EP066 Recommerce: The Future of Ecommerce? === [00:00:00] Darin Newbold: All right, and welcome to Commerce Today. My name is Darin Newbold, and as always, my fun loving cohort is here. Josh is back, and we're going to be talking about, uh, well, I guess we're going to be talking about back to the future, Josh. It's, uh, re commerce, the future of e commerce. Help me out here. What's that all about? [00:00:25] Joshua Warren: Yeah. So re commerce, you know, we love our fancy, fancy ways to describe a very simple concepts. Um, re commerce is selling, Pre owned used products, secondhand products, uh, typically online via e commerce. So it's kind of, you know, the, the re of recycling, reusing, reselling. with the e commerce added in. [00:00:45] Darin Newbold: so is this something that just has started happening or is it, is it something that has been around for a long time? [00:00:52] Joshua Warren: It's been around for a little while, for at least a few years, but it's kind of hit that tipping point where this is the year where a lot of brands are starting to add e commerce efforts. It's kind of the combination of the technology getting to where it needs to be and then the shift in consumer behavior. Sprinkle on a little bit of a challenging economy. Um, and you get a lot of recommerce, especially right now in apparel. [00:01:14] Darin Newbold: Well, and I noticed it, uh, even with a pair of shoes that I recently bought that they had that as an option or that I could even go by those types. But here in our, uh, in our notes and kind of what we had talked about, there was, uh, I think an article or something that really kind of. spurred or kick this off for kind of your thoughts around this whole e commerce program? [00:01:35] Joshua Warren: Yes. So, um, ThredUp, which is a resale platform, released their 2024 resale report. That got me thinking and researching and went as far as looking at Lululemon's SEC filings. Um, and I put together a LinkedIn article, um, that went live today that got some great feedback on. So thank you everybody. Um, and that is kind of where all this is coming from. And so I'll have links to that in the show notes for sure. [00:02:00] Darin Newbold: for sure. Well, that's, that's awesome. So you mentioned Lululemon, uh, there's another one, Hannah Anderson's, I guess. Tell me, what are some, what's the successes that's out there that, uh, that people are seeing? [00:02:13] Joshua Warren: Yeah. So, um, first of all, that resale report is showing us that the global market for resale and re-commerce is going to hit 350 billion by 2028. A lot of money in the US alone. It's going to hit 73 billion. and a lot of this is coming from being able to provide kind of a more curated high end experience online versus, you know, going to a resale shop in person. A really crazy stat is, last year we talked about ecommerce growth and holiday sales growth and all that. And it was okay. It wasn't amazing, but it was okay. But in recommerce, recommerce growth, um, online last year was, what was it? 23%. So definitely a fast growing sector. And yeah, two of the programs that I like to highlight that I think are really good examples and also a good contrast to each other is, um, Lululemon has one called like new, um, and I believe it's even like new. lululemon. com and Hannah Anderson has one called Hannah me downs. I love a good pun. So. And I think that one's actually preloved. hannahanderson. com. Um, and we're going to dive into those a little bit further into the episode. Um, and in researching all this, you know, one of the big shifts is a demographic shift, like so many things lately, um, the younger generations, which I say, like, I'm not part of, but anyway, the, the younger generations have a preference for, um, sustainability, affordability, um, kind of some interesting, slightly related things I've been seeing is The youngest shoppers and consumers, they don't get why you would spend so much money on a pair of Nike's because they don't attach the value to a specific brand name. It's more to the experience that they get with the product. So they're a lot more likely to think, Hey, I want to get a good value. I want to get something that maybe supports how I feel about protecting the environment about, you know, not generating so much trash, so much CO2. Um, and so that's driving a lot of people to recommerce. [00:04:10] Darin Newbold: So a question that maybe, maybe you thought of or didn't think of, but I'll zing this one past you. I think we've always seen this a lot more in technology and kind of the e commerce. I mean, you think of the iPhone market or the Android market and all of that. I guess, how does it compare or how would you say it compares? And I know I'm throwing you a kind of a sideways, a curve ball here, but do you have some thoughts on [00:04:33] Joshua Warren: Yeah, you know, the, the iPhone market used iPhone market, for instance, like that's, that's a very clear, like these are multiple thousands of dollar devices at times and, um, the, the retained value they have can be pretty high, but also the cost savings of the buyer can be pretty high. So it's easy to make the economics work. It hasn't always worked in the past with things like, um, apparel. So you think about 20 t shirt. How much is, how much value does that retain after a year or two? How much is someone willing to pay for it? Um, well, again, as the technology has gotten better and better, it's able to actually still eke out a little bit of profit on reselling that, secondhand apparel. [00:05:11] Darin Newbold: Interesting. Well, since you're talking about that, what are the benefits of this re commerce for the brands? how does it help them? [00:05:19] Joshua Warren: So we've talked a lot, especially you go back to our Amazon episodes about sustainability and how, if your brand is sustainable, that can be a big selling point. Um, a big thing that a lot of brands talk about once they launch something like this is called the circular economy. It's basically that [00:05:33] Darin Newbold: the circle of life, Josh. [00:05:35] Joshua Warren: it's the circle of your product's life. So, um, you basically, when you create a product, you put it out in the world. It comes back to you and then you sell it again, instead of it being kind of a linear path of you sell it to one person, they're done with it, they throw it away. Um, so that, that actually gives you a chance to make a little bit of money again on the same product that you already made. while also kind of practicing that sustainability real interesting thing. And one of the reports I read was that this is actually increasing brand loyalty and customer engagement because like for Hannah Anderson. Before they had their, um, re-commerce efforts, when you were, you know, passing along some Hannah Anderson clothing you bought, you might go to eBay, sell it on eBay. [00:06:16] Darin Newbold: Right. [00:06:16] Joshua Warren: eBay is getting that customer data. You're getting that connection to eBay. Well now, no, you go back to Hannah Anderson's site. So you're spending more time engaging with that brand, without them having to spend, you know, any marketing money, not having to develop new products. Um, so yeah, and it, it kind of ties into the next benefit of it really helps you expand your market. And it gives you new revenue [00:06:37] Darin Newbold: revenue streams. Exactly. Because then you can sell the, uh, accessories possibly with whatever that are new accessories, as opposed to re commerce accessories. Wow. What else? You're getting, and then you mentioned it a couple of times, but the importance of keeping that data, that it's not going somewhere [00:06:56] Joshua Warren: Yeah. and um, Another thing I saw some of the brands doing that so smart is, um, especially if you're doing the marketplace model of recommerce, which we'll talk about in a little bit. Um, you can see what people are listing the used products for what prices they listed at and what prices do and don't sell. And so now all of a sudden you have a lot of data in how much your consumer is willing to pay for your products when they're used. Which you can then kind of back into, okay, how much would they be willing to pay for these new? [00:07:25] Darin Newbold: Interesting. [00:07:26] Joshua Warren: you can do that without ever changing any of your own pricing. So you don't have like the risk to your brand of raising or lowering your pricing and, um, you know, potentially changing consumer behavior in that, um, line of business because you're getting all this data from the people that are reselling your products. [00:07:41] Darin Newbold: Hmm. Well, that is very, very fascinating. Well, you've started to definitely pique my interest and hopefully those listening on what creates success here. What are some of those factors that really make e commerce effective? [00:07:56] Joshua Warren: Yeah, so, um, definitely that sustainability focus and I think that's the big difference. You know, going to your question earlier about electronics and like the iPhone example, um, that was always more, and Apple's changed their message some, but originally that was more, Hey. I spent a lot of money on this phone. I need to get some money back so I can afford to buy [00:08:14] Darin Newbold: for the next way. Exactly. [00:08:15] Joshua Warren: Um, but the brands that are being very successful in apparel and other verticals now, it's that sustainability focus. They're basically saying, Hey, we're doing this for the good of the, the climate. We're doing this for the good of the, uh, The world for our customers, they don't mention that they're also gathering the data, making the money, but it's that sustainability focus, um, also having really solid some type of quality assurance, to make sure that the products that are being sold are the condition that they are described that there's kind of eBay used to always call it trust and safety. That you have the trust and the safety in that buying experience. Um, even making sure they're authentic. Hannah Anderson does some interesting things where they basically can validate that you actually purchased this product from them new before you're allowed to resell it. And that's important