Branded recommerce: What is it, who is doing it and how?
Jishnu Surendran, Co-founder, Circlestack
In part 1 of our series on branded recommerce, Neelkamal Biswas explained how the resale market is on the rise. Now, let us dive deeper into what exactly is branded re-commerce, who is doing it and how.
Branded recommerce is when you return a used product to a brand in exchange for credits (or cash) and the brand resells the product to another customer. As per ThredUp’s Recommerce 100 report, the number of brands running re-commerce programs in the US has increased 4.3x over the last 3 years (153 YTD in 2024 vs 36 in 2021). While growth in the US looks promising, it is interesting to note that most global brands that run such programs in the US have not extended those yet to Europe.
Let us take a look at the different branded re-commerce models and notable brands who have adopted those:
✅ End to end branded recommerce
This is when brands let users trade-in products (either online or in-store) and subsequently sell them (either online or in-store). All the trade-in and sales channels (web-shop or brick and mortar store) are owned by the brand. Patagonia and Levi’s are notable examples. Patagonia runs the entire program online whereas Levi’s accepts trade-in at select stores and sells used products online. While Patagonia offers its ‘Ironclad’ guarantee on used products as well, Levi’s does not.
✅ Branded recommerce on 3rd party platforms
This is when brands set up used product web-shops as part of platforms like ThredUp, Sellpy, Depop and so on. A notable example is H&M. H&M Pre-loved is available on ThredUp in North America and on Sellpy in Europe. H&M, interestingly, is also a majority owner of Sellpy. As per H&M, you can return unused products at any store and receive a thank-you voucher. The product is subsequently picked up and processed by their resale partners. Another notable example is the Doc Martens store on Depop.
✅ Branded P2P marketplaces
This is when brands offer a peer-to-peer selling platform as part of their website. Zara is a notable example of this model and allows customers to list their used products and find buyers. Products are shipped directly between the seller and buyer. This is potentially a low-risk entry point for brands to test out the appetite for resale amongst their consumer base. Also, in categories where the original retail price is on the lower side, a high-touch resale loop which includes product inspection and refurbishment is not viable.
While branded re-commerce can create new revenue streams, expand customer base and aid sustainability efforts, it poses some trade-offs for brands to address. For instance, cannibalisation of existing business, additional costs for warranty and customer service, operational complexity and so on. We will explore these in a subsequent post.
If you have come across interesting recommerce models, have views on the reasons for slower adoption in Europe or if you think there are more trade-offs to address, let us know in the comments!
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