What brands excel at recommerce?

The GreenBiz team has covered resale, a.k.a. recommerce, a lot over the years. Examples include:

• How resale initiatives are not actually changing our relationship with stuff, particularly apparel.
• What would it take for resale to make the step from scrappy upstarts to mainstream players, and how does this model grow up?
• Who can capture the economic opportunity of resale and how?
• And, finally, at our upcoming Circularity 23 conference, we’ll have a session devoted to the resale explosion and how it can become a deeper part of businesses and their goals to become more circular.

We can sum up the broad takeaway of these articles in one sentence: The fast growth of recommerce programs has been a mixed bag when it comes to environmental benefits. 

A new report from OSF Digital (a digital transformation company) and Trove (a recommerce platform provider) aims to shed light on the trends and leaders in recommerce. We know from this report, as well as the annual ThredUp Resale Report, that recommerce revenue is poised to grow at three to five times the rate of traditional retail through 2030. What is still unclear from that growth is whether this business model will drive down the production of new products. Additionally, this rapid growth means both opportunity and responsibility for those advocating recommerce initiatives.

According to Andy Ruben, founder and executive chair of Trove, his company worked closely with OSF to create the structured criteria for the index. (The two companies haven’t shared details about what, exactly, the analysis studies.) Ruben shared by email, “We iterated the criteria across nearly 50 interviews with brands, service providers (including Trove competitors), retail analysts, sustainability and brand subject matter experts.” OSF then gathered and analyzed the data in a platform-agnostic manner to provide an accurate assessment of brands and the industry, he said.

What it is

The Brand Resale Index evaluates “leading practice adoption across 40 brands in four industry verticals,” according to Ruben. The verticals studied are apparel, outdoor goods, footwear and luxury items. The brands in the index were evaluated across 147 (not a typo) criteria, and scores were based on executive interviews, consumer surveys, mystery shopping and third-party data. (Like I just said, details about the criteria weren’t disclosed.)

The index also contains an instructive table showing the four main categories of resale platforms. The following information is adapted from the Brand Resale Index and explains the recommerce universe quite well.

• Managed Brand-Owned: Brands purchase items from customers, process them, then sell them directly to customers on a branded resale site. Resale platforms support brands with end-to-end solutions including trade-in, logistics and commerce (Coach, REI and Patagonia).
• Peer-to-Peer Brand-Owned: Brands enable customers to buy and sell items directly from each other on a branded resale site. Resale platforms support brands by offering seller/buyer tools for customers to list, purchase and ship a brand product directly to another customer (Frye and Outerknown).
• Managed Marketplaces: People sell their items to the platform, and the platform sells the items directly to its customer base (The RealReal and ThredUp).
• Peer-to-Peer Marketplaces: People sell to one another within a community platform (eBay and Poshmark).

What it found

As you may expect for any fast-growing space such as recommerce, leaders and laggards are already distinguishing themselves. Just within the 40 brands reviewed for the index (out of more than 120 that have dedicated resale channels), there is a wide disparity in the index for implementation of best practices. Each of the 147 criteria was graded on a pass/fail for each brand, and total scores range from 31 percent on the low end to 72 percent for the best-performing companies. The outdoor industry leads the pack, and the other three sectors in the index fall behind overall. The analysis points out that this outcome may not be surprising, given that outdoor gear has a relatively long history of resale and reuse. Also, according to the report, the outdoor industry has a “natural alignment between the resale mission and customer values, the durability of products and higher-priced items.”

Right now, resale is at a very important, yet precarious, place. We went from 30 to 120 brands with dedicated resale programs in 2022.

The report also made clear something I suspected, but didn’t have the data to support. In general, brands received higher scores for their marketing activities around the commerce experience they deliver than the scores they received for the actual trade-in and selling processes used to collect products to be resold. In other words, brands are making the story of recommerce much clearer than the actual implementation. If the trade-in and sales experience for consumers is not well understood, smooth and easy, then it will be difficult for brands to build up the inventory they need for recommerce to meet the demands of the market.

What the Brand Resale Index shows us, quite importantly, are the gaps in resale implementation and where brands can focus their energy moving forward. Those gaps include building inventory through sales and trade-ins back to the platform, selling used products in a single experience alongside new products and improving branding on resale platforms to create a cohesive story across the new and used product programs. When I asked Ruben about the current and future states of recommerce, he expressed both the reality of where we are today and an optimistic future of where we can go. 

“Right now, resale is at a very important, yet precarious, place. We went from 30 to 120 brands with dedicated resale programs in 2022. However, the Brand Resale Index revealed that not all are positioned to grow and scale. There is work to be done for brands to move forward and develop impactful circular models. Consumer expectations for greater value, experience and sustainability are continuing to grow, which points to the major opportunity in the resale space.” 

The coming years will likely show us if brands are ready to capitalize on that opportunity. Trove intends to update the index annually so we can start to get a better sense of the longer-term trends in this space.