For many years consumers have been able to get what they want, whenever they want with minimal effort and at low cost. But consumers are now facing into a very different reality. Empty shelves, rising energy bills and interest rates and staff shortages are colliding and wreaking havoc on an array of industries. Post pandemic consumers were already assessing their discretionary spending habits with a study from LEK finding that 57% of consumers believe the pandemic helped them realise that some of their pre-pandemic discretionary spending was unnecessary.
At the same time, consumers are becoming increasingly tuned into the climate emergency, worried about the impact their consumption has on the planet. As a result we are seeing the rise of many trends including that of re-commerce.
What is re-commerce and what is driving its growth?
Re-commerce is defined as powering the re-use of goods, which can mean both the reselling and renting of goods – and can encompass everything from fashion to furniture.
The concept is obviously not new, with the sale and purchase of second-hand goods online having been around since eBay consolidated the practice and moved it online in 1995. But in recent years we have seen a significant shift towards the re-commerce adoption, so why is re-commerce making a big come back?
Needing new: Many of today’s consumers want the best new thing, regular new product releases and feature upgrades lure them into making frequent new purchases. These purchases leave them with outdated products that still function well and have retained value
Environmental shoppers: Many of today’s shoppers are aware of their own environmental footprint, and are wanting to dispose of old purchases in a responsible and environmentally friendly way – along with understanding the eco-credentials of goods they purchase.
Cost-conscious consumers: Cost-conscious consumers trade, sell and exchange their old goods – and tend to change their shopping behaviour by factoring an item’s resale value into the cost of ownership and purchase.
Currently, clothing and second-hand apparel represent the largest portion of the re-commerce market and it is set to reach over $51 billion by 2023. Other popular re-commerce sectors include home goods, collectibles, and art. According to research from GlobalData, the whole market for second hand goods is projected to reach US$77 billion ($106 billion) by 2025, more than double 2021’s volume.
What’s more, research firm Cowen now predicts re-commerce will account for 14% of the apparel, footwear and accessories markets by 2024, up from about 7% in 2020.
Whilst historically re-commerce may have been associated with low value and undesirable products – the trend is being embraced by all parts of the market including the luxury end of town. As a result, we are seeing a plethora of players taking a slice of the action. Some of the major players globally in re-commerce include eBay, Craigslist and Facebook (via marketplace), as well as a series of vertical marketplaces including the RealReal, ThredUp, Vestiaire and others.
How are brands responding to re-commerce so far?
Although some brands are raking in millions off this business model, the appeal of re-commerce goes beyond money. Re-commerce isn’t simply a new revenue stream, it’s enabling brands to build sustainability credentials to appeal to core audiences. For example, Levi’s recently launched Levi’s Secondhand, a buy-back and resale program that lets customers purchase pre-owned Levi’s apparel online and exchange items in-store for a gift card that can be used toward a future purchase. The offering essentially turns the brand’s brick-and-mortar stores into environments that double as a sourcing channel for resale or recycling.
Lululemon have also jumped on the re-commerce wagon and have created “Like New” reselling options on their website that aims to reinforce and demonstrate the cleanliness and quality of re-sale items to reassure their customers of the quality of the pro-loved clothes. Anything that doesn’t meet their standards is responsibly recycled, driving a two-pronged sustainability approach.
We are also seeing re-commerce partnerships in market, notably Walmart and ThredUp, who combined forces to sell previously owned branded clothing, shoes, handbags and more via Walmart’s website.
Implications for brands
Not just about fashion: Although we are seeing a lot of focus and attention on re-commerce for fashion and apparel, re-commerce is growing across an array of industries and verticals including collectibles, toys, furniture and much more. This means a lot of brands have the opportunity to tap into the benefits re-commerce can offer. Consumer product brands and retailers in various verticals should assess how re-commerce is re-shaping their respective market and assess market entry alternatives as there is no one size fits all approach.
Customer engagement and loyalty: It is important for brands to understand the role re-commerce might play in driving loyalty and retention – given a brands values and ethics are increasingly driving purchase decisions. According to KPMG, 70% of shoppers prefer brands that promote an eco-responsible approach. While completely reinventing its supply chain to be fully circular-ready can take time, re-commerce represents a more immediate path forward for brands to remain relevant as consumers seek out sustainable alternatives.
Are you interested in developing or evolving your eCommerce strategy? Get in touch with us to chat about how we can help to build a robust strategy tailored to your audience’s needs here.