Before the COVID-19 pandemic, the recommerce industry was expected to boom, potentially doubling in growth over the next five to 10 years. Now, with the unemployment rate lingering at 13.3 percent in May and the spread continuing in new hot spots, the industry is witnessing its own impacts. While some consumers are turning more often to recommerce sites for products, it's estimated that growth across the whole of the retail economy will be negative.
"There is no doubt that coronavirus has disrupted the retail market and all segments within it," wrote Neil Saunders, GlobalData managing director and lead analyst, in recommerce marketplace OfferUp's 2020 Recommerce Report: Parents & Children. "Recommerce is not immune from these impacts."
OfferUp published the report, in partnership with data analytics and consulting firm GlobalData, at the end of April. The report shared insights about how parents are shopping for products for their children, including furniture, clothes and essentials such as diapers and feeding tools. Among the report's findings:
- 66 percent of the surveyed parents are more worried about their finances now than they were before the start of the coronavirus pandemic.
- 39 percent of the respondents are turning to online resale marketplaces, such as OfferUp, to purchase items for their children during the pandemic.
While the recommerce industry is not immune to the downturn, there were areas of growth at the beginning of the pandemic. OfferUp's analysis, for example, noted that of the over 2,000 parents it surveyed for the report, 71 percent of the parents overall said they worried about their personal finances, and 81 percent described their level of parenting stress as medium or high in this moment.
Despite financial concerns, parents are still spending as a direct result of the pandemic — after all, children are home more often than they would have been if schools were still holding in-person classes.
"I think what we've seen is just a huge influx of activity on OfferUp because people still need things. And so, if you look at certain categories, certain categories have really taken off," said Nick Huzar, CEO of OfferUp, when we spoke in early May about the report.
Some of those categories for babies and kids were essentials (such as the diapers and feeding tools mentioned above), playtime and apparel, which are also noted within the report as the top three spending categories. The report noted that the baby and kids recommerce market is expected to increase from $3.3 billion in 2020 to $5.6 billion in 2024.
The impacts of the COVID-19 pandemic are not limited to OfferUp. In early May, Back Market, a marketplace for refurbished electronics that operates in eight countries including the United States and France, where it was founded, also reported increased interest — among parents and other consumers.
"We've seen in two weeks with more consumers, who are under lockdown orders and want electronics products, more have turned to refurbish companies like ours," said Serge Verdoux, managing director at Back Market. "I've seen a lot of parents who have had to purchase either laptops or more likely tablets so that the kids could do home school."
Verdoux said Back Market’s "business in April was 100 percent higher than in March."
And the company is poised to grow in other ways. In May, it announced a funding round of $120 million from investors Goldman Sachs, Aglaé Ventures and Eurazeo Growth.
The company said this latest infusion will help it invest to improve the features and the functionality of its platform and grow n markets where it already operates — the U.S., the U.K. and Germany — and later expand to other markets including Canada and Mexico.
"We definitely have a plan to expand beyond the eight markets that we are in," Verdoux said.
For Back Market, which is working with about 1,200 refurbishers and plans to double that figure in the next year, refurbished goods offer an opportunity to make profit while diverting waste from the landfill. Despite the pandemic-induced economic downturn, the recommerce space is still poised for growth.