by Camille Chin | September 17, 2024
Put simply, recommerce is the process of selling previously owned goods. It comes from the words “reverse commerce” and has its roots in garage sales and flea markets, but it’s more structured and conducted in physical and online channels.
The American recommerce market was estimated to be worth more than US$188 billion in 2023, an increase from nearly US$140 billion in 2020. That growth is expected to continue with forecasts reaching US$276 billion by 2028.
According to eBay’s 2024 Recommerce Report, millennials show the highest frequency of purchasing pre-loved goods with 9% buying weekly and 24% buying monthly, followed by Gen Z (21% monthly). Almost three in five (59%) global consumers have bought pre-loved goods in the last year.
It’s the era of reuse, resell, recommerce and it reflects what’s important to consumers today: the planet and their pocketbook. But before your business dives into the second-hand market, define your strategy. This article will help.
What Is Recommerce?
Recommerce is the selling of pre-owned goods, which are then reused, recycled or resold. The purchasing and reselling of goods is typically done in two ways:
- A buyback program, which involves buying products back from customers and refunding them a certain amount of the item’s sale price.
- A trade-in program that gives customers credit for their used items that can be put towards a new purchase.
Retailers usually clean up the used items and resell them in-store or online at a reduced price. Note: recommerce is not the same as consignment, which is the selling of a customer’s item in exchange for a percentage of the profit.
What Are the Benefits of Recommerce for Retailers Like You?
A Better Brand Image
By extending the life of clothing, jewellery, home goods, electronics, sporting goods and more, recommerce contributes to the circular economy thereby reducing the need to produce more. In the US, about 85% of all textiles end up in landfills every year, which is equivalent to 2150 pieces per second.
Recommerce gives retailers an opportunity to establish themselves as a sustainable and socially responsible brand. Eighty-four percent of consumers say sustainability is an important factor in their purchase decisions, however, 50% say they’re not sure whether they’d pay a premium for sustainable products in times of inflation.
Convert Price-Sensitive Shoppers
We know that many shoppers reduce their spending on discretionary items during inflation and a recession. Interestingly, 37% of consumers have reported that they’re interested in the cost savings of pre-loved goods to fuel other areas in which they splurge: hobbies, travel, family etc.
What’s more, selling used, premium goods is a strategic way to capture shoppers who are reluctant to purchase luxury goods at the full price. Once they’ve tried the premium item for less, it’s easier to convert them into full-price customers.
Unique & Varied Merchandise
Incorporating used goods into your retail sales channels expands your merchandise assortments — and both you and your customers will never know what to expect. Shoppers who seek unique and vintage goods will be drawn to your stores and website to explore, especially if you refresh your pre-loved inventory often.
Improve Customer Loyalty & Retention
Recommerce programs directly benefit consumers. Those who participate in buyback programs tend to become loyal, repeat customers and they often take the money or credits they’ve earned from selling you their used items and reinvest it back into your business by purchasing additional items.
Customers are also more inclined to shop at stores that have a buyback program because they feel reassured that their products have resale value.
What Should Retailers Consider Before Jumping In?
The Quality of Goods
Create a grading scale that describes the quality of pre-loved goods and determine which conditions you’ll accept. For example, some retail stores only accept items that are like new to maintain high-quality expectations for their customers. Others are willing to refurbish or restore items.
Remember: even though your customers are shopping for pre-loved items, it doesn’t mean that they’re willing to compromise much on quality. Below is an example of a common grading system.
Like New: Excellent condition with no marks or scratches
Very Good: Minimal wear with very light signs of use
Good: Some wear with signs of consistent use
Acceptable: Heavy wear with some damage
Pricing
You’ll need to develop a system to help you determine the price of goods — both what you’ll offer to purchase them for and what you’ll sell them for. Make sure your Point-of-Sale system is up to the task. A smooth and consistent process will determine your success and ensure a positive customer experience.
Sales Channels
You can sell second-hand items from your physical stores, which might make purchasing goods from customers easier, and online on your e-commerce site. Outdoor apparel and gear store REI has also tested pop-up shops as an expansion of their members-only shop and trade-in platform.
Of course, you can leverage a third-party platform. Archive, Reflaunt, ThredUp and Trove are good options for brands and retail businesses. Keep in mind, however, that by leveraging a third-party platform you’ll be sacrificing a portion of your profit and there may be listing restrictions. The third-party platform may also create a disjointed customer experience. On the plus side, you’ll get the opportunity to leverage an additional and pre-established customer base.
What Brands & Retailers Have a Recommerce Platform?
Canada Goose
Canada Goose currently accepts select outerwear and clothing from all customers in Canada and the U.S. as part of their Generations Trade-In program. Trade-in items are accepted via mail using a prepaid shipping label. In return, customers get gift cards to spend in store or online.
The luxury winter clothing manufacturer was founded in 1957 as Metro Sportswear. It changed its name to Snow Goose in 1985 and finally Canada Goose in 2000. Its Trade-In program features vintage pieces, including some bearing the original Snow Goose label.
Lululemon
Lululemon operates a Like New resale program, which launched across the US on Earth Day in 2022. Customers can exchange their gently used lululemon gear for an online gift card ranging from $5 to $25, depending on the item. The initiative has kept more than 1.7 million pieces of lululemon gear in action.
The athleisure brand reinvests 100% of the profits into its Impact Agenda, which aims to make all its merchandise with “preferred materials” (those that contribute to improved environmental and/or social impacts) by 2030.
Patagonia
Patagonia accepts pre-loved clothing and gear through its Worn Wear program, which launched in 2017. The outdoor apparel company gives customers in the U.S. up to 50% of an item’s resale price in credit that can be used for purchases in store or online. Patagonia accepts trade-ins at most retail locations and by mail.
Patagonia’s Recrafted line features shirts, vests, jackets and bags hand-sewn from retired Patagonia products. Each garment is made in California from deconstructed and repurposed materials. Talk about a one-of-a-kind piece.
Is Recommerce Right for Your Retail Brand?
For the most part, recommerce is a win-win: customers get the same quality products for a fraction of the price and retailers get an additional opportunity to generate revenue without increased production. It’s certainly worth asking your existing customers if they’d be interested in a resale program.
Recommerce is in the growth stage so if you add it to your retail strategy, you’ll surely encounter challenges. For example, determining margins can be tricky for some retailers and authenticating goods equally so. But recommerce is only going to get bigger so by ironing out the kinks now, you’ll likely see success sooner.
Promote your program well after launch to encourage customers to participate. And remember: a unified retail management suite that includes inventory, warehouse and order management capabilities as well as a single source of real-time data will make your recommerce journey that much easier.
For more, check out a list of branded resale shops presented by PracticalEcommerce.
