Modern Retail

The rise of recommerce: Retail’s sustainable future

Recommerce

The sale of pre-owned items is a tradition as old as the marketplace itself, spanning everything from high-end auction houses selling antique art, furnishings and specialist collectables to the humble garage or yard sale. The arrival of the internet, however, proved transformational as platforms like eBay and Craigslist enabled resellers to tap into a much wider potential customer base. All of which helped fuel a change in societal attitudes where the ownership of pre-owned goods is concerned.

Fast forward to today and the recommerce market is booming, thanks to a generational mindset shift combined with changes wrought by the global health pandemic that are driving consumers to adopt more sustainable shopping habits. Indeed, last year’s COVID-19 lockdowns spurred more people than ever to head online to sell or buy second-hand products. 

The consumer love affair with recommerce

Recommerce has a widespread appeal for consumers from every age demographic and all walks of life. So much so that a growing awareness of green issues is fast becoming a top factor in purchasing decisions, with 73% of millennial consumers saying they prefer to purchase from sustainable brands. 

In addition to the growing disinclination for throw-away fashion, luxury brand lovers on a smaller budget view buying pre-owned items at a discounted price as a practical way to access previously out-of-reach collections.

Finally, in an era where conscious consumption is all the rage consumers no longer want as much ‘stuff’ in their lives. Especially if their living spaces are constrained. Recommerce offers a sustainable way to clean out their closets, achieve lifestyle aspirations, and update their look in one stroke. 

An opportunity waiting to be grasped

According to Statista, the global second hand and resale apparel market is predicted to hit $65 billion by 2024, compared to just $11 billion in 2012. All of which presents brands with a significant potential opportunity. By diversifying their offerings, they could tap into a new customer base of price and eco conscious shoppers, all the while demonstrating the strength of their sustainability credentials. 

Last year Kering, which owns Gucci, Bottega Veneta, Alexander McQueen, Balenciaga and others, acquired a 5% stake in the French consignment e-tailer Vestiaire Collective. Vestiaire offers a service that both sources and authenticates pre-owned items, so prospective buyers can shop with confidence. While many fashion retailers saw their business shrink last year, Vestiaire grew by more than 100%.

To participate in the so-called ‘circular economy’ that’s scoring so highly with today’s consumers, brands need to be certain they can both preserve the value proposition of their high end items and handle all the logistics elements involved.

Recommerce as a service

While luxury brands make up a significant proportion of re-sold goods, all kinds of sports brands, retailers and labels are getting in on the recommerce act and adopting circular initiatives. Only recently, IKEA has announced a new buyback service for unwanted IKEA furniture and committed to resell, donate or recycle these items.

When it comes to apparel, Trove has been providing ‘circular shopping’ as a service to leading brands like Nordstrom, Levi’s, Eileen Fisher, and REI. Indeed, Patagonia used Trove to launch its Worn Wear digital storefront – an initiative designed to encourage customers to return their ‘still functional’ clothes to a store or by mail and receive a credit in return. Meanwhile, Levi’s used Trove to create Levi’s SecondHand, which also aims to help their fan base keep clothes from ending up in landfills.

Recommerce: the commercial realities

While a recent study revealed that 56% of people across all the generations are willing to pay more for sustainable products, it is young consumers that are leading the fray. According to research by GlobalData, both Millennials and Generation Z are twice as likely to engage with recommerce than older consumers and are enthusiastically buying up pre-owned clothing, jewellery, shoes and handbags. Indeed, one-third of Generation Z expected to buy one second hand clothing item, shoe, or accessory in 2020 alone. High end goods in particular are powering this massive growth in second-hand retail, with the luxury second hand market growing four times faster (12%) than the primary luxury market (3%).

Recommerce: mastering the processing options

One of the biggest challenges of recommerce is determining the best way to handle and process returns – including validating if items are genuine or knockoffs, whether the returns process needs to include cleaning and repairs, and whether credit notes will be issued are dependent on the item condition. This is reverse logistics at its essence. 

After which, decisions will need to be made on whether to offer a fully integrated brand experience that lists used items alongside new, or if it’s preferable to sell used items on a separate microsite. 

For retailers that opt to handle recommerce returns in-house, only outsourcing stages like cleaning and repairs, a flexible order management system (OMS) will be key to crafting a process that best fits their proposed business model and meets customer expectations.

Today’s modern OMS platforms make it easy for brands to handle all the logistics elements that make recommerce possible. Just like any other fulfillment process, the OMS can be used to orchestrate every step: from initiating a blind return and consolidating items for shipment to a processing facility, through to managing manual steps like quality checks, and automatically triggering notifications to staff and customers and making items available online once these are available for resale.

Seizing the moment

With consumer buying habits shifting, demand for resale is exploding as shoppers hunt down vintage designer options and embrace frugality in a bid to eliminate wastefulness and save the planet. But that isn’t the only factor at play. 

A growing focus on circularity and sustainability within the fashion industry itself is also playing a major role in pushing the resale agenda forward. Indeed, according to a recent McKinsey report reselling, repairing and refurbishing could help reduce the fashion industry’s emissions by 13 million tonnes of CO2 by 2030.

As brands look to create lifelong relationships with customers who care about what happens to their garments after they’ve enjoyed them, deploying the right OMS is the key to putting in place all the logistics elements that make it easy for high-value customers to trade in items, so they can buy into the latest collection – and brands can craft the process that best fits their business at the same time. While offering a sustainable way for young shoppers to acquire a luxury experience.

Credit: Rob Shaw, MD EMEA at Fluent Commerce

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