What is recommerce?

Recommerce is the selling of previously owned items through online marketplaces to buyers who reuse, recycle or resell them.

While recommerce is growing at a rapid rate, the concept is not new, with industry leaders, like Craigslist and eBay, having been around for decades. Electronics, appliances and media, such as books, CDs and DVDs, are products that sell well in the secondary market. Other retail items, such as brand-name clothing, shoes, jewelry and other fashion, are making their way from thrift to online stores. This entire business model is built around the idea of product reuse, taking it from its traditional roots in brick-and-mortar stores and bringing it online for more accessibility and reach for resale.

Types of recommerce

Most consumers are familiar with commonly used business models, such as business-to-business or business-to-consumer. With recommerce, new models, such as consumer-to-consumer and consumer-to-business, are available. Both consumers and businesses are finding ways to take advantage of the recommerce boom. New marketplaces and business programs are starting up in the wake of this adoption. Given the broad scope of the secondary market and the possibilities that exist to make a profit and reuse pre-owned items, there are several different types of recommerce solutions.

Informal and formal markets for recommerce

Informal and formal markets are the original forms of recommerce and one widely adopted by consumers in order to sell goods directly in the secondary market. Before the digital age, there were flea markets, garage sales and consignment shops that drove this type of person-to-person sales activity. However, digital marketplaces, such as Craigslist, eBay, Facebook Marketplace and Amazon, provide outlets for consumers to resell used products to buyers looking for discounted rates on products that still have an extended life span.

Other organizations have begun using digital marketplaces as a business model, with different companies focusing on different niche items, including the following examples:

  • DeCluttr
  • Poshmark
  • Mercari
  • OfferUp
  • thredUP

These companies incorporate payment processing into their platforms. However, the advent of PayPal, Venmo and other person-to-person (P2P) payment processing tools has made it easier for individuals to sell their goods with a much wider reach. In all, the digital technologies and marketplaces available to used goods sellers has expanded the recommerce market space.

Recommerce services

Direct, P2P marketplaces are not the only way to resell and reuse previously owned products.

With consumers' growing inventory of electronic goods and technologies advancing, there is always an inclination to upgrade, but many people prefer not to throw away their previously owned version. Many companies are looking to make purchases of the used goods in order to resell them in the secondary market. They purchase these goods and often refurbish them to be "like new" for the next buyer. Especially with electronics and appliances, the life of these items can be extended well beyond their first lifecycle. Purchasing at a lower rate, working on them and reselling at a higher rate is their way of making profit, while also giving these products a second life to a new user who didn't have to pay full price for the new item.

Most platforms handle everything during the transaction, including a suggested retail purchase price for the item, organizing the shipping of the item, controlling the condition by putting it through their workshop technicians and recycling the goods appropriately if it cannot be used again. Companies such as Gazelle and provide outlets to sell used electronics easily, rather than going through the effort of creating the listing and selling privately to another person.

Trade-in and buyback programs

Given that many products can outlast consumer upgrade cycles, original equipment manufacturers are offering their own way to enter products back into the secondary market. Large companies, such as Apple and Canon, offer trade-in programs that enable users to sell back their used products in exchange for credit toward new items. Retailers such as Amazon, Best Buy and Target have programs that also enable people to trade in used products for credit or discounts, including everything from electronics to car seats. Clothing and outdoor gear companies, such as REI, Patagonia, Levi's and North Face, offer consumers the ability to sell back or donate lightly used products, giving them a second life and enabling more sustainable recycling practices.

Mobile operators, such as Verizon, AT&T and T-Mobile, offer mobile device and wearable trade-in programs for a discount on upgraded devices. They offer discounted rates based on the trade-in value of the original device. Then, those used devices go to their partners to be refurbished and are either sold in bulk to resellers or refurbished to go back into the stores. Overall, these services from retailers and manufacturers provide a great recycling opportunity and way into the used market.

Benefits of recommerce

One of the benefits of recommerce is the ability of the seller to make some extra money off their previously used items. Additionally, the recommerce market offers an element of sustainability, giving a new life and use to products rather than seeing them thrown away into landfills.

Primary benefits of recommerce can include the following:

  • Cost savings. For consumers purchasing products in the secondary market, they can save money from the original purchase price, while still getting a quality product when it is in good condition.
  • Conscious consumption. Consumers are more conscious of their original purchases, as they are more likely to make a purchase of a product that has a good resale value over time.
  • Sustainability. Recommerce provides the ability to recycle and reuse anything from quality clothing to electronics. This may reduce the demand for production of new items and lower the energy consumption from the manufacturing facilities creating these products.
  • Recycling. Consumers are encouraged to resell and reuse products that still have a long life in them after their initial use. This builds off the sustainability concept and enables good-quality items to have a home with new buyers.
  • Space saving. Knowing that the secondary market started with garage sales and flea markets, the concept of "cleaning out the closet" grows with recommerce. Being able to resell baby clothes and toys, or even older-generation gaming consoles, frees up space in the home and builds on the recommerce market.

Recommerce as a business model

The recommerce market is expected to hit $64 billion in revenue by 2024, while it was only at $28 billion a few years ago. This growth is substantial and is directly related to businesses adopting recommerce strategies as a business model. Whether it is in addition to existing offerings, such as a trade-in program, or the core business itself, such as Facebook Marketplace, the growth for demand of secondhand goods is on the rise.

There are many factors that drive this type of growth, including the following:

  • younger consumers adopting the sharing economy over owning;
  • consumer interest in access to used goods at discounted rates;
  • the use of powerful digital marketplaces; and
  • a growing number of environmentally conscious consumers and brands.

For retailers and large manufacturers, offering programs that encourage recommerce enables them to retain the current customer base through trade-in and upgrade programs. It also attracts a new audience of people that want refurbished products in their second life at heavily discounted rates.

It is clear there is a lot of growth and opportunity in the recommerce space. The industry will continue to grow, being driven by P2P sales and brands offering their own recycling, refurbishing and product upgrade paths. It is important to note that recommerce merchants are growing 20 times faster than the broader retail market, so it is clear there is a demand and need to be a part of this space.

This was last updated in August 2022

Continue Reading About recommerce

Dig Deeper on Customer experience management

Content Management
Unified Communications
Data Management
Enterprise AI