The earth is changing, as is how consumers shop. With 77% of Americans concerned about the environmental impact of products they buy, retailers are revamping their business models to improve both the planet and their balance sheets.
For years, the fashion industry has faced backlash for its climate-harming practices. Consider these facts:
- One new garment takes 77 gallons of water and creates 17 pounds of CO2 equivalent.
- Over 100 billion garments are produced each year, with 73% of all apparel sent to landfills or incinerated.
- Buying one used item reduces its carbon, waste, and water footprints by 82%.
To combat fashion’s wastage problem, many retail-focused sustainability initiatives center on moving toward a circular economy: one that emphasizes the repair and recycling of existing materials and products for as long as possible.
As it becomes easier to sell clothes online, people are getting rid of their old clothes and reinvesting the money back into more used items. Apps like Depop and Poshmark have paved the way for modern resale-as-a-service (RaaS) leaders like ThredUp and The RealReal, while simultaneously giving birth to the thriving recommerce industry.
Today, the recommerce and resale market is growing at a rate 11 times faster than traditional retail and is expected to double within the next five years. By 2030, the industry is expected to be worth $84 billion, almost double that of fast fashion.
Many companies are launching buyback, trade-in, and upcyling programs to capitalize on this trend, improving sustainability efforts and increasing brand value in the process.
Keep reading to learn about:
What is recommerce, and how does it work?
Recommerce (or reverse commerce) is the process of selling previously-owned products through physical and online channels.
Recommerce typically happens through organized buyback, trade-in or upcyling programs—initiatives that allow customers to return their used products, often in exchange for money or store credit. Retailers then clean up the items and resell them in-store or online, for a reduced price.
Not only do these resale programs get brands one step closer to a fully circular supply chain, but they also keep shoppers brand-loyal.
For premium brands, selling used goods is also a way to convert more price-sensitive shoppers and encourage them to try products. From there, it’s then easier to convert them into full-price consumers.
“65% of the people buying resold are new to the brand, having been unable to afford it before,” says Trove CEO Andy Reuben in an interview with Vogue Business. “It’s an opportunity to increase the value in the brand, not decrease it.”
Buyback, trade-in, and upcycling programs are also a great way to get returning customers in-store and drive more revenue. Once shoppers are in-store, especially returning customers, they’re more likely to buy. Customers are also more inclined to shop knowing that their products have resale value.
“Outside of sustainability, the biggest opportunity for retailers is that buy-back programs bring customers back into the store,” shares Sara Miltenberger, CEO of RSTR Media. “It allows customers to experience the brand in a new way and opens up opportunities for customer acquisition.”
According to Sara, buyback programs offer the power of ‘The Great Deal’—the deal most shoppers might spend hours looking for. They also create affordable opportunities for those who need to get a new wardrobe after significant weight loss or gain.
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The rise of recommerce and resale
Although resale programs are only now in the spotlight, recommerce has been around for over a century—namely through secondhand shopping. During times of economic despair, like The Great Depression and World War II, many shoppers were unable to afford new clothes and turned to secondhand retailers for solutions.
The first Salvation Army thrift shops opened in 1897. Goodwill soon followed in 1902. In the 1950s, high-end consignment shops began popping up across the nation, giving birth to the booming vintage clothing industry.
With the introduction of the internet, sales gravitated online, first to eBay and then to dedicated mobile apps like Poshmark and Depop.
We’ve now entered into a new frontier of recommerce. ThredUp and Trove offer retailers proprietary infrastructure, tooling, and expertise to build their own resale programs in exchange for a percentage of the proceeds. ThredUp and The RealReal also run separate online consignment and thrift operations where consumers can buy and sell used items.
“As resale continues to grow in popularity, we hope to see more and more garments being given their second—if not, third, fourth, fifth—lives,” says Liz Hershfield, SVP, Head of Sustainability at J.Crew Group & SVP Sourcing at Madewell. “Denim, in particular, can pretty much be worn until it’s falling apart because it’s such a strong fabrication and is meant to wear down and get all that amazing character from being worn over and over again.
What’s next for recommerce? Liz would love to see technology incorporated into the next phases—a way to track the life of a pair of jeans, through RFID or other technology, so retailers and analysts know how many times it has been worn and can track the life of each product.
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5 retail brands leading the recommerce charge
While buyback, trade-in, and upcycling programs are most popular in the apparel industry, beauty and CPG companies have also launched their own initiatives around product refills and reusable packaging.
In partnership with Trove, Allbirds offers customers $20 in-store credit in exchange for turning in their pre-loved Allbirds shoes. The used shoes are then resold online on the ReRun platform, starting at $59. First launching at three stores in New York, Chicago, and Los Angeles in February 2021, Allbirds has plans to expand its ReRun program nationwide.
After a two-state pilot in 2021, lululemon is bringing its Like New resale program to all stores nationwide. Whether online or at any store in the US, customers can exchange their gently used lululemon gear for an online gift card ranging from $5 to $25, depending on the item.
The goods are then resold by lululemon on its Like New platform for nearly 50% off the retail price. Any item that doesn’t meet the predetermined quality standards is recycled through Debrand.
The lululemon resale program will reduce its products’ carbon footprint by up to 50%, and all profits will be directed toward its Impact Agenda. By 2030, lululemon pledges to make 100% of its products with sustainable materials and end-of-use solutions.
The Body Shop
Image Source: Retail Bum
To start the process, shoppers buy a 250-milliliter refillable aluminum bottle in-store and choose from an assortment of shower gels. Once the bottle is empty, it’s rinsed and refilled at any participating Body Shop location. As part of the initiative's expansion, The Body Shop plans to offer refillable shampoos, conditioners, and handwash.
The Body Shop also launched a recycling program with TerraCycle, where customers can bring in their disposable packaging to be recycled by store employees.
Meow Meow Tweet
As part of its unique Bulk Aisle refill program, organic skin care brand Meow Meow Tweet encourages its customers to shop in bulk after their first purchase. By refilling the glass bottle from their first order, buying in bulk reduces the amount of plastic packaging needed for reorders and saves customers money. All bulk purchases are delivered in lightweight aluminum bottles and come with free shipping as an added incentive.
To educate customers on the upside of buying in bulk, Meow Meow Tweet breaks down the Bulk Aisle math that results in each customer saving 255 bottles from landfills and saving $1,575 over a 30-year span.
Image Source: Meow Meow Tweet
A retail leader in sustainability, REI has been selling used gear since 2017. Although all shoppers are able to buy resold goods, the trade-in option is available only for REI Co-op members. It operates the same way as a standard program: trade in your used gear in exchange for an REI gift card.
REI has also tested pop-up shops, selling only used gear as an expansion of its famous in-store Member’s Only Garage Sales.
Evaluating your retail sustainability
Retail circularity programs can take different forms. Some retailers may opt to build an initiative in-house. Others will seek help from a recommerce partner or launch peer-to-peer programs with services like Recurate.
Ultimately, this decision is dependent on a handful of factors, including your main sales channels, existing ecommerce infrastructure, and level of in-house sustainability expertise.
It’s important to note that the rise of recommerce is in the early stages, and there’s still plenty of room for innovation.
“I don’t think we’ve unleashed the creativity [for recommerce] yet. The field is wide open,” says Monica Park, co-founder of circular fashion group Eleven Radius. “The winners, long-term, will have a very clear, almost-obsessed focus on the customer experience and finding the right incentives to truly reward and shift their habits. This is going to come from people within brands who really understand and care about the customers who buy their products the first time around.”
You may not be in a position to launch a buyback, trade-in, or upcycling program now, and that’s OK. What’s important is that you’re thinking about how to move toward participating in the circular economy. The easiest way to start is by creating quality products that hold up over time.
Remember, recommerce programs can serve as a key pillar in your broader sustainability efforts but should not be your entire strategy. For more information on other important sustainability decisions, like using recycled and transparently sourced materials, biodegradable packaging, digital sampling, and clean energy options, make sure to check out our Retailer’s Guide to Sustainability.
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