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Recommerce logistics: How to add resale to your reverse logistics process

Illustration of a tablet with shoes on it next to a cardboard box with a dollar sign.

The idea that consumer items have more than one life is not new. But it’s taken on a new significance as consumers face a host of challenges, ranging from sustainability to inflation. Cost consciousness, growing environmental awareness, and the demand for more sustainable shopping options have all served to turn recommence into a booming market.

According to eMarketer, e-commerce resale will account for 74.6% of total U.S. total resale volumes this year. Yet as the e-commerce landscape evolves in favor of enabling faster, more seamless recommerce activity, so does the importance of the reverse logistics process in efficiently handling returned products and unlocking opportunities for resale.

In this blog, we’re delving going into what recommence is, why e-commerce brands should consider adding a resale channel, and how to effectively implement recommerce into your reverse logistics workflow.

TL;DR

  • Resale, also known as recommerce or the secondary market, involves buying and selling pre-owned merchandise through various channels.
  • E-commerce brands should consider adding a resale channel to tap into the growing demand for secondhand products and cater to environmentally conscious consumers.
  • The reverse logistics process is integral to the recommerce model, involving steps such as product intake, inspection, sorting, refurbishment, and determining resale value.

What is recommerce/resale?

Resale, also known as recommence, reverse commerce, or the secondary market, refers to the buying and selling of merchandise that has already been owned and used by consumers. Recommerce takes place through a variety of channels, including brick and mortar stores, social media platforms, websites, or an online marketplace.

While some pre-owned items may be sold at a lower price point (as seen in apparel thrift stores) others may have more value in the secondary market, as seen with vintage clothing or discontinued brands and product lines.

A recommerce model managed by a brand requires streamlined workflows to not only sell the products but to receive, inspect, recondition, and ship products to the new owner without creating bottlenecks inside your fulfillment operation.

Why should e-commerce brands consider adding a resale channel?

Recommerce is growing rapidly consumers search for ways to continue discretionary spending without breaking the bank. As inflation continues to affect purchasing habits, giving certain items more than one life offers shoppers ways to both save money and make money. A whopping 93% of consumers say that higher product prices are affecting their decision to buy or sell pre-owned products.

Moreover, growing consumer awareness about minimizing waste and having a positive environmental impact has seen resale explode in popularity. This is especially true amongst younger consumers, with 64% of Gen Z and Millennials saying they are influenced by sustainability efforts when making purchases.

And with e-commerce fraud such as bracketing and wear-once-and-return at an all-time high, the recommerce circular economy presents a favorable alternative to shoppers. In theory, resale enables shoppers to use or wear a product only a few times before recouping at least some of the purchase price or receiving store credit for their next purchase.

For these reasons, forward-thinking brands are viewing resale as the next big growth strategy. Big brands including Patagonia, Ralph Lauren, and Burberry are turning to recommerce solutions to stay relevant to consumers.

What is the reverse logistics process?

Reverse logistics refers to the process of handling products that flow from the end consumer back to the brand or retailer – the opposite of the traditional e-commerce supply chain. Streamlined reverse logistics is an integral element of successful returns management, reconditioning, product end-of-life activities, and of course, recommence.

The reverse logistics workflow usually progresses as follows:

Return initiation. The customer decides they want to return an item. This can be due to various reasons, such as receiving a damaged or incorrect product, a change of mind, or wanting to return a secondhand product for resale.

Return authorization. Upon receiving the return request, the brand uses its return policy to evaluate whether an item is eligible to be returned, exchanged, or resold.

Return shipping. The company gives the customer instructions on how to return the merchandise to the designated facility

Inspection and sorting. Returned items are inspected to assess their suitability for return, repair, resale, or disposal/recycling.

Inventory receiving and storage. Merchandise that passes these checks is formally returned to storage or picking locations in the fulfillment center to be part of a future customer order.

Implementing recommerce programs into the returns process: A step-by-step guide

So, what does reverse logistics have to do with resale? The answer: everything.

If you are an e-commerce brand, returns management will already form a significant part of your logistics workflow. E-commerce returns drive a huge amount of activity in the warehouse, as customers navigate buying products online without testing or trying them first.

To manage such high return volumes, a streamlined reverse logistics strategy is essential to minimize excess inventory and create as many resale opportunities as possible for returned products. This is where with the right planning and approach, recommerce solutions can slot in seamlessly to generate more revenue opportunity for your business.

If returned merchandise is already being processed and inspected in your facility, implementing a recommence program is a matter of deciding how products marked for resale need to be routed through your reverse logistics workflow to maximize efficiency and revenue generation.

By augmenting returns management with resale, your brand will not only reduce problem inventory and liquidation but also boost the value of returned inventory by being able to adjust its value proposition to consumers. 

So, how should e-commerce brands go about adding recommerce to the returns process?

1. Decide what resale model(s) you want to invest in

Not every type of recommerce is alike or has the same objectives in mind. Some incentivize customers to sell their items back to the brand for store credit or consignment, while others focus on repurposing excess or defective inventory. So what resale options are available to e-commerce brands?

Take back/trade-ins

Take back resale programs create a closed ecosystem where customers take used products back to the brand they were purchased from so they can be resold on branded channels. Customers are usually incentivized to sell this way by being offered store credit on their next purchase, which helps to create a continuous loop of resale and repeat purchases.

Take back programs are preferred by brands who want full control over the resale process, both to boost revenue and to ensure consistent brand experiences. Pre-owned merchandise can be expected in-house to ensure quality and relabel products accordingly.

Repurposed resale

Rather than relying on consumers wanting to sell items, repurposed resale is when brands utilize existing inventory as merchandise for their resale channels. This may include product samples, returned items, refurbished products, or excess inventory.

Repurposed resale is a great way for businesses to preserve brand equity by creating a secondary line of merchandise priced at a slightly lower price point, rather than relying on clearance sales to shift inventory that’s tying up valuable storage space.

Lululemon ‘We Made Too Much’ section on their website.

Lululemon is one such brand that protects its premium image with a ‘We Made Too Much’ section on its website for excess items. This gives products a new life by repositioning their value proposition, rather than having it be viewed simply as unwanted inventory.

Multi-channel resale

Instead of selling secondhand items only through owned channels, multi-channel resale sees brands make use of external marketplaces and websites to sell pre-owned merchandise directly to consumers. This has the advantage of giving brands extra reach in their resale efforts, rather than relying on shoppers coming straight to their website.

A common way to do this is by using certified resellers, who are committed to upholding certain policies or brand guidelines in product listings. This also gives brands the ability to set pricing and ensure that resale doesn’t end up cannibalizing sales in other channels.

Because it has a vested interest in controlling the supply of secondhand products, Apple manages a close group of authorized resellers in different territories where consumers can purchase refurbished products according to certain conditions, namely that the warranty no longer applies.

The right recommerce model for your business will be decided by a range of factors, including:

  • The type of products you sell
  • Your biggest pain points in the return process
  • Whether you want resale to be customer-facing
  • Whether you partner with a 3PL

The resale opportunities for used apparel, for example, will be quite different than for electronic devices and have very different target audiences. Before you can add a resale channel or choose a resale partner to work with, you need to determine what recommerce model is going to serve your brand best.

2. Decide on your customer-facing workflow

If your resale strategy relies on customers choosing to send their merchandise back to you, your front-end resale workflow is every bit as important as what happens on the back end. To boost resale activity, it needs to be as seamless and easy as possible for customers to participate. Preparing for resale should start not at the point that customers decide to resell a product, but from the moment that an initial sale is made:

After the initial purchase: All post-purchase communications with customers, such as order confirmation emails and shipping notices, should make a point of promoting your resale program to plant the seed.

Initiating a resale: Having a self-service portal on your website for customers to register resale merchandise not only takes pressure off your customer service team, but also ensures that your warehouse staff know what merchandise is incoming and take steps accordingly.

Shipping and packaging: Since customers will need to ship items to you, your shipping policy also plays a big role in incentivizing resale. Offering to cover the cost of return shipping for resale merchandise, for example, is a great way to remove friction from this workflow. Likewise, using return-ready packaging for all orders avoids customers needing to source their own in cases where an item is only used a few times before it is resold.

Post-resale: Allowing customers to track their resale activity via a customer account means they can monitor their positive environmental impact and the amount of store credit outstanding, which helps to gamify the resale experience and establish recurring customer practices.

3. Decide where returned merchandise needs to be sent

Before pre-owned merchandise can be listed online and resold, it needs to be sent to a facility for inspection and storage. Where this takes place will depend on your current returns management system and what logistics partners you are working with.

For example, if your business is using different locations for fulfillment, you may decide to send all merchandise for resale to one location which has been configured for reverse logistics. Alternatively, if you are working with a resale partner, you may be more efficient to send products to their facility with staff that are trained to manage inspections and refurbishing. One potential downside of this approach is that resale merchandise may need to be sent back to your warehouse in preparation for picking and packing for future orders.

In any case, an aggregated shipping strategy is an important component of your resale strategy to ensure that pre-owned merchandise is being shipped in bulk in minimize shipping costs and time spent loading/unloading inventory at different locations.

4. Decide on your merchandise inspection workflow and criteria for resale

Your brand has a vested interest in ensuring that any secondhand merchandise sold is in good condition and is not defective in any way. Otherwise, you will attract the ire of frustrated consumers who rightly expect pre-owned items to still be usable for their intended purpose.

What qualifies as ‘good condition’ looks like will be up to your business to decide. For example, if you are an apparel brand, your policy may state that garments have to be free of damage or stains to be eligible for resale. For electronic devices, they need to be proven to be in full working order.

