Can the rise of re-commerce help create a more sustainable retail sector?

Shopping habits change; consumers are increasingly choosing to purchase or rent used items rather than purchasing brand new items.

Digital marketplaces are making this increasingly easy: 80% of refurbished goods are now purchased online.

The trend is only set to grow: 44% of people say they are buying more second-hand stuff and Barclaycard Payments estimates that recommerce already contributes £7 billion to the UK economy every year. It is mainly driven by the younger generations, with more than two-thirds of Gen-Z preferring to buy second-hand. Meanwhile, Selfridges aims for almost half of its customer interactions to be based on resale, repair, rental or refills by 2030.

Economic and environmental factors

Why does this happen?

With the cost of living rising, it’s no surprise that customers are increasingly paying attention to the price of products. Finding second-hand items that would otherwise be financially inaccessible is an attractive prospect when budgets are tight.

But it’s not just about the price; The impact on the environment is also an important factor. Two-thirds of consumers now look at a brand’s environmental performance when purchasing an item. Nearly three-quarters of them assess not only the products, but also factors such as deliveries and returns. Sustainability is an important influence on the rise of re-commerce.

Stimulating the renovated technology sector

The rapid rise of re-commerce has highlighted a growing trend of consumers opting for refurbished electronics. Refurbished technology is big business and growing rapidly.

Nearly two-thirds (64%) of British consumers have previously purchased a reconditioned or repaired electrical appliance. Despite the popularity of second-hand clothing, twice as many people would buy a used washing machine or refrigerator than second-hand clothing.

Customers are attracted by the cost savings, with many like-new items being sold at up to 50% off the recommended retail price. Another big draw is the environmental benefits, with refurbished electronics standing out for their attractive appeal to the circular economy.

This highlights an exciting new opportunity for retailers to increase their revenue streams while improving their environmental performance, but much more can be done to help this market reach its potential. That’s something we’re looking at here at fulfillmentcrowd.

The renovation roundabout

For example, there are some fundamental challenges in the traditional renovation process. Sending products for repair and then for resale creates logistical and environmental burdens.

Under the existing model, when consumers encounter problems with their purchases, the items are returned to the local fulfillment center responsible for the initial logistics. These products are then returned to their original manufacturing locations to diagnose and resolve the problem. These locations are often thousands of kilometers away, such as in China.

Once repaired, these refurbished items are then returned all the way back to their original destination market for resale, significantly increasing the item’s carbon footprint.

With a typical return rate of more than 10% for consumer technology in Britain – and around a quarter of that due to defects – every retailer must navigate potentially thousands of products on this inefficient and environmentally damaging round trip.

Challenging the status quo with a local approach

To address these challenges, we’ve created a new service that can resolve issues and return items to market as refurbs, all without ever leaving the intended sales destination.

To do this, we are establishing a network of regional returns centers, initially in the US, UK and EU (Germany), where returned items are thoroughly assessed, tested and refurbished by locally based experts.

It’s a complete end-to-end process, from returns logistics to diagnostics and repair (which is managed by our experienced team using detailed guidance from the manufacturers), through to the reintroduction of refurbished items to the resale market.

This provides a more sustainable and efficient solution for returned products, which benefits our customers, their customers and the environment.

Conclusion

Retail is a sector that is constantly developing. At a time when ethical and environmental concerns around the business models of the likes of Temu and Shein are increasing, the more we can do to support more sustainable purchasing habits the better, especially if it also helps retailers increase efficiency and diversify their range. offering to meet different budgets.

Our approach provides a blueprint for the future and shows how businesses can thrive by integrating the principles of the circular economy into their operations.