Recommerce

Recommerce or reverse commerce, refers to the process of selling previously owned, new or used products, mainly electronic devices or media such as books, through physical or online distribution channels to companies or consumers willing to repair, if necessary, and reuse, recycle or resell them afterwards.

History of the term

In February 2005, in an interview for The New York Times, George F. Colony,[1] chief executive of Forrester Research, was the first to introduce the term recommerce to answer a question about the increase in spending for technology after years of budget cuts in large corporations after the Dot Com Bubble burst: "There's a lot of shelf-life issues out there. People are a couple of releases behind. Older PCs. There is a move to really go back to - we call it 'recommerce'. Instead of 'ecommerce', it's 'recommerce'". He said.[2]

The term later evolved, and today it is primarily used to describe business models centered on the purchase and resale of used goods by companies. Most recommerce businesses are focussed on consumer electronics, such as smartphones, tablets, and notebooks. Physical media, such as books, DVDs, and blue ray discs take a significant share of the recommerce industry as well.

While there was always an informal industry, such as garage sales and flea markets, to resell used goods, the creation of platforms, such as eBay or craigslist suddenly allowed private individuals to sell used goods of any kind much more efficiently.

In the recent years, beginning from the early 2000s, companies that professionalized the industry by offering professional buyback or trade-in schemes started to thrive: it became possible for consumers to sell their old smartphones, TVs, or computers when they purchased new ones to reduce the cost of the new device. This has been common practice with car sales for decades.

Companies, such as Gazelle, Rebag, and ThredUp started in the 2000s to offer purchasing and trade-in services completely separate from the purchase of new items and further spread the term.[3]

Different Types of Recommerce

Informal Market

Consumers that sell used goods directly person to person (such as flea markets, garage sales or ad hoc) or via Marketplaces such as Amazon o eBay. Hereby some platforms such as eBay may hedge the risk of the payment for the consumer by providing payment tools such as PayPal or just offer the possibility to market the product such as craigslist.

Trade-In & Recommerce Services

An increasing amount of transactions occur directly via specialised service companies that purchase used goods, refurbish them if necessary and resell them subsequently. Such platforms often provide initial indications of the final purchase price for the good.

Most platforms assist the user during the transaction by offering following services:

  • An indication of the final purchase price to the owner of the product sold (often the final price varies as the consumer cannot verify to the full extend all determining factors of the product sold such as the quality of the battery of a smartphone during the process);
  • By organizing the logistical return of the product;
  • By controlling the product's condition in a specialized workshop;
  • By recycling the good if it can't be used anymore.

This kind of resale allows sellers to overcome some marketplaces drawbacks, by providing a means of simplified acquisition, and immediate and sometimes guarantied value.

Buy Back & Trade-In Offers by Vendors of new Products

Especially in the electronics sector the purchase and buyback of consumer electronics became very common in recent years. By today all major MNO offer Trade-In solutions combined or detached from the purchase of a new phone. Most of this services are offered by 3rd party refurbishing companies specialised in used electronics.

Mobile OperatorOffers Trade-In / Buy Back
AT&TYes, all major brands[4]
T-MobileYes, all major brands
VerizonYes, all major brands
SprintYes, all major brands

Types of purchased products

Examples of the main assets of companies acquired by recommerce include:

Many ecommerce services have introduced recommerce solutions, including distributors, online retailers, and chain retailers.

The various marketing positions recommerce

Multiple types of recommerce services are available:

  • Recommerce, used as a method of funding, which can compensate the seller in cash or with a voucher.
  • Solidarity recommerce, the return of products by offering its holders an opportunity to share or redistribute the residual value with a non-profit organization or a social cause (e.g., micro-credit, or insertion).
  • Ecological recommerce, the recycling or proper disposal of products with strong polluting capacity (providing repair or recycling regulatory compliance).

Positive Impact of Recommerce

Environment

Environmental reports by electronics manufactures show that the majority of natural resources for the production of such products are consumed during manufacturing and first transport of the product and not during the use of a product. In many cases the reuse of such a good is significantly more beneficial than the pure recycling as eventual logistics and energy consumptions during the recycling don't occur and a used product can be resold instead of a new product being produced. The reuse of a product is an effective means of reducing products' environmental footprint.[5]

SmartphoneProductionLogisticsUseRecyclingTotal Emissions
iPhone 6[6]85%3%11%1%95 kg CO2e

Consumer Purchase Power

The product holder increases its purchasing power to acquire a new product by selling back its old one.

The development factors

Several factors have greatly accelerated the development of recommerce in developed countries, including:

  • The demand for solutions enabling consumers to separate themselves ethically