Infographic – Recommerce is the sustainable trend transforming retail
By Katerina Mansour - 30 January 2023
Consumer interest for used products in itself is not a new concept – secondhand purchases have existed since the dawn of time. However, we are currently seeing an acceleration, both in consumer demand and brand engagement, towards what many are calling “recommerce”. Furthermore, while recommerce applies to all consumer goods, we’re seeing secondhand apparel reaching heights of popularity never seen before. Indeed, the resale market for apparel is expected to be worth $218 billion by 2026.
Perhaps most interesting is that a growing number of businesses have decided to jump on this trend in the past couple of years. They’ve done so either by developing their own secondhand programmes or partnering with third parties to co-develop a resale offer. We’ve seen brands like Levi, Michael Kors, Gucci, Jimmy Choo and Hugo Boss take this step recently.
Below we’ll have a look at key factors driving the growth of resale retail and the benefits for brands. We’ll also cover how startups are key enablers in this space.
Key drivers behind the rise of recommerce
While there are a large array of reasons that can explain the rising popularity of secondhand shopping, we’ve identified three of the main drivers below.
Rising inflation and the need to spend less money
According to a ThredUp survey, 58% of consumers said that buying secondhand helped them amid rising inflation. Furthermore, 45% of adults in the UK reported being open to buying secondhand via an online resale marketplace, citing saving money as the primary motivator. Indeed, inflation is a significant issue today that is having a very tangible impact on households worldwide. Consumer price inflation reached 6.2% in France in October 2022, the highest it had been in decades. A survey by BFMTV showed that 51% of French consumers were avoiding shopping and outings in order to spend less money. Similar outcomes are seen in the UK, where The Guardian reported two-thirds of consumers plan on cutting non-essentials in 2023, like eating out and holidays.
Given this economic context, it’s not surprising that buying secondhand would become more popular. However, one key difference today is that there is much wider access to secondhand items than there ever was before.
Increased convenience and widespread access to secondhand products today
Today, it’s much easier to buy or sell secondhand products. Platforms like Vinted, Vestiaire Collective and Leboncoin have become big players on the market. For example, Vinted overtook eBay as the biggest online resale marketplace in Europe in 2021, with a nearly 40% market share. However, numerous smaller companies and startups have also emerged making it more convenient for consumers to access secondhand offers. This reality has been acknowledged by consumers: 70% of consumers say it’s easier to shop secondhand than it was 5 years ago. They attribute this to the emergence of new technologies and online marketplaces.
Consumer demand for more sustainability
It’s a well-known fact today that sustainability is a huge driver for consumers in all areas of life. The amount of waste generated by human beings is of mounting concern and has led to growing activism. Recommerce is a response to this in some respects.
ThredUp reported that secondhand apparel displaced 1 billion new clothing purchases in 2021. Indeed, fashion has historically been the biggest segment in secondhand shopping. Its impact on the environment is well-known today and consumers have identified it as one of the areas they have the most control over. As a result, many consistently buy secondhand apparel rather than seeking out new items. This is especially the case for younger generations. For example, 62% of Gen Z and Millennials say they look for an item secondhand first. Furthermore, according to Capterra, 94% of French consumers say that sustainability factors in their decision-making process before a purchase. Brands are increasingly seeing this as a driver for change and are therefore becoming more inclined to develop secondhand programmes or partnerships for their products.
Key benefits for brands engaging in recommerce
Recommerce presents many opportunities for brands and retailers. For example, 88% of retail executives offering resale say it has helped drive revenue. As awareness of the benefits have grown, so has the number of businesses joining the resale world. Research has shown that brands with resale shops increased by 275% in 2021 compared to 2020.
In our infographic we chose to focus on 3 key benefits, though there are of course many more.
Generating more revenue through resale
By developing buy-back and resale offers for their business, brands are able to generate more revenue for each of their products. A customer purchases the item, uses it, decides it’s no longer needed and then sends it back to the brand to be resold secondhand. The customer is typically rewarded in some way for this act: store credit, coupons, discount on next order, etc. Through this process, brands can also avoid overproduction. This incurs economic benefits as it avoids the need to majorly discount excess stock at the end of a season.
Reaching new customer segments through resale
There are two customer segments that seem particularly interesting for brands to target with a resale strategy: customers who place sustainability as their first priority when purchasing an item and customers who cannot afford a brand’s products new. The first segment is likely to continue to grow, as consumers increasingly seek out businesses that adopt sustainable practices. Furthermore, as the number of sustainable competitors continues to grow, brands without a strong and genuine sustainability strategy will fall behind.
The second customer segment is especially relevant for luxury brands, which are among those adopting resale strategies today. Indeed, the European luxury resale market is expected to be worth $25 billion by 2027. The reason is of course simple, many consumers would love to own luxury items but are simply not able to invest the sums necessary to acquire a new item. For years now they’ve thus gone to platforms like Vinted or Vestiaire Collective as an alternative. Indeed, BCG research showed that 71% of buyers purchase secondhand from brands they wouldn’t be able to afford otherwise. By developing their own resale systems, luxury brands can thus reach new audiences and generate additional revenue, while also embracing growing demand for sustainable luxury.
Gaining more control over your product’s life cycle
A major issue with shopping for secondhand items from major brands is authenticity. Many customers are fearful of buying a knockoff. By gaining control over their products’ life cycle, brands can help provide that confidence to a customer that a secondhand item is authentic. They may also be able to reduce the amount of items of theirs being resold by third-parties. This can be crucial for brand image, as it avoids customers unknowingly buying a knockoff and being upset by the poor quality of said product. It also helps avoid third parties representing their brand in ways that might be misaligned with their core values and mission. Lastly, brands implementing resale platforms also gain more data on their products at different points in their life cycle, which can prove quite valuable.
How startups enable recommerce
There are a few key ways in which brands are collaborating with startups to develop a resale offer. One strategy is to partner with an already established resale platform to launch said offer. This involves having a select group of individuals provide secondhand items, which the brand can authenticate before they are made available on the platform for sale. One example of this is when Alexander McQueen partnered with Vestiaire Collective. Another approach is to develop your own resale platform and leverage a startup’s already-available technology to put it together. Indeed, startups can make it easier to develop your own marketplace by providing you with their expertise and resources to manage logistics, inventory, refurbishing, orders and more.
Aside from collaborating with brands to develop resale programmes, many startups have also developed their own solutions to support customers of the recommerce market. Gently and Faircado are two examples of this. Gently aggregates secondhand offers from an array of resale platforms so that users can easily find what they’re looking for by browsing a single platform. Faircado, on the other hand, develops a browser extension that works as a shopping assistant. While a user is shopping for a specific item, the extension will show them second-hand offers available online for said item. This helps avoid people hours of searching for more sustainable alternatives to the products they want.
Learn more in our infographic below: