This is an excerpt from Ryder E-commerce’s latest ebook “Unleashing the power of creative channel expansion for D2C brands” by Arrive, a fully-managed resale channel solution. Check out the full ebook here.
As we stand at the intersection of sustainability and profitability in commerce, one concept is set to reshape the retail landscape — “recommerce”.
An innovative solution to the challenge of handling returned inventory, recommerce is expected to transform retail returns from a cost center into a profit-driving, sustainable asset.
This recommerce revolution is fueled by shifting consumer behaviors and a growing desire among brands to reclaim a share of their Gross Merchandise Value (GMV) lost in non-new returns, which currently have limited handling options (liquidation, landfills, donation & resale among them).
While current recommerce programs are accounting for a small portion of a brand’s revenue (<1%), it is expected that a successful resale program can recapture anywhere from 1-8% of a brand’s mainline GMV as best practices continue to develop.
There are several recommerce models for brands to consider, that are differentiated by how returns are collected and sold by brands:
Brand supply is by far the most promising financial and sustainable approach. This involves implementing a straightforward set-up at fulfillment warehouses where non-new returns are inspected, refurbished, graded, listed, and then sold on a fully branded resale website.
The “brand supply” method of recommerce presents the largest revenue and sustainability impact potential because it generates the highest volume of returns eligible for resale, and the quality of “brand supply” returns is much higher than other methods, meaning the resale price is much closer to MRSP (within 10-30%) than other options (40-70% discounts).
In addition to building and powering a fully branded resale storefront on behalf of a brand (including managing order updates & customer support), Recommerce providers like Arrive offer a fully outsourced reverse-to-forward logistics resale programs through their network of warehouses, where they take receipt of non-new returns and quickly refurbish-grade-list and fulfill resale items.
“With 67% of retail executives planning on revamping their return management and asset recovery program in the next 12-24 months, the recommerce movement is expected to accelerate quickly as brands scramble to boost bottom line performance whilst driving their sustainability program forward.” Says Chris Lavoie, Director of Strategic Partnerships @ Arrive. “A brand supply returns-to-resale program has the potential to be the silver bullet retailers are looking for.”
One major outdoor retailer who partnered with Arrive in early 2023 quickly generated $1M in resale GMV with an incredible 90% sell-through rate within their first 90 days, validating the potential of a brand supply model that comes with a higher volume of high-quality units. Importantly, this brand was able to stand up its resale program (branded storefront & operational set-up) in under 8 weeks, a timeline that will only get shorter as recommerce becomes mainstream.
Want to learn more? Check out the rest of our ebook on how brands can effectively expand their selling channels and find more opportunities to creatively engage customers: