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SVThe booming second-hand market is projected to reach $350 billion by 2028, fueled by sustainability, affordability, and evolving attitudes toward pre-loved items. The Pre-Loved indicator from Svensk Handel shows that the Swedish second-hand market generated a turnover of 1.3 billion SEK in October this year. This growing trend extends to the holiday season, with more consumers opting for second-hand Christmas gifts—a shift businesses can capitalize on by introducing a trade-in program. This blog explores how to make recommerce a profitable part of your business strategy—turning those unwanted products and returns into new revenue streams.
What is Recommerce?
Recommerce, or reverse commerce, refers to reselling pre-loved, refurbished, or returned products. This circular business model gives items a second life, which benefits businesses, consumers and the planet. By including recommerce strategies into your business model, you'll tap into the growing demand for affordable, eco-friendly shopping, reduce waste, and create a new source of income —all while meeting the expectations of today's eco-conscious customers.
Why pre-loved is booming
Buying second-hand isn't just trendy—it's socially and environmentally responsible. A large customer base is now drawn to the combination of sustainability and economic savvy, driving rapid growth in the second-hand market.
According to our Novus report 'State of Returns & Circular Shopping 2024', over 50% of Swedish consumers already engage in circular shopping, which means buying and selling pre-loved items. Brands like Cervera, Polarn O. Pyret, POWER, and IKEA lead the way by directly integrating second-hand into their sales models.
Take control of second-hand sales
"Retailers need to stop leaving money on the table." – Wilhelm Hamilton, CEO, Reclaimit
Despite the potential, many e-commerce businesses and retailers still rely on external platforms like Facebook Marketplace, Tradera, and Vinted for second-hand sales, missing out on revenue. Outsourcing also means losing control over pricing and the customer experience. By incorporating recommerce strategies into your business model, you can;
- Promote circular shopping
- Boost customer loyalty
- Maximize profits
Why let third-party platforms take a cut when you can keep the profits in-house?
How to turn returns into revenue
Launching a trade-in program is one of the easiest ways to tap into the growing second-hand market and start selling pre-loved items.
What is a trade-in program?
A trade-in program allows customers to exchange pre-loved items for discounts, vouchers, or product upgrades. These programs are often integrated into your e-commerce platform and supported by your post-purchase experience platform to manage logistics and streamline the process. Customers provide product details, receive an estimated value, and return the item for verification. Once approved, businesses can refurbish, resell, or recycle the items, creating value while promoting sustainability.
How a trade-in program benefits your business:
- Promote sustainability: Keep returned products within your ecosystem. Instead of sending them off to third-party platforms, refurbish, resell or recycle them to minimize environmental impact.
- New circular revenue streams: Don't let returns go to waste. Refurbish and resell them, creating an entirely new source of income.
- Boost customer satisfaction: Highlight potential savings with refurbished and pre-loved items, promoting affordability without compromising quality.
- Boost customer loyalty: Strengthen customer relationships through trade-in incentives that promote sustainability and strengthen recurring engagement with your brand.
- Control the customer experience: Be in charge of the customer experience, even post-purchase. Make sure each product offers complete traceability, giving consumers confidence in its origin and journey.
The role of repairs in Recommerce
Recommerce isn’t just about reselling—it’s also about repairs. The EU’s Right to Repair Regulation, effective July 2024, currently applies to specific categories like household appliances, televisions, and electronics. It focuses on improving access to spare parts and repair instructions for consumers and service workshops. As the regulation evolves, more product categories are expected to be included, broadening the adoption of repair services.
Why repairs matter:
- Increasing product value: Repairs turn returned or used items into high-quality products, adding value to your inventory and reducing waste.
- Building trust: Offering repairs, especially with warranties, strengthens your reputation and sustainability image.
- Driving loyalty: Customers are more likely to return if they can repair their products to extend product lifespan.
Consumers increasingly value repair options
According to our Novus report: 'State of Repairs 2024', 76% of Swedish consumers prefer repairs with a warranty over replacements. This shows that repair services are an opportunity to build trust and loyalty.
Incorporating repairs into your recommerce strategy not only aligns with new EU regulations but also meets the growing demand for sustainability, helping your business stay competitive in a circular economy.
5 tips for Recommerce success
- Grade transparently: Categorize trade-ins by condition and outline repair service levels clearly.
- Set competitive pricing: Offer fair prices for trade-ins and transparent costs for repair services.
- Provide warranties: Reassure customers with guarantees for refurbished and repaired products.
- Incentivize engagement: Reward trade-ins with discounts or loyalty points and offer perks for repeat repairs.
- Seamless integration: Create a dedicated, easy-to-navigate section for second-hand products and repair services online.
Patagonia leads with repairs and trade-in program 'Worn Wear'
Patagonia is a good example of a successful recommerce strategy. Their "Worn Wear" program offers both a repair service and a trade-in option, allowing customers to return used clothing for repairs or discounts on new items. This approach has helped Patagonia deepen its commitment to sustainability while driving customer loyalty.
IKEA’s Circular Hub: A Recommerce success story
IKEA's Circular Hub is also a great example of a successful recommerce strategy, enhancing both sustainability and profitability. Customers can return gently used IKEA furniture through their buy-back program in exchange for store credit. These items are then refurbished and resold at discounted prices in the Circular Hub, giving products a second life and reducing waste.
This initiative aligns with IKEA's sustainability goals and appeals to cost-conscious, eco-minded consumers. IKEA is a company at the forefront, and already in 2019, IKEA gave a second life to 47 million products through such efforts.
Time to ACT
The second-hand market is too valuable to ignore. By embracing recommerce with trade-in programs and repair services, your business can unlock new revenue streams, achieve sustainability goals, retain loyal customers, and stay competitive.
Take control of your share by leveraging the circular economy and maximizing your profits.
