Recommerce - A Booming Market For A Sustainable Future

By Nicola Kinsella, VP Global Marketing, Fluent Commerce

Buying and selling pre-owned items always has been popular, with almost everything from cars to clothes available second hand. But, like so many other areas of the economy, ‘recommerce’ as it’s now more formally known, has been digitally transformed. A process massively accelerated by the likes of eBay and Craigslist, pre-owned is now fully mainstream, given added importance by the need to focus on global sustainability and more recently, the COVID pandemic.

Momentum is growing. Data from Statista suggests that the global second hand and resale apparel market will reach $65 billion by 2024 – an impressive level of growth since 2012 when it was worth $11 billion. Brands clearly see a major opportunity and by diversifying their proposition, they open up a committed and engaged customer base of shoppers who understand that sustainability and fashion are far from mutually exclusive. Today, recommerce is chicer than ever before. 

Take luxury group Kering, for example, which owns Gucci, Bottega Veneta, Alexander McQueen, and Balenciaga, among others, who recently acquired 5% of the French consignment e-tailer Vestiaire Collective. Vestiaire sources and authenticates pre-owned items, and while many fashion retailers saw their markets shrink last year, and understandably so, Vestiaire grew by more than 100%.

A Circular Argument

A growing diversity of brands are homing in on this ‘circular economy,’ a great example being IKEA, which now offers a buyback service for unwanted furniture, aiming to give it a “second chance at life.” And when it comes to clothing, Trove is an example of an innovative business providing ‘circular shopping-as-a-service’ to well-known brands such as Nordstrom, Levi’s, Eileen Fisher, and REI. For example, Patagonia used Trove to launch its Worn Wear ‘Used Clothing and Gear’ offering, designed to enable customers to return still functional clothes and receive a credit in return. Similarly, Levi’s used Trove to create Levi’s SecondHand, which also helps customers keep clothes from ending up in landfills.

Younger consumers are the driving force behind recommerce. Even though 56% of people across all the generations are willing to pay more for sustainable products, both Millennials and Generation Z are twice as likely to engage with the circular economy than older consumers, according to GlobalData. In particular, luxury goods are fueling this growth in second-hand retail, with the high-end second-hand market growing four times faster (12%) than the primary luxury market (3%).

Delivering The (Used) Goods

Creating an effective infrastructure to handle and process returns relies on a series of core competencies. These include validating whether items are genuine or fake, whether the returns process needs to include cleaning and repairs, and whether credit notes must be issued, among others. Think of it as ‘reverse logistics’.

For retailers that opt to handle recommerce returns in-house, outsourcing stages of the process like cleaning and repairs, a flexible order management system (OMS) may still be required depending on their business model and customer expectations. Today’s modern OMS platforms, for instance, make it easy for brands to handle recommerce, and in common with any traditional fulfillment process, the OMS can be used to manage everything from initiating a blind return and consolidating items for shipment to a processing facility, to managing manual steps like quality checks and triggering notifications at important points.

This is no passing trend, with demand for resale growing dramatically as shoppers put vintage designer purchases at the top of their lists as part of a frugal mindset that will play an important role in long-term sustainability.

It also has real potential to go beyond any suggestion of virtue signaling by industries keen to demonstrate their eco credentials. Indeed, according to a recent McKinsey report, reselling, repairing and refurbishing could help reduce the fashion industry’s emissions by 13 million tons of CO² by 2030.

For brands and consumers alike, there is little in the way of downside. From the brand perspective, recommerce gives them a better chance to create enduring relationships with a generation of customers who care passionately about what happens to their garments after they’ve enjoyed them. By deploying the right order management system to deliver the logistics infrastructure required to trade in the circular economy, they also can strike the best balance between new and used. And for the consumers, the future offers an exciting opportunity to stay true to their values, while enjoying a diverse choice of brands and products.