because they have some, um, licensed products. And, you know, Disney doesn't want someone out there selling knockoff Disney Hannah Anderson used clothing. [00:09:09] Darin Newbold: Absolutely. [00:09:10] Joshua Warren: so that's an important thing to kind of focus on. Um, I also see kind of an interesting thing that some brands are doing is, um, tying this into a loyalty program. So basically either an existing loyalty program or launching a whole new loyalty program to encourage people to come back and resell these items through your brand. [00:09:29] Darin Newbold: Interesting. Well, and it, it obviously adds in, you know, being able to have competitive pricing, unique product assortments that, uh, that are possible there. And, and I love that you have here, adaptability, innovation, operational efficiency, all of that. that's got to really, really impact the merchants as they're, as they're looking at, at these things for re [00:09:51] Joshua Warren: there as they're looking at these things for e commerce. You know, 75 billion up for grabs. So it's a good market to be in, but it's moving so fast that, yeah, the brands that are most successful are the ones that really have those efficiencies and are able to adapt. [00:10:17] Darin Newbold: Now, another quick curveball, just because I, uh, I don't know if it makes it here in our notes or not, but, uh, So when the, when the brand is reselling their, their, their products, are they taking another cut from the, from the seller in that point? So just like an eBay does, if I sell something on eBay, they take their pound of flesh, as they might say, [00:10:39] Joshua Warren: they always make money. They always do. And there's actually, it depends on the model they're using. And we will [00:10:44] Darin Newbold: Oh, we're going to get to the model. Sorry. [00:10:45] Joshua Warren: no worries. [00:10:46] Darin Newbold: Perfect. Well, that's, uh, what are some lessons, you know, outside of apparel, the non apparel, uh, verticals, what are some, some lessons there that could come around? Yeah. [00:10:57] Joshua Warren: and so one of the big focuses for the article that I wrote is really that while apparel is leading the charge with recommerce, it's actually something that is highly effective outside of that vertical, and I don't think enough non-apparel brands have realized that yet. And so, yeah, so electronics, um, you We've already mentioned Apple a few times. Canon does something similar where it's basically a trade-in program. You get credit for buying your next phone, your next printer, whatever it happens to be. Um, and then they refurbish and resell. So this is, um, almost recommerce is almost a way of just. Putting a nicer spin on the old practices of selling refurbished products. Um, but it is more about, um, in, in some cases connecting the consumers to each other and building a community more than those efforts did, um, over in the furniture world, Ikea, actually in some countries operates a buyback program and does kind of a, um, what we call the take back model, um, for e commerce. And then two of the really interesting, um, very. Recommerced focused brands out there, are the, Vestiaire [00:12:03] Darin Newbold: Best year. And [00:12:05] Joshua Warren: And the real real and they actually resell high end goods and the markups there and the profit margins are just mind blowing. [00:12:14] Darin Newbold: Wow. And [00:12:15] Joshua Warren: I do think that, you know, really in any category, um, where Um, your products lend themselves to it. I do think there's an opening and an opportunity for e commerce. I think the lowest price points and the thinnest profit margins, it becomes very challenging, but I think for pretty much everybody else, it's definitely, uh, definitely possible, but do you think about things like, um, One of the examples that I had seen and used in my article was like, nobody wants to buy furniture that has questionable stains on it. [00:12:45] Darin Newbold: Right. [00:12:46] Joshua Warren: you got to think about factors like that of, is your product something that when someone goes to buy a used version of it, are they going to be like, eh, I don't know. So, [00:12:54] Darin Newbold: shirts probably are not [00:12:56] Joshua Warren: yeah, you know, it depends. It's, it surprised me, but how are flip flops another product category? I'm a fan of, but Nope, Nope. Right out. [00:13:03] Darin Newbold: Those are, those are right out. All right. So moving along here, how do we. How does a merchant, as they're looking at this and considering this, how would we choose kind of that, the right model? And that's where you, you're coming back to me on some of this. So, so yeah, let's, let's talk that for a minute or two. [00:13:20] Joshua Warren: Yeah. So I kind of break out all these programs down into two different models, the marketplace model or the take-back model marketplace model. That's like what Hannah-me-downs does. And that is where you provide a marketplace where the consumer that has bought your product lists it for resale. they are responsible for shipping it directly to the person