Consumers’ changing values, tastes, generational differences, and mobile shopping habits are helping fuel one of the buzziest trends around: recommerce. Recommerce, or reverse commerce, is the selling of previously owned, new or used products. The commonly held wisdom is that recommerce increases goods’ sustainability by keeping them out of landfills for a longer period and by reducing unnecessary purchases. But is that always true? For instance, online retailers’ famously easy return policies come with an ugly hidden cost. Overall, about 25 per cent of ecommerce goods are returned. That means more logistics, more damaged or unsellable goods, a higher carbon footprint, and of course, more landfill waste. And the jury is still out as to whether it can truly cut over-consumption.
As brand owners move forward with recommerce businesses, they need to make sure that programmes are well designed to serve stakeholders, as well as the environment. After all, recommerce grew out of a desire to give items of all kinds a second life. And, done well, can provide an incentive to change behaviours.
Brands are offering recommerce services because consumers want them, they increase ongoing engagement with their customer base, and they can drive real revenue. Recommerce merchants are growing 20-times faster than the broader retail market, providing a compelling imperative to move forward now.
How can your brand play in the recommerce market? What steps should you take to build a viable business model that delivers ROI?
What recommerce looks like for your brand will differ based on your industry, business model, partners, logistics, and other key variables. Researching your customers’ needs and buying patterns, potential recommerce opportunities, their feasibility and costs, and any business or technical requirements that need to be addressed is a solid place to start. Develop a plan that outlines sustainability goals, factors in costs, defines success, and plots ROI to get started.
Why do items become waste or subject to recommerce in the first place? You may realise that your product isn’t being used appropriately, has unknown process failures and need to be redesigned, or is out-of-step with current tastes and should be discontinued. Knowing why waste occurs can help you make changes now to reduce returns proactively. Conduct user research to see how people interact with products and where gaps in communication and utility can be filled, either through awareness campaigns, or through re-designs.
Many brands are reclaiming their goods to reduce landfill waste. With a recycling program, you gain experience in learning what, how many, and what type of goods consumers return and their condition, while burnishing your brand as a sustainability leader. You can recycle items into new products and downcycle damaged goods, like Mattel is doing with its Mattel PlayBack program for toys. Or perhaps it might make sense to buy back and sell used goods, while also providing refunds for new purchases, as IKEA is doing. It may even be as simple as removing branding to make items more attractive for re-sale. Patagonia has officially ended its long tradition of adding corporate logos to its clothing to help promote reuse and resale.
Not all goods lend themselves to refurbishment. Designer clothing and goods (not fast fashion), consumer electronics and appliances, and heavy durable goods can often be profitably repaired, restored and resold, while materials in poor condition can be downcycled. Right to Repair trends are fast becoming a force to be reckoned with in the electronics space.
Brands will need to decide how to refurbish goods and whether to control these operations or set up networks of certified partners. With Nike Refurbished, Nike is taking ownership of refurbishment. At the other end of the continuum is Stuffstr, a start-up offering closed-loop services for clothing brands: collecting, recycling, refurbishing and reselling items.
If your brand doesn’t have the capability to resell its own goods or develop its own digital platform, establish a partnership with a resale platform that does. For example, Walmart is working with thredUp to increase consumer access to used women’s and children’s clothing (not just its own brands). Look for partners that align to your brand’s purpose and have an established platform in this area.
Brands can take a leadership role in motivating consumers to adopt new behaviours, such as purchasing longer-lasting goods; prolonging their usage with good stewardship; repairing, renewing or upcycling items themselves; and returning preloved items for resale. From offering coupons and refunds to creating community, brands can create affinity around shared sustainability goals. Patagonia provides DIY guides and tutorials on repairs, provides credits for material returns, and connects individuals to organizations working on environmental issues via Patagonia ActionWorks. Leverage social and mobile marketing, PR, take-back events and other strategies to drive adoption.
When it comes to recommerce, customers aren’t waiting: They’re already here. Conscious consumers are buying from purpose-driven companies and sustainable brands.
By moving forward in a thoughtful way, brands can test new ideas, research and validate sustainable business models, develop the value chain to support recommerce services, and create the tools to drive more value from products.
Connecting with customers in a deeper way turns one-time product sales into ongoing, profitable relationships. Customers will gladly join brands on the journey of improving usability and sustainability over disposability, opening their wallets and hearts.