3 lessons from recommerce pioneers
Thrift shopping is getting a makeover.
As companies begin to take reuse seriously, an increasing number of consumer goods companies are building "recommerce" businesses around taking back used items and reselling them to consumers interested in secondhand goods.
"We’ve been obsessed about this space for about 10 years, and what’s exciting now is this space is showing up," said Andy Ruben, founder and CEO of Yerdle, a resale company that powers the back end of about 85 percent of the brands that include recommerce in their business models. He spoke last week at the Circularity 19 conference in Minneapolis.
Recommerce is more than just a sustainability opportunity; it’s also a business opportunity grounded in circular economic principles. Ruben cited a Wells Fargo report estimating that circularity — the notion that brands must consider the full lifecycle of the products they sell — and recommerce will cause $50 billion in market disruption over the next three years. The secondhand apparel market alone is projected to more than double in size by 2023 to $51 billion, according to a report from secondhand clothing seller ThredUp.
Consumer goods brands are discovering an opportunity in following the road paved by pioneers such as ThredUp and The RealReal, which targets the luxury resale market, Ruben said. Two of those companies shared at Circularity 19 some lessons they have learned in implementing their own recommerce programs.We see used and potentially recyclable goods as levers of growth and retention and acquisition for us.
Tip 1: Consider the customer acquisition potential
In a world where younger consumers demand more from the brands they interact with, both agreed that recommerce is central to survival for the consumer goods sector. That’s especially true given the importance younger generations place on sustainability and equity issues. About 30 percent of millennials and members of Generation Z will participate in resale or rental transactions this year and that will rise to half next year, according to Ruben.
One in every three customers for outdoor retailer REI’s rental and recommerce business is a millennial, said Peter Whitcomb, director of new business development and the circular economy, in conversation with Ruben. "We don’t want to give up our customers and members’ closets and garages," he said. "We see used and potentially recyclable goods as levers of growth and retention and acquisition for us."
REI has three lines of business included in its recommerce initiative: resales of used gear, both online and at physical garage sales; rentals of outdoor gear at 127 locations; and experiential centers that are separate from stores and offer both rentals and experiences such as climbing or kayaking classes.
Tip 2: Dedicate resources
Given the complexities and challenges involved in building a recommerce business, it’s important to put a strong team in charge. "Having a dedicated project manager was really key to our launch," said Karen Campbell, who works on strategy and new ventures as global commercial business controller for Arc’teryx, an outdoor equipment and apparel company, and who also spoke on the panel. Just two days earlier, Arc’teryx launched its Rock Solid buyback program to take in, clean, repair and resell lightly used outdoor gear.
"There’s so many functions involved, there’s so many ways that this kind of program can go," added Campbell. "Having someone who can speak all the languages, all the functions, and really keep focused on that minimum viable product to get it live and get it going and take the learnings and evolve from there was really important."
Tip 3: Don't go it alone
Partnering with service providers who specialize in product takeback and turnaround can smooth the process for brands interested in launching recommerce programs. "The unifying principle around circular commerce is you take the product back with intent," Whitcomb said. "As soon as you have the product back within the system, the operational mechanics of repairing it, pricing it, fulfilling it are really, really complex and not necessarily the core competency of a retail brand."
Even with great partners and project managers, though, the types of programs REI and Arc’teryx are building may not be right for all retailers. "You have to have durable quality product to begin with," Campbell noted. "We have a design ethos that really celebrates durability and timeless designs, and we know that there’s equity in our product that wasn’t being realized."
With recommerce programs, both brands and consumers are starting to realize that value.