What is Recommerce?

Recommerce is the practice of selling previously owned items.  While businesses such as thrift shops, jewelers, and automobile dealerships have been known for using “certified, pre-owned” models, the practice has gained momentum in other sectors over the last decade. Today, luxury and premium fashion brands are seeing profitable opportunities in recommerce. 

More recently, recommerce has become synonymous with online marketplaces such as TheRealReal, ThredUp, and Poshmark, where customers can buy and sell items. These new companies can be thought of as third-party marketplaces.

Types of Recommerce 

As sustainability and circular economy practices gain prominence in business, recommerce has emerged as a powerful concept. It allows brands to extend the lifespan of their products, reduce waste, and tap into new revenue streams. Let’s explore the three types of recommerce: 

• Peer-to-Peer Marketplace 
• In-House Branded Recommerce 
• Managed Recommerce

Peer-to-Peer Marketplace

Peer-to-Peer marketplaces are third-party platforms facilitating buying and selling of pre-owned items. These online marketplaces connect individual sellers with interested buyers, creating a vibrant ecosystem of pre-loved products. Here are the pros and cons of this recommerce style:

Pros

• Wide customer reacch: Peer-to-Peer  marketplaces attract a large audience of bargain hunters and enthusiasts, increasing the chances of item sales.
• Minimal operational effort: Brands can leverage the existing platform infrastructure without significant investments in technology or logistics. 

Cons

• Limited brand control: When utilizing a third-party platform, brands relinquish control over customer experience, pricing, and data insights.
• Potential brand dilution: Competing alongside various other sellers can dilute brand exclusivity and uniqueness.
• Lower profit margins: Transaction fees or commissions charged by the platform can impact profitability.

In-House Branded Recommerce

In-house branded recommerce involves brands developing their own recommerce channels or platforms. This approach allows brands to maintain control over the entire customer experience, from item selection to pricing and logistics. Consider the following pros and cons:

Pros

• Enhanced brand control: Brands can curate the recommerce experience to align with their brand values, ensuring a consistent and premium customer journey.
• Greater customer engagement: In-house recommerce fosters direct customer relationships, enabling personalized interactions and data collection for future marketing efforts.
• Improved profit potential: By eliminating third-party fees, brands can capture a higher percentage of the resale revenue, leading to improved profit margins.

Cons

• Initial setup costs: Developing an in-house recommerce platform may require investments in technology, logistics, and marketing.
• Operational complexity: Managing the end-to-end recommerce process can be challenging, especially for brands without prior experience or resources. However, companies like Trove have created white-label solutions to do the heavy lifting for brands for a reasonable setup and management cost. 

Managed Recommerce

Managed recommerce refers to partnering with specialized recommerce service providers that handle various aspects of the process on behalf of the brand. These providers offer comprehensive solutions, including technology, logistics, pricing, and customer support. Here are the key considerations:

Pros

• Expertise and support: Managed recommerce providers bring specialized knowledge and experience, guiding brands through the recommerce journey.
• Scalability: Brands can scale their recommerce operations without significant internal investments or resource allocation.
• Streamlined operations: Outsourcing recommerce tasks frees up internal resources, allowing brands to focus on core competencies.

Cons

• Reduced brand control: While managed recommerce providers offer support, brands may have limited control over certain aspects of the process.
• Partnership dependency: Brands rely on the performance and reliability of the recommerce service provider for seamless operations. 

When evaluating recommerce strategies, it’s crucial to consider the specific goals and resources of your brand. While peer-to-peer marketplaces and managed recommerce have their merits, in-house branded recommerce stands out as the ideal choice for brands aiming to maximize control, customer engagement, and profitability. By establishing an in-house recommerce channel, brands can shape a unique and tailored customer experience, build brand loyalty, and contribute to a more sustainable future. 

Take a Look at these 14 Brands with Resale Programs 

Why the Recommerce Revolution is Here to Stay

While pre-owned models have been adopted for many years, the current ‘Recommerce Revolution’ in retail is here to stay. This shift is customer-led and based on customers’ desire to shop in more sustainable and affordable ways. While the early evolution of the market has been led by third-party marketplaces serving the growing customer behavior, the future growth is via brands. 

Over the past five years, new business-to-business platforms have emerged to support brands that want to enter the resale space themselves.  Trove pioneered these new platforms with partners such as Patagonia, Eileen Fisher, and REI in 2016, providing the trade-in, single SKU merchandising, operations, and merchandising technology necessary to scale a resale program 100% aligned with the brand.

From a sustainability perspective, recommerce offers brands a way to get more value out of an item they already made. This happens to also be a profitable way to grow their business without commensurate growth in their greenhouse gas footprint. More than 70% of a product’s environmental footprint is from upstream materials and production.  By allowing customers to trade in and purchase previously owned items, brands support more circular models that minimize the effects of new production–growing their business by selling their items multiple times. For example, it takes over 2,000 liters of water to produce enough cotton to manufacture a single shirt, and over 7,000 liters of water to manufacture a pair of jeans. In addition to water, manufacturing apparel requires multiple resources, including electricity and natural gas. By opting to include recommerce as a part of their business model, brands can reduce their overall carbon footprint. 

From a business perspective, leveraging the recommerce business model opens the door to a wider customer base that may have previously been unable to afford the prices of new luxury and high-end items. Additionally, selling premium items in good condition at more accessible prices gives brands an opportunity to make a profit a second time on the same item. 

Learn More About the Market Factors Driving Luxury Resale Boom. 

How Does it Work?

The process of recommerce is essentially making items no longer being used sellable again.  These items are then merchandised and sold to customers through existing channels, online or physical channels. 

Trove works directly with brands to provide the end-to-end products and services solutions necessary to operate a profitable brand resale program at scale. For example, when a customer decides to trade-in previously purchased apparel to lululemon or Patagonia, Trove provides the technology for the brand to identify, price, and issue a gift card to the customer so they can purchase something in-store that day or online. This keeps the customer in the brands’ ecosystem or purchasing behavior to help boost the lifetime value of a customer and acquire new customers into the mainline business. 

Trove’s operating system provides the backbone for brands to identify, accept, route, price, and issue credit for any pre-worn item, no matter how worn or old. Then intelligently route millions of trade-ins and unlock the ability to resell previously unsellable items via branded websites. Trove’s merchandising technology for these single SKU items integrates directly into brands existing online and store channels providing true-to-brand photography, item listings, and trade-in credit along a seamless customer journey, allowing a new lululemon or Patagonia customer to find and purchase an item, getting more life out of premium items and growing the brands’ customer base.

Build Your Trade-In & Resale Program Today

Recommerce is rapidly becoming a preferred practice for shopping among customers of all ages. Resale is on track to become 20-30% of the closet of the future. Trove powers Resale as a Channel for the most innovative, premium, and luxury brands, including Allbirds, REI, NEMO, Patagonia, and more, Trove believes businesses can grow without growing their carbon emissions.  Learn more about Trove’s mission and access case studies on its recommerce model by visiting the website today.