The rise of secondhand ecommerce and marketplaces
In just the past two years, the retail landscape has undergone intense transformation — with COVID-19 triggering an exodus to ecommerce with no signs of slowing down. According to Statista, total global ecommerce sales for the next four years are projected to grow by 50%, with an estimate of US $7.4 trillion by 2025.
Even for the most digitally adept businesses, however, the challenge of scaling upward remains when it comes to ecommerce. McKinsey reports that within the United States, over 90% of ecommerce storefronts earn less than $1 million in annual revenue, despite the barriers to entry remaining low for new players.
One common theme we see is that many companies are not effectively connecting the dots between emerging ecommerce trends and the pandemic. For example, the current wave of “re-commerce,” or secondhand resale, is driven primarily by global supply chain obstacles that have caused shortages of new products and extended delays for restock. Additionally, ecommerce marketplace sales in the United States also skyrocketed in 2020, with 45% growth in the early stages of the pandemic.
As we reach the halfway point in 2022, companies need to keep on their toes as newer ecommerce trends take over the market. In order to maintain a steady growth trajectory, the most successful brands remain cognizant of these changes and are fluid in shifting their business strategy. Today, this may mean piloting a new program for secondhand inventory or incorporating marketplaces into an omnichannel approach.
Driving B2C with secondhand approaches
The concept of buying secondhand is far from new to those familiar with thrifting for clothes or perusing local flea markets. The pre-owned industry at large, however, has started to dominate online spaces, especially as the pandemic reshaped how the average consumer valued used products during times of low supply. Within the context of high shopping periods, this scarcity translated to over 6 billion “out-of-stock” messages during the 2021 holiday season — a 253% increase in notifications compared to pre-pandemic conditions.
From a company perspective, it has become financially advantageous to invest in the pre-owned segment across different industries. According to ThredUp, a highly popular secondhand apparel firm, its annual resale report states that the global market for thrifted fashion is on an accelerated trajectory, expecting tripled growth by 2026 compared to the regular clothing market. In the automotive industry, used cars in Ireland are selling for above retail, with a price increase of 50% since the beginning of the pandemic.
Additionally, consumers are also reaping the benefits of resale, with new avenues opening for the average person to sell their used goods online. The most recent Recommerce Report from eBay, which surveyed individuals from the US and several European countries, revealed that 75% of respondents started selling secondhand to establish a new income stream.
The other crucial motivator driving the pre-owned industry is the increased emphasis on promoting the circular economy through sustainable practices. Especially in the fashion industry, Gen Z and millennials are observing the initial environmental consequences of wastefulness and want to counter it. In fact, they will go so far as to call out companies that engage in this behavior.
For growing companies that want to take a sustainability angle with resale, it’s imperative to extend these actions beyond values-based messaging. In this time of heightened awareness, younger consumers are more environmentally conscious and will diligently research which brands they want to support, even if they are publicly marketed as secondhand or “pre-loved.”
Overall, the demand for used goods will likely persist beyond current supply chain issues, especially as Gen Z and millennial consumers drive secondhand purchasing to lessen the environmental impact. Merchants need to be deliberate with how they incorporate resale into their business model, especially since sustainability and responsibility play a key role in how companies are perceived. For those wanting to get started with secondhand, read on to learn about how online marketplaces can serve as one pathway into the pre-owned industry.
The rise of online marketplaces
Given the previous context around resale, it is no surprise that online marketplaces are serving as a crucial puzzle piece for a variety of buyer-seller interactions. Online marketplace sales accounted for 67% of total global ecommerce in 2021, with a total of $3.23 trillion spent in the top 100 marketplaces. It may even be that you have purchased something from an online marketplace like Amazon or eBay.
In its simplest form, an online marketplace can be compared to a traditional department store. Both serve as platforms to offer goods from a variety of brands. Third-parties and businesses often sell through marketplaces to expose their product to a wider audience, while consumers prefer marketplaces for the convenience of one-stop shopping and the ability to compare prices between similar goods.
Additionally, marketplaces provide sellers with liquidity, which creates a reasonable expectation for sellers to find buyers and for buyers to find the products they seek. In order to support this interaction, companies like Airbnb are designed to organize and consolidate housing accommodations provided by sellers, rather than offering up their own real estate like a traditional hotel chain. Airbnb’s success is dependent on its ability to share information with consumers in the form of efficient search customization and conversely connect hosts with potential travelers. Since liquidity works in both directions, everyone benefits from the marketplace model when supply and demand are balanced well.
As mentioned earlier, the pre-owned industry is experiencing massive growth, and online marketplaces are serving as a major driver of sales. For example, Vestaire Collective, a leader in the apparel resale space, is an online global fashion company that leverages the marketplace model effectively to host a large repository of high-end, secondhand clothing. Specifically, Vestaire has realized that liquidity is crucial to a marketplace’s success and utilizes technology to keep pain points out of the buyer-seller equation. In doing so, the fashion company is highly popular and serves as an ideal success story for companies looking to blend resale with the marketplace model.
Instead of making a rapid transition to marketplaces, however, companies should consider how online marketplaces can help kick-start or build upon an omnichannel approach. According to Adobe’s 2022 Digital Trends — Retail in Focus report, consumers expect companies to tailor their customer experience seamlessly both online and in-store. And they expect self-service features like live search that reduce the number of hurdles to reach checkout. For businesses that are newer to ecommerce, marketplaces may serve as an ideal starting point, whereas digitally native brands can view marketplaces as a logical next step in retail expansion.
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