What is Recommerce?
By Andy Ruben
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.
The term ‘recommerce’ was introduced in 2005 by a man named George Colony, CEO of Forrester Research, a global research and consulting company specializing in technology and B2B marketing. During an interview, Mr. Colony used the term when discussing the process of first-world countries selling outdated or ‘used’ technology to growing nations.
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.
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.
Different than third-party marketplaces, brands have existing recognition, trust, physical store networks, and existing customers. Hence brand involvement with resale will substantially grow the category. Some brands are exploring this new demand by engaging with third-party resale platforms that offer Resale-as-a-Service to test the waters. These relationships are low effort to set up, however, the objectives of the partnership are different. Brands gain limited access to customer data and controlling merchandising activities such as pricing, grading the condition of an item, description and photography of an item. Lastly, third-party marketplaces are incentivized to sell more stuff which is not the same as bringing in a new customer to a brand or building brand loyalty–so different objectives.
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.
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.