Can the rise in re-commerce help create a more sustainable retail sector?

Shopping habits are changing; consumers are increasingly opting to buy or rent used items rather than purchasing brand new.

Digital marketplaces are making this easier and easier, with 80% of refurbished goods now purchased online.

The trend is only set to grow, with 44% of people stating they’re buying more second-hand items and Barclaycard Payments estimating that recommerce already contributes £7bn to the UK economy annually. It’s driven in particular by younger generations, with over two-thirds of Gen-Z preferring to buy second-hand. Meanwhile, Selfridges is aiming for almost half of its interactions with customers to be based on resale, repair, rental or refills by 2030.

Economic and environmental drivers

So, why is this happening?

Well, with increases in the cost of living, it’s no surprise that customers are paying closer attention to the price of products. Finding preloved items that would otherwise be financially inaccessible is an attractive prospect when budgets are tight.

But it’s not just about price; environmental impact is a key factor too. Two-thirds of consumers now look at the environmental credentials of a brand when purchasing an item. Almost three quarters of those evaluate not only the products, but also factors such as deliveries and returns. Sustainability is a key influence on the upsurge of re-commerce.

Boosting the refurbished tech sector

The rapid rise of re-commerce has highlighted a growing trend in consumers choosing refurbished electronics. Refurbished tech is a big business, and it’s growing quickly.

Almost two-thirds (64%) of UK consumers have previously bought a refurbished or repaired electrical item. Despite the popularity of pre-loved clothes, twice as many people would buy a used washing machine or fridge over second-hand clothing items.

Customers are drawn by the cost savings, with many items that are as good as new selling for up to 50% off RRP. The environmental benefits are another big draw, with refurbished electronics standing out for their attractive circular economy appeal.

This points to an exciting new opportunity for retailers to increase revenue streams while also boosting their environmental credentials, but there’s much more that can be done to help this market reach its potential. Which is something we’re looking at here at fulfilmentcrowd.

The refurbishment roundabout

For example, there are some fundamental challenges in the traditional refurbishment process. Sending products for repair and then for resale creates logistical and ecological burdens.

In the existing model, when consumers encounter issues with their purchases, the items are sent back to the local fulfilment centre responsible for the initial logistics. These products are then transported back to their original manufacturing locations to diagnose and fix the problem. These locations are often thousands of miles away, such as in China.

Following repair, these refurbished items are then shipped all the way back to their original destination market for resale – significantly increasing the item’s carbon footprint.

With a typical return rate of more than 10% for consumer tech in the UK – and around a quarter of those due to faults – each retailer is potentially having to navigate thousands of products taking this inefficient and environmentally detrimental round-trip.

Challenging the status quo with a localised approach

To tackle these challenges, we’ve created a new service that enables issues to be resolved, and items to be returned to the market as refurbs, all without ever leaving the intended destination of sale.

To do this, we’re establishing a network of regional returns centres, initially in the US, UK, and EU (Germany), where returned items are thoroughly assessed, tested, and refurbished by locally employed experts.

It’s a complete end-to-end process, from the logistics of returns to diagnostics and repair (which is managed by our skilled team using detailed guidelines provided by the manufacturers), through to the re-introduction of refurbished items on the resale market.

This ensures a more sustainable and efficient resolution for returned products, benefitting our customers, their customers, and the environment.

Conclusion

Retail is a sector continuously in a state of evolution. In an age where there are growing ethical and environmental concerns around the business models of the likes of Temu and Shein, the more we can do to support more sustainable purchasing habits, the better, particularly if it also helps retailers to increase efficiency and diversify their offerings to meet a range of budgets.

Our approach offers a blueprint for the future, showcasing how businesses can thrive by integrating circular economy principles into their operations.