Can Your Products Survive the Secondhand Market?

    Folks are far more likely to buy a used car than a pair of used underwear. Products with a longer life span — think appliances, electronics, and most clothing — are more suitable for the resale model than their flimsier counterparts. If your products aren’t built “to last,” it might not make sense to establish a resale store. 

    3. How Will You Evaluate Quality?

    Just as Verizon grades the cosmetics of its “pre-owned” devices while backing them with a 90-day guarantee, your brand will need to figure out how to convince customers to trust that your resold products will still meet their needs.

    Your approach will ultimately depend on your industry and product type, but money-back guarantees, close-up photographs of the item, and a grading scale are all ways you can establish value in your resale store. 

    4. Are the Margins Worth It?

    While recommerce is a great way to help your business sustain the planet, it might not necessarily sustain your bottom line. If your margins on new products are already tight, a resale store might not be a viable strategy for your business. 

    The Future of Recommerce

    As inflationary pressures tighten consumer budgets and planetary pressures heighten concerns about climate change, a new recommerce renaissance should be seen as a welcomed development. A careful review of your brand, products, and customers should help make it clear whether it’s a viable strategy to help grow your company’s online sales.

     
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    Written by: Chris Caesar

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