that buys it. Um, so you're not having to take the products back yourself. You're not having to touch them. you just provide that platform, um, and you do take a cut since you asked about that. Um, [00:13:52] Darin Newbold: I think Allbirds, by the way, I think Allbirds does the same thing. [00:13:55] Joshua Warren: Yeah there's a number of brands that do that. So it's really, cool seeing that. Um, and that can be a much lower lift, especially on your reverse supply chain. Um, if you use the marketplace model, the take-back model, that's Lululemon's like new program. So that you actually can either ship something back to Lululemon or just take it in your local store and they literally. Take the product back from you. They give you some money that gets funneled into a reverse supply chain process where they will collect all those items, clean them up, decide what you know is worth reselling and then basically just handle it like any other ecommerce transaction where Take care. They just sell it to whoever buys it, and then the brand is the one responsible for shipping it. And, um, kind of something interesting, uh, some feedback I got on the article on LinkedIn. Somebody pointed out that the marketplace model, while it's a lower lift for the brand, it's a little bit easier to implement in a lot of ways. Um, It increases the shipping cost and the complexity for the customer, because if you go to hand me downs and you buy three different items from three different people, you pay three different [00:15:00] Darin Newbold: different shipping costs. [00:15:01] Joshua Warren: and going back to sustainability. You even now have three different shipments that are possibly coming from three different places in the world, or at least in the US, the market player, the take back model. It's obviously then all typically coming from one warehouse, one shipment, one shipping charge. Some brands will even do free shipping. Um, so that's a, slight difference between the models to think about. But beyond that, when you're selecting which model to use, um, definitely think about your resources and infrastructure. If you're struggling to handle the returns you already have and your reverse supply chain already, don't go try to launch a take back model. Same thing with, if you have a lot of stores where those stores could be collection points, that could be a good indicator that you want to use the take back model. [00:15:45] Darin Newbold: Well, and it, you know, other things that, uh, that you need to consider there would even be, is it durable enough to be able to, to go through this process and over and over again and still be, still have value to the person that's, that's purchasing it. yeah, and definitely, definitely the, the interest in sustainability is key. And. It seems like more and more with prices and, you know, just economics of it, the pressure on pricing and is secondhand shopping has become a much greater and much more important in a lot of different ways. [00:16:18] Joshua Warren: Oh, yeah. [00:16:20] Darin Newbold: well, all right, as we, uh, as we kind of land this plane on re commerce, what, uh, What are kind of the top two or three things, Josh, that merchants need to walk away from from this episode? [00:16:32] Joshua Warren: I think if you haven't already started talking about some type of recommerce effort, now's the time to at least sit down and think, does this work at all for my brand? if you don't have any immediate no's then I would say start small. Think about kind of the simplest, um, most lightweight way you could test this. Maybe do a small pilot program with. if you have like a key, key customer group in your loyalty program and I say, Hey, our VIPs, we're going to trial this. And literally with the marketplace model, it could be as simple as we're going to have a Facebook group where our verified purchasers can go and sell to each other there. So a lot of small ways to pilot this, and we definitely encourage you to try one of them out. So, [00:17:10] Darin Newbold: as always, we want to, we want to thank you for taking the time to tune in to our podcast. We really appreciate it. And we always love comments and any, any experiences around this. We would love to hear it. I know Josh would on his LinkedIn, Joshua Warren, definitely check that out. Uh, and want to kind of throw out the reminder. Do you have one last thing, Josh, you kind of have that look in your eye. [00:17:33] Joshua Warren: I know. No, I [00:17:35] Darin Newbold: it's always, it's always that one thing I forget. So go [00:17:37] Joshua Warren: just had a bad joke. That's all. So I was just going to tell everyone that like the kids say, although at this point, I don't know if it's even the kids, but like the kids say, my DMS are open. So feel free to DM me on LinkedIn. If you have any questions or feedback, [00:17:50] Darin Newbold: Well, perfect. And join us next Wednesday, one 30 us central time. On LinkedIn for another live episode of Commerce Today, make sure to subscribe to Commerce Today in your favorite podcast app. With that, we appreciate you. Take care. Have a great day. ​