Thinking sustainably with recommerce
Once upon a time, a customer bought a product—and the product lived happily ever after in its new home. That is, until something new came along and caught its owner’s eye.
But what if that product’s story didn’t have to end there? What if, instead of being retired from circulation and ending up in a trash heap, the item was resold to another owner?
As you’re probably well-aware, this isn’t describing a fairy tale; it’s referring to a real-life retail phenomenon known as recommerce. This increasingly popular practice can help boost the sustainability of your eCommerce business, while boosting your bottom line. Keep reading for tips on how to effectively participate in recommerce.
What is recommerce?
In the broadest sense, recommerce refers to the buying and selling of used goods. It’s typically associated with the rise of eCommerce, though recommerce can involve an integrated approach between physical and online resale.
Sites such as eBay and Craigslist paved the way for recommerce back in the 1990s by providing platforms for consumers and businesses to exchange used goods directly.
While those peer-to-peer marketplaces are one type of recommerce, more recently brands and retailers have been joining in as well, offering professionally-managed and authenticated online shopping experiences for reselling used items, returns, overstock, and/or floor samples. Thanks to resale, merchants are redefining the product life cycle, and the results are healthier both for the planet and the bottom line.
Why offer recommerce?
Recommerce is a fast-growing business opportunity with OfferUp forecasting that recommerce will grow 80% in the next five years—or five times faster than the retail sector as a whole—and reach a total estimated market size of $289 billion by 2027. This runaway growth is due to three converging trends:
Ease of buying and selling online - While online shopping is no longer growing at the breakneck pace of 2020 and 2021, eCommerce revenues are still on the rise. In fact, U.S. online sales topped $1 trillion for the first time in 2022, according to comScore. Consumers who tried buying online for the first time during the pandemic are now more comfortable than ever with shopping or even selling online themselves, setting the stage for recommerce exchanges to thrive.
Demand for sustainable eCommerce - Overall, 68% of U.S. consumers are willing to pay more for sustainable products, according to research from the Wharton School of Business. And more than 80% of consumers 55 and younger are willing to spend 10% extra. Recommerce offers sustainable benefits such as extending a product’s life and reducing the need to manufacture more new goods. In addition, many recommerce items are bought and sold locally or at least within the same region, reducing the environmental impact of order fulfillment when compared to shipping newly-produced goods.
Bargain-hunting perks - Retail sales have slowed since October 2022 due to inflationary pressures and rising interest rates, according to CNN. Deloitte also found that 75% of US consumers are still concerned about rising prices. So, while consumers are theoretically willing to support sustainably produced products, they’re currently seeking solutions that combine eco-friendly practices with lower prices. Recommerce meets both needs, since resold goods are typically offered at a substantial discount.
But recommerce isn’t just a quick fix for tough times. The price points of resold products can be attractive even when the economy is booming—especially for consumers who want to make luxury or brand-name purchases, but don’t yet have much spending power. Recommerce offers a lower entry price point without requiring brands to slash prices on the latest items. Some vintage and exclusive items can even fetch higher prices second-hand than when they were purchased new.
Recommerce business models
With startups and household names alike entering the recommerce market, there are a growing number of ways that shoppers can source second-hand goods. They include:
Peer-to-peer marketplaces - In addition to eBay and Craigslist, platforms like Facebook Marketplace, OfferUp, and Mercari enable individual consumers and businesses to buy and sell items directly without an intermediary. These days, more and more marketplaces are supplementing their platforms with authentication and fulfillment services to aid the exchange process. Retailers are jumping into the ring as well, with some offering their own peer-to-peer platforms. For example, H&M’s Re:Wear program enables customers to sell used H&M apparel in exchange for a percentage of the sale price. While H&M offers shipping labels and “suggested pricing” through its algorithm, it allows customers to ultimately set their own prices and arrange delivery.
Brand-managed recommerce - Under this model, merchants accept used goods from customers and take the lead in reselling them. They resell second-hand items just as they would new merchandise, though often through a dedicated resale section of the online store. This recommerce model offers a higher degree of protection for buyers, given that the brand or retailer authenticates and inspects each item before posting it for resale. Retailers and brands take a substantial cut of proceeds; often they buy back an item for an upfront “trade-in” amount, or offer their customers a small percentage of the final sale cost. For instance, Arc’Teryx offers a ReGEAR site for shopping traded-in outdoor apparel, backpacks, and more. The brand vets gear, refurbishes accepted pieces, and resells them at a discount, offering the original owners 20% of the original purchase price upfront as a gift card.
Pure-play retail recommerce - Online retailers that sell exclusively second-hand merchandise offer a curated selection of used goods from a variety of brands on a professional-grade eCommerce site. These sites typically offer a small percentage of the final resale price to the original owners. As with other “clicks-to-bricks” retailers, some recommerce sites are branching out to experiment with unique omnichannel business models. Resale mega-site thredUP partners with dozens of retailers to offer in-store second-hand options. Meanwhile, Wix merchant Preloved Kilo sells used apparel by weight, offering a one-kilogram “mystery boxes” with an assortment of used clothing in a buyer’s size. They also host pop-up events to attract thrifters who prefer to do their shopping in person.
4 quick tips for getting started with recommerce
Despite its growth and the variety of business models to consider, the basic premise of recommerce may be cause for hesitation. After all, isn’t the point of retail to sell new merchandise?
But when done right, recommerce won’t undercut business. In fact, recommerce can extend the profitability of your products, enabling them to be resold and generate income beyond the initial sale.
Another plus: It doesn’t take a top-to-bottom revamp of your eCommerce business plan to get started with recommerce. With a little planning and a lot of clear communication, you can test the concept for your audience without making expensive investments. Here’s how to start.
01. Join, don’t host, a peer-to-peer exchange
You may be tempted to dive into recommerce by launching a branded platform and letting your customers do the trading. But that type of commitment is more complex than it seems. Questions to consider include:
Who fields complaints? Even if your policies clearly spell out that buyers and sellers are responsible for working out transaction details on their own, your customer service team is likely to feel the impact when exchanges go wrong.
What prevents cannibalization? You’ll need rules—and the means to enforce them—so customers don’t resell barely used merchandise at a steep discount, or even buy and “flip” popular products with the tags still on.
Instead, if you want to launch quickly, consider posting items yourself on someone else’s recommerce marketplace first. That way, you can test your audience’s appetite for second-hand goods without major technology investments, and you can start with a relatively small assortment of items.
02. Start with low-hanging fruit
You don’t have to offer recommerce for every category of product you sell; you don’t even have to start by actively promoting trade-ins. Instead, start by building on existing practices, and use sales and customer data as your guide.
What happens currently to returned merchandise? If items head back to the shelves in physical stores, consider also adding them to an online resale category. Include floor models and samples to broaden the range of offerings.
What categories are enduring favorites? Focus on products that already have a following, with customers who are eager to snap up new seasonal variations and releases. Consider launching your recommerce program by putting these items front and center.
Where do customers want to purchase used products most? Use customer feedback and surveys to determine where interest is strongest. Consider a regional rollout in physical stores, or post items on the recommerce sites where your customers already shop.
03. Establish a process for quality assurance
Your reputation as a professional brand sets your branded recommerce program apart from marketplaces where buyers have to scrounge around for good-quality items. Build trust by showcasing your product expertise. For example, you could promote an inspection and refurbishment program that ensures that you only offer high-quality used goods. If it’s appropriate to the category, consider offering a limited guarantee or warranty on resold items, and consider whether your standard policies for returns and exchanges apply to second-hand goods.
As you introduce your recommerce program to a larger audience, take the time to develop customer service content, email marketing campaigns, and social media posts to communicate important details: how your program works, its benefits, and your overall vision for it.
Earn second-hand sales, sustainably
Recommerce can boost your bottom line while supporting the health of the planet. Getting started doesn’t have to be complex either. By building on existing practices, carefully considering your business model, and clearly communicating options and expectations, you can successfully launch second-hand sales through your online store.
Editor, Wix for eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.