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Recommerce: What’s attracting retailers and consumers to pre-loved products

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Shiv Joshi
Shiv Joshi
An editor with over 20 years of experience across industry verticals and content formats from tabloids to magazines, he is the Deputy Group Managing Editor at Images Group.

Recommerce is becoming big business in the country, with prominent retail players like Tata Cliq Luxury getting into the pre-owned category

New Delhi: Whenever she’s looking to buy a new gadget, Mumbai-based project manager Aditi Khan buys preloved products online primarily because they tend to be cheaper than paying a premium for newer ones. And also because buying such goods is her contribution towards creating a sustainable world. “I get a higher or premium model or brand for a lot less than a brand-new piece of the same make or model. It makes a lot of sense if you are on a budget or if you change gadgets frequently,” she said.

Like Khan, millions of Indians are overcoming their initial hesitations and reluctance to purchase pre-owned items that now are sold by major retailers and companies with warranties. Furthermore, consumers are increasingly looking to adopt sustainable ways of living, catapulting re-commerce as a big business in India. As per Infogence Global Research, in 2022, the country’s recommerce market was $29.54 billion and it was estimated to grow at a compound annual growth rate (CAGR) of 6.15% till 2027.

“Recommerce provides an excellent opportunity for affordability, experimentation and sustainability that are important drivers for the younger generation,” Anand Ramanathan, Partner, Consumer Industry Leader, Consulting, Deloitte India said.

There are many players in the market from big, organised players like Amazon, Flipkart and Cashify to several small unorganised ones selling a variety of products. As per Luxepolis, an online marketplace for certified pre-owned and discounted new luxury goods, about seven new pre-owned businesses launched in 2023.

Recently, Tata Cliq Luxury entered the segment by launching the Reloved story selling rare luxury timepieces to begin with. Read more about it here.

What is Recommerce

The term recommerce was coined by Forrester Research chief executive officer George F Colony in 2005 to describe remarketing of used goods by owners to merchants. It is also called reverse trade.

“Re-commerce, or reverse supply chain, entails offering new products in exchange for old ones; reselling returned products; repairing defective products; or recycling or refurbishing used products,” wrote Adarsh Menon, former Senior Vice President & Head – New Businesses at Flipkart in a Times of India blog explaining the term in today’s context.

What Recommerce is not

While the word is also used to describe sales of all used items, by definition, recommerce entails only consumer-to-business-to-consumer sales of pre-owned items. In used goods, the transaction occurs between two consumers. But in the case of recommerce, the items are sold by owners to a merchant who then either sells it as it is or after some value addition, which could involve repair/refurbishment of the item.

By that definition, Olx is primarily a used products marketplace. But what Amazon, Flipkart of Cashify do is recommerce.

“If you are a merchant and making a purchase through Olx so that you can resell the second-hand item later, then it would fall under recommerce,” Saurabh Nangia, founder of Mesh.ai wrote on his Linkedin blog on the topic.

Top resold items

Smartphones are not the top-selling pre-owned items in the country as one would expect | Source: Peakpx

In 2020, more than 20 million smartphones were traded in the second-hand market as per a report by market intelligence firm International Data Corporation (IDC) and India Cellular & Electronics Association (ICEA). IDC estimates that by 2025 the figure to touch 51 million, with the organized segment accounting for 20-25% share up from 15% in 2020.

However, it is interesting to note that smartphones are not the top-selling pre-owned items in the country as one would expect.

Bags and accessories (27%), clothing (23%), shoes (21%), consumer electronics (TV, smartphones etc) (20%) and furniture and household goods (20%) are the top five most common second-hand purchases in India as per a September 2023 online survey of 4,037 respondents by Statista.

Another segment within recommerce that is growing exponentially is pre-owned luxury. The Indian second-hand luxury goods market is expected to exhibit a CAGR of 12.18% during 2022-2027 as per a LinkedIn blog by Luxury Connect Business School.

“There is a transformative shift in the dynamics of luxury consumption in the country, fuelled predominantly by the conscientious choices of today’s discerning consumers. Pre-owned luxury finds acceptance among them as an ecologically responsible way to shop,” said Gopal Asthana, CEO, Tata CLiQ.

Youth and small-town consumers are driving sales of used luxury items as per media reports.

What’s driving recommerce

Experts reveal that re-commerce has always been in existence. However, technology has helped formalise the business and make it more mainstream.

“Technology has played an important role in the growth of recommerce business models by enabling reverse logistics for pre-owned products, improving search through the use of AI, community building through social commerce and enhanced product visibility through augmented reality (AR)/ Virtual Reality (VR),” Ramanathan, Partner, Consumer Industry Leader, Consulting, Deloitte India said.

Making recommere work

Marketing plays a pivotal role in the success of recommerce. The other is trust say experts. “Collaborating with local influencers would bring trust and credibility,” Amitek Sinha, co-founder and COO, ETML, a growth advertising agency.

Sinha adds that the key to successful campaigns lies in the curation of meaningful creatives with clear communication that would ultimately bring awareness about why recommerce.

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