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Recommerce growing 20x faster than broader market. How can it scale?

recommerce

The way consumers shop has changed considerably in the last few years. The popularity of buying and selling old items online has boomed, from tech to clothing, and resale-as-a-service and recommerce platforms are thriving as many companies launch buyback, upcycling and trade-in services to improve sustainability and offer customers more affordable products.

New research in December 2022 suggests the recommerce sector is growing up to 20 times faster than the broader retail market. By 2025, this sector is predicted to be worth over $125 billion. This news comes on the back of research from eBay that found over half of British shoppers are planning to buy refurbished or second-hand items over Christmas 2022 – with two-fifths of UK shoppers prioritising value for money this year.

eBay is, understandably, celebrating and supporting this rise of pre-loved shopping. Earlier this year, they launched their Circular Fashion Innovator Fund and invited 10 shortlisted businesses (one of which being Nibble!) offering circular fashion solutions to pitch to them for mentorship and funding.

As recommerce and pre-loved popularity grows, a key question emerges: when items are preowned, each with their own unique quality, their own history, and aren’t widely available anymore… How do retailers selling these price the items effectively? 

Getting the price right in Recommerce

Pricing accurately, even in traditional ecommerce, is a struggle many retailers are facing as they head into 2023 with piles of overstock—more on that in our next blog. When it comes to pre-loved, brands hoping to really tap into the recommerce sector need a way to understand their pricing beyond just looking at conversion statistics.

Every retailer across every industry has the message of “listen to your customers” drilled into them, but arguably recommerce needs to go one step further and TALK WITH customers – listening is too one-sided for this space. The struggle, until now, has been being able do that at scale.

1-to-1 price negotiations work well enough on peer-to-peer marketplaces like Depop or Vinted (for now) but that same conversational approach is impossible to replicate on a large-scale pre-loved retailer without AI. Thankfully, technology exists now that makes this possible, and no longer a clunky solution.

For example, look at pre-loved fashion retailer Thrift+, who recently launched a short trial with Nibble exclusively in their sale section to help price accurately and clear stock. Nibble’s natural language chat engaged shoppers and empowered them to share feedback during fast chats. Nibble tracked instances of shoppers saying the product price was too high; understanding the intent behind these messages and agreeing deals at a price that, crucially, left both the shopper and Thrift+ smiling.

Speaking about the trial, Thrift+ CEO Joe Metcalfe said, "We didn’t have time to be constantly answering offers, so we trialled Nibble and our customers responded very positively ... We sell second-hand where pricing is hard, and the overall feeling from shoppers was positive and they got a great deal, quickly!"

Condition: Very Good to some, Fair to others

Another factor to be considered in the rise of recommerce sites is the subjective nature of pre-loved quality, particularly when dealing with fashion and second-hand tech. When describing the condition of an item, what constitutes “Very Good” to one person may be “Fair” to another – to avoid needless returns, it’s crucial quality is given more than a simple label.

For a great example of pre-loved quality being given the attention it deserves, look at pre-loved fashion retailer Reskinned. All of their clothing passes a thorough grading process before being listed where quality and condition is checked. Then, if anything has been repaired on the item, these repairs are listed in the product’s description, down to the finest detail like fixing a thread pull.

Conversational AI could be used in recommerce to explain in greater detail the condition of an item, or make sure the customer understands what exactly constitutes “Very Good” quality. With the excitement this year around the advances in conversational AI from tools like ChatGPT, it might not be long before you have a chatbot explaining to you exactly where any damage is on a pre-loved item or giving examples of what quality to expect.

Recommerce is growing fast, there’s no doubt about it. Look at pre-loved fashion retailer Go Thrift, who are aiming to make sustainable fashion choices more affordable and encourage their customers to 'wear without waste' – they've reported Black Friday 2022 sales being up 161% year-on-year.

Sooner, rather than later, large recommerce retailers are going to need to rely on tech to be able to scale effectively as more consumers discover the benefits of second-hand – not just from a sustainable, environmental point of view; but in their efforts to save money and reduce newer purchases.

For tips on negotiating on peer-to-peer marketplaces, check out our article that covers how five of the biggest online marketplaces are empowering their customers to negotiate online. 

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