Once you have decided on your criteria for resale goods, your inspection workflow will ensure that any merchandise labeled for resale, whether sent in by the customer or repurposed, is fit to be listed on your resale channels. By following the same product grading system for all items you can be confident that no unsuitable products will slip through the cracks.

A resale inspection workflow could look as follows:

  • Inventory arrives at your facility and is unpacked.
  • Labels are checked to ensure the authenticity of the merchandise.
  • Items are inspected and photographed to identify any defects that would make them ineligible for resale.
  • If defects are found, workers must determine whether items justify refurbishment or repairs, or are disposed of.
  • Items free of defects can be prepared for order fulfillment. This may include relabeling and repackaging.
  • Resale value is determined based on condition, demand, and market trends.
  • Once ready for resale, items need to be stored in the correct part of the warehouse for picking.
  • If items are eligible for resale customers will receive incentives, such as store credit or a discount on their next purchase.

5. Decide how to market your resale channel

Many brands may not want to give their resale channels too much of a spotlight. Why? Because they would much prefer that customers buy full-price items instead. But in a highly competitive retail market where consumers are increasingly price-sensitive, resale provides a pathway for new customers to give your brand a chance without needing to commit to a big purchase.

Marketing your resale channels is key to attracting new and existing customers to participate and build revenue, especially if you are dependent on customers to list pre-owned products. Initiatives such as exclusive discounts and store credit are a great way to boost resale activity, especially if it’s a new avenue for your business. If you have a loyalty program, targeting your members with the ability to earn loyalty points is a brilliant way to encourage resale, as this segment represents your most loyal customers who have made the most purchases.

Partnering with influencers is another strategy to promote your resale program, as it shows the end-to-end resale experience from the viewpoint of both sellers and buyers. Peer to Peer resale sites such as Poshmark are well known for using this strategy and creating a network of ambassadors on social media to promote their service.

Improve your reverse supply chain by partnering with a 3PL

Managing reverse logistics in-house is already complex before you factor in adding resale to your workflow. Retro-fitting a recommerce program into returns management requires an in-depth understanding of your current return vs. resale volumes, labor availability for inspections, and shipping costs to move returned merchandise between facilities.

Tying up time and resources managing returns and resale this leaves your brand vulnerable to missing out on valuable growth and marketing opportunities, especially once your recommerce program takes off. If your reverse logistics strategy is unable to scale alongside volumes, this increases the risk of bottlenecks in the resale and return process that leads to unhappy customers and stagnating revenue.

Partnering with a 3PL like Ryder E-commerce to coordinate your reverse logistics paves the way for better business decision-making and more opportunities to optimize operational speed and costs:

Best-in-class returns management technology

A great fulfillment partner doesn’t just move goods from A to B but equips brands with the right technology and infrastructure to grow their businesses and deliver great customer experiences.

E-commerce brands who are interested in adding recommerce to their operation can leverage one of Ryder E-commerce’s partners to speed up the set-up process and build a fully integrated resale channel:

Recurate. Hand over management of the end-to-end recommence workflow, from integrating with the back-end of an e-commerce platform to formulating a tailored resale program including peer-to-peer resale, take back, and repurpose.

Nok. Implement a multi-channel recommerce strategy and manage returns via one full-service platform that is configured to your business’s needs.

Ghost. List your products on high-quality resale marketplaces to increase your brand’s reach and control the pricing of secondhand items.

Arrive. Access fully-branded resale channels and a network of facilities dedicated to identifying, refurbishing, and managing secondhand merchandise to maximize resale revenue opportunity.

Access value-added services that streamline resale

Inspection, re-ticketing, kitting, and repackaging are just some of the detailed workflows your business will require to create a streamlined resale channel that maximizes revenue. A full-service 3PL is essential to action these steps and ensure quality control throughout the reverse logistics process while maintaining speed. Ryder E-commerce offers a full menu of value-added services to support resale and seamless returns management, from repairs and alterations to labeling.

Get a tailored shipping strategy

Reverse logistics requires a very different shipping approach to outbound orders. Shipping both returned and resale merchandise at the lowest possible cost is essential to keep storage and freight charges down and avoid delays in processing items. A 3PL can design a shipping strategy that optimizes both speed and cost, allowing you to capitalize on key resale opportunities.

Ryder E-commerce’s SmartRate selection tool and relationships with both regional and nationwide carriers enable us to tailor the ideal shipping strategy for your resale channel, so you aren’t leaving valuable dollars on the table.

Incorporating resale into your reverse logistics strategy is not just smart business sense; it’s a powerful step toward refining your overall returns management approach by diverting as much merchandise as possible into a robust secondary market with higher perceived value. Moreover, recommerce is an actionable way to promote sustainability and minimizing environmental impact on your customers, which will only grow more important in the years to come. As resale continues to expand, it will help brands to unlock new revenue streams, enhance the customer experience, and position brands as responsible players in an increasingly conscious market.

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