Why is recommerce so popular?
One major reason is that it’s an easy way for customers to get something they want without having to leave their comfortable homes. Plus, it’s a great way for brands and retailers to sell products that may not be feasible or even possible through the traditional shopping channels. With recommerce, there are literally no limits to how products can be sold or consumed.
There are a few reasons for the recent resurgence of recommerce. Firstly, consumers are more aware than ever of the benefits of buying products secondhand. Not only does this save them
Sustainability has come to be valued highly in our society and across many industries. With the growing awareness of the impact that our wasteful practices have on the environment, there has been an increased drive to find ways to reduce or reuse materials. In the apparel and textiles industry, this often manifests itself in overproduction and unsold items being tossed out or destroyed altogether. This waste not only affects our planet, but also hurts businesses and consumers alike as it costs money to dispose of this excess inventory. By working together we can achieve a world where sustainability is embraced not only by businesses but by consumers as well.
Gen Z is quickly becoming a force to be reckoned with when it comes to ethical consumption. They are deeply committed to sourcing products that are sustainable, no matter the cost, and this trend will only continue as they enter the workforce. With their growing purchasing power, businesses that align themselves with Gen Z values will be in a strong position to succeed.
Recommerce enters big brand boardrooms
It would appear that the proliferation of successful third-party resale marketplaces has generated a paradigm shift in how brands view the secondhand market. Now, realizing the potential revenue and valuation upside to being able to sell their goods through these platforms, brands are beginning to invest more resources into understanding and measuring the impact on top and bottom line. While recommerce still faces significant challenges (namely creating a trustworthy shopping experience for buyers and reducing traffic fraud), it appears that it is poised for significant growth in the coming years.
When Patagonia publicly stated their goal to generate >$100 million in resale revenue by 2020, they set the bar high for other consumer companies looking to follow suit. This is a strong indication that recommerce is now seen as a important strategy for brands looking to thrive in the future. With shoppers becoming more interested in sustainable andustainable products, it makes sense that companies would want a higher percentage of revenue from recommerce transactions.
Brands can take advantage of repurchase marketing to drive traffic to their websites and generate revenue. By selling the same product multiple times, brands can reduce production costs while also increasing market demand for the product. This allows businesses to grow their bottom line while attracting more customers through a more efficient marketing strategy.
3 areas drawing VC investment
The recommerce space is growing quickly and there are a variety of startups looking to take advantage. With managed marketplace platforms, enabling tools and software, and consumer-facing industries being some of the most fertile ground for recommerce startups, founders have plenty of options to consider when building their businesses.
Marketplaces
One of the most interesting aspects of recommerce is that it allows startups to directly connect with customers. By managing the entire resale process, these companies can tap into a large potential market. Additionally, platforms typically have a small SaaS fee, but most revenue is generated via a take rate on goods sold, ranging from 10%-25%.
Advertising remains a key differentiator for device makers and brands on branded marketplaces, as consumers are bombarded with advertising from multiple sources throughout the day and can be swayed to make a purchase based on their initial impressions. Device makers, in contrast, must devote significant resources to marketing campaigns to maintain relevancy in the minds of consumers. By pooling resources across brands and devices, branded marketplaces provide an environment where device makers can focus on innovation and quality control instead of marketing spending.
Because C2C marketplaces are typically run by brands, they tend to be filled with products that the brand has created or acquired. This type of control over secondhand inventory gives brands a unique selling opportunity, as well as the ability to appeal to customers looking for something specific. Additionally, psychological factors can come into play when using these types of marketplaces; consumers may see secondhand products as being more authentic (since they have not been altered in any way) and this can lead to higher levels of trustworthiness.
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