Both the retail and ecommerce spaces have undergone a substantial transformation in the last several years. Re-commerce (stemming from the word ‘reverse commerce’) refers to the art of selling previously owned products, and this business model certainly isn’t new for consumers or businesses.
Re-commerce goes back several decades, popularized by platforms like eBay and Craigslist. However, digitization—coupled with increased awareness of circular economy principles and added pressure on ecommerce retailers to automate and adapt to more environmentally friendly processes—has given re-commerce room to grow as a sophisticated, influential, and positively disruptive model.
According to used electronics marketplace and retailer MPB, almost 71% of consumers bought used or sold products in 2023, suggesting a profound shift in consumer shopping behaviors. As such, more retail and ecommerce businesses are rightfully taking notice and must identify opportunities for themselves to expand their market presence and avoid falling behind on this exploding trend.
Why Consumers Are Choosing Used Items
Modern re-commerce extends far beyond traditional brick-and-mortar consignment stores and online marketplaces. Consumers nowadays, particularly millennials and Gen Z, are embracing circular commerce models that emphasize sustainability without compromising product value.
The surge in re-commerce isn’t just rooted in growing environmental consciousness; it stems from several other factors:
- The growth in re-commerce merchants (growing 20 times faster than the standard retail market and five times faster than off-price retailers) is providing the ease for consumers to choose recycled and refurbished items
- Improved technology that augments the payment process makes it more secure and convenient
- Increased pressure mounting on businesses to cut down on electronic waste (e-waste)
- Younger consumers favoring the concept of sharing or reusing over owning
- Economic factors making consumers more cautious of their expenditure
Brands now have opportunities and challenges ahead of them when capturing market share in this growing sector while maintaining profitability.
Making Re-Commerce Work for Your Brand
Successfully implementing a re-commerce strategy requires careful consideration of several operational factors.
Cost Structure Analysis
Firstly, there needs to be clarity on the allocation of shipping costs, avoiding any ambiguity about whether the consumer or brand is responsible. A hybrid model where return shipping costs are shared, free returns for premium members or high-value items, and fees calculated based on resale potential and condition would be worth consideration.
Deploying specialized fulfillment services like detailed condition assessments and inspections—with standardized grading systems—will also be a good move. Looking at refurbishment and repackaging, partnering with manufacturer-approved repair service providers and accredited refurbishment facilities will also help.
As far as storage is concerned, optimizing warehouse space, developing sustainable packaging solutions and implementing just-in-time (JIT) processing will be pivotal, collectively building a cost-efficient re-commerce model.
Revenue Optimization
Costs and revenue will need to be carefully managed when moving away from standard linear retail and ecommerce. Consider the following:
- Dynamic pricing models based on demand and condition
- Competitor pricing awareness
- Seasonal pricing adjustments
- Minimizing the time from return to resale
- Optimizing recovery channels
- Reducing customer acquisition costs through targeted marketing and loyalty incentives
- Lowering fulfillment and transportation costs wherever possible as operations scale
- Reliable trade-in programs for regular customers to build loyalty
- Transparency regarding sustainability operations
Building a Sustainable Re-Commerce Strategy
Workable re-commerce strategies require an overhaul and rethink of a company’s entire logistics infrastructure.
Integrated technology platforms must be integrated across multiple channels, including:
- Real-time returns and barcode or UPC inventory management
- Automated returns processing systems
- Predictive maintenance and quality assessment checkers
- Digitized, quick communication channels
- Performance analytics, sustainable route planning, and reporting tools
Brands must also take steps to add value to their customers when purchasing and re-purchasing through their channels. This can include:
- Detailed condition reports and inspection and grading systems
- Dedicated in-house or outsourced repair facilities
- Custom kitting and repackaging solutions
- Stringent quality control measures
As far as returns management is concerned, streamlining the process will be crucial in upholding a quality re-commerce brand. Whether this comes in the form of self-service portals or instructions, automated approval systems or specialized routing systems, expediting the process to minimize hassle and worry for consumers will prove key.
How to Scale Your Re-Commerce Operations
Scaling re-commerce operations successfully depends on several critical factors, namely infrastructure optimization, operational productivity, and cost management.
When optimizing infrastructure, partnering with a 3PL that specializes in re-commerce models is recommended. These providers can evaluate their clients’ technology integration capabilities, review scalability potential, and optimize logistics processes to minimize bottlenecks and reduce costs. This, coupled with stronger inventory management, real-time tracking, quality control processes, and user-friendly returns procedures, will allow brands to scale effectively.
Utilizing advanced kitting services will also help brands design optimized workflows and standardized packaging solutions to aid their scaling strategy. Comprehensive returns cycle management and automated tracking across various hardware (GPS, RFID, BLE, etc.) will help brands maintain accurate inventory in real-time and strive towards performance objectives and KPIs.
When it comes to managing costs and overheads, balancing shipping costs between business and consumer, with dynamic pricing evaluating locality, value, and demand, will help exponentially. While initial overheads may be higher in the short term, over time, these will be rebalanced with the right investments and optimization.
Conclusion: Next Steps in Your Re-Commerce Journey
As re-commerce continues to grow with each passing year, now is the time to adapt your operations to meet this demand.
Objectively evaluate your current operational capacity, identify the most pressing infrastructure and technology upgrades, pinpoint the most attainable objectives and select the right partners to help match your brand’s growth trajectory.
With more than 20 years’ experience in IT and extensive knowledge of the evolving tech industry, Chester Avey writes authoritative articles and up-to-date opinion pieces on a wide range of topics: digital marketing trends, AI, cyber-security, software solutions and ecommerce.
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Tags: Sustainability
