Shopping habits are changing. Consumers are increasingly choosing to buy or rent used items rather than new.
Digital marketplaces are making this easier, with 80% of refurbished goods now purchased online.
The trend is set to grow, with 44% of people saying they are buying more second-hand items, and Barclaycard Payments estimates that re-commerce already contributes £7 billion to the UK economy annually. It's particularly driven by younger generations, with more than two-thirds of Gen Z preferring to buy used. Meanwhile, Selfridges aims for nearly half of its customer interactions to be resale, repair, rental or repackaging by 2030.
Economic and environmental factors
Why does this happen?
Well, with the rising cost of living, it's no surprise that customers are paying more attention to product prices. Finding pre-loved items that may be financially inaccessible is attractive when budgets are limited.
But it's not just about the price; Environmental impact is a major factor too. Two-thirds of consumers now look at a brand's environmental credentials when purchasing an item. Nearly three-quarters of these not only evaluate products, but also factors such as deliveries and returns. Sustainability is a key factor influencing the rise of recommerce.
Promoting the renewable technology sector
The rapid rise in re-commerce has highlighted the growing trend of consumers opting for refurbished electronic devices. Regenerative technology is big business, and it's growing fast.
Almost two-thirds (64%) of UK consumers have previously purchased a refurbished or repaired electrical appliance. Despite the popularity of pre-loved clothing, twice as many people buy a used washing machine or refrigerator as used clothes.
Customers are attracted by the cost savings, with many items that are as good as new being sold at up to 50% off the suggested retail price (RRP). Environmental benefits are another big draw, with refurbished electronics having attractive circular economic appeal.
This points to an exciting new opportunity for retailers to increase revenue streams while also enhancing their environmental credentials, but there is much more that can be done to help this market realize its potential. Which is something we look at here at fulfillmentcrowd.
Restoration roundabout
For example, there are some fundamental challenges in the traditional renovation process. Sending products for repair and then for resale creates logistical and environmental burdens.
In the current model, when consumers experience problems with their purchases, items are sent back to a local fulfillment center responsible for the initial logistics. These products are then transported back to the original manufacturing locations to diagnose and resolve the problem. These locations are often thousands of miles away, such as in China.
After repair, these refurbished items are then shipped to their original intended market for resale – significantly increasing the carbon footprint of the item.
With a typical return rate of over 10% for consumer technology in the UK – and around a quarter of that due to breakdowns – each retailer is likely to be forced to navigate thousands of products on this inefficient and environmentally damaging round-trip.
Challenge the status quo through a local approach
To address these challenges, we have created a new service that allows issues to be resolved and items returned to the market as renewals, all without leaving the intended destination of sale.
To do this, we are creating a network of regional returns centres, initially in the US, UK and EU (Germany), where returned items are rigorously assessed, tested and refurbished by local experts.
It's a complete and comprehensive process, from return logistics to diagnosis and repair (managed by our skilled team using detailed instructions provided by the manufacturers), to reintroducing refurbished items into the resale market.
This ensures a more sustainable and efficient solution for returned products, benefiting our customers, their customers and the environment.
Conclusion
Retail is a sector that is constantly evolving. In an age of increasing ethical and environmental concerns around the business models of the likes of Timo and Shane, the more we can do to support more sustainable purchasing habits, the better, especially if it also helps retailers increase efficiency and diversify their businesses. Offers to meet a range of budgets.
Our approach provides a blueprint for the future, showcasing how businesses can thrive by incorporating circular economy principles into their operations.