Recommerce: a sustainable and profitable alternative.
Laia Ordoñez
02/03/2023
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Of course, you read that right: today's article is about "recommerce". We are going to show you that it is a lucrative and sustainable alternative.
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Recommerce is a growing trend, although not all brands or online stores are aware of its potential. In this post we will explain what it is, where it comes from, what its advantages are and we will even show you a couple of examples of companies that have adopted it.
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What is recommerce?
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The prefix "re" may have already given you a clue. Effectively, it is about marketing used, reconditioned or simply second-hand products online. Whatever you prefer to call them depending on their condition or your own perception of this business.In fact, we can say that second-hand stores have been around as long as commerce itself. Online sales have also been no stranger to this practice: used products have long been available on eBay or Amazon. Not to mention specific C2C (Customer 2 Customer) apps and portals. We are talking about such well-known sites as Milanuncios, Vinted or Wallapop.If all these businesses make money with products that are not new, why don't we as manufacturers or distributors also apply recommerce? This seems to be the question that many brands have been asking themselves recently and, increasingly, they are integrating this practice into their business strategy.
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Advantages of recommerce
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Well, the truth is that it has many advantages, and very relevant. Let's make a small review, because recommerce is:
- Sustainable: there are certain industries that are highly polluting because of their production methods, their raw materials or their geographical relocation. There is no doubt that manufacturing in China what is sold in Europe involves transportation, and that, in turn, increases the carbon footprint).
The biggest problem is that, whether due to fashion or trend, all these products have a useful life longer than that given by the user. When the customer stops using them, it is not because they are no longer useful, but because they are no longer fashionable or they have grown tired of them. These customers, paradoxically, are the first ones who seek to buy from sustainable businesses and ventures.- Profitable: acquiring used products and reselling them usually has an interesting margin, even if it is lower, taking into account that we save all the investment in production.
- It increases the perceived value: not only of old or discontinued products, but also of new ones. In some way, thanks to recommerce, we increase the value of our entire catalog.
There is a very clear example of this: cell phones. Apple has been integrating recommerce into its commercial strategy for years, so an iPhone buyer knows that his new handset will depreciate less than that of other brands and that Apple itself will be willing to buy back his new purchase when he decides to sell it.- Exploit another segment: as we have said, there is a real demand for these products and, if we do not meet it, some of our competitors are going to. It makes sense to include that segment and make recommerce vertical within our sales channels.
Bottom line: recommerce is a commercial opportunity, but it also improves our brand positioning. We become more eco-friendly and, thanks to that, we have an in-vogue argument that helps us sell more. -
Disadvantages of recommerce
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We always say: there is no perfect strategy or trend. Everything has some drawbacks that it is important to assess before jumping headlong into it.In the case of recommerce, the downsides are:
- Logistics: when you go to work repurchasing used products, you do not have just one supplier, you have hundreds or thousands. This always complicates management.
- Quality control: not everything can be sold in the state in which it is received (in some cases, it cannot be sold at all). You will need to create new processes for this and, surely, hire or assign part of your team to the task.
We could also mention as a negative aspect that it complicates customer service and, especially, complaints about the condition of the product. However, with a good and clear returns policy, this can be almost completely solved. -
Examples of recommerce companies
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We like to give examples because they are not only illustrative but can also inspire you. Most of the cases we can show you are of brands that are in sectors such as fashion or electronics. If you think about it, recommerce seems especially suitable for them.
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#1 – Levi’s
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The iconic jeans brand has set aside a space on its own website for used buyers. It makes a lot of sense to do so because there is a large market of collectors looking for vintage garments.Until now, those customers so loyal to the brand had to resort to a parallel market where, apart from anything else, they were exposed to counterfeits and other problems.
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Therefore, Levi's made the decision to create second hand, a subdomain within its main page where to buy and sell used clothing.
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#2 – Back Market
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Here we have a very different model, because Back Market is a marketplace specialized in technology, with products that are usually refurbished (although they also come from overstocks in some cases).
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One very interesting thing that, in our opinion, they have been able to solve well, is trust. Firstly, by offering a 1 year warranty on their products and, secondly, because they have several prices per product depending on its state of preservation.Here are two examples of different recommerce, but there are many more. In fashion segment, we could have mentioned H & M, Zalando or Veepee, which have also incorporated it into their strategy in different ways.
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What do you think about recommerce, do you think it would be interesting for your online store? Tell us what pros and cons you see for your specific case.
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Images | Unsplash, mentioned brands.