Recommerce: Where Business Opportunity Meets Sustainability

Posted on February 20, 2019

The recommerce business model presents a great opportunity for entrepreneurs, particularly those pursuing ideas in the apparel industry. It’s a relatively low-risk approach that turns into a perfectly circular pattern of business when executed properly. It can also be leveraged as a financially beneficial secondary stream of revenue.

The sustainability factor is central to understanding the impact of recommerce on the retail landscape. The negative effects of fashion production on the environment should not go understated. At its current rate, the fashion industry is projected to use up 25 percent of the world’s carbon budget within the next 30 years according to Green Biz.

But, as we’ve seen so many times in business, just those facts won’t cause a change in any industry. Instead, it requires consumers changing attitudes and taking a stand. Essentially, there has to be a business benefit. Otherwise, forget about it.

We’re starting to see those factors take shape, though. There are suddenly business benefits to finding alternatives in the eyes of our society that is growing increasingly environmentally conscious.

Enter: the recommerce market. To further explain how recommerce works, here are the details on three recommerce business doing it extremely well:

thredUP

The largest e-commerce thrift store in the game, thredUP is a giant in recommerce. At its core, thredU is a site for consumers to exchange secondhand clothing. The return for sellers is either cash or store credit.

ThredUP has also welcomed in fashion brands and retailers with its UPcylce program. With this program, sellers are further enticed to use thredUP as they are given the option to be paid with a gift card from participating brands. ThredUP manages all intake, pricing, marketing, selling, and shipping. Potentially, both parties benefit as thredUP receives an increase in supply and the partnering brands gain increased sales and new customers. All is done in the name of having a more sustainable fashion industry.

“Retailers are realizing that through this program, they can launch a loyalty program that is good for the planet and good for business,” says Karen Clark, thredUP vice president of marketing communications and partnerships. “Sometimes, they don’t need to be mutually exclusive — customers are incentivized to resell.”

ThreadU even has a resale report with a bevy of interesting facts about recommerce and its growing prevalence. If you’d like to check that out, click here.

The RealReal

The RealReal and thredUP have many similarities. The most obvious difference between the two comes with The RealReal’s focus on specifically the luxury recommerce market. Authenticity is key, with the company buying used luxury items and verifying they are legitimate before reselling. The RealReal has the ambitious goal of becoming the first circular-economy company to reach $1 billion. The company currently reports 7 million subscribers and $500 million in revenue.

To see the environmental impact made by The RealReal, dive into its sustainability calculator. As of October 2018, the business had saved an estimated 246 million liters of water and 65 million driving miles through its consignment process.

This combination of revenue growth and sustainability is recommerce at its finest.

Yerdle Recommerce

Unlike the previous examples, Yerdle Recommerce isn’t a recommerce marketplace itself. Instead, it’s a white-label service that allows brands to set up their own reselling marketplace. Clients include Eileen Fisher, Patagonia, and REI.

Each of the brands that work with Yerdle encourages the return of unwanted items for resale. That’s where Yerdle takes over, handling everything from refurbishment to resale through the marketplace owned by the brand.

“The used business is happening whether a brand promotes it or not,” says Yerdle Recommerce CEO Andy Ruben. “So, the real question is, does a brand want to partake in what is happening in a consumer-driven economy? There is a different customer for these used products than for new products. A brand participating in this space gets access to a group of customers that weren’t necessarily shopping them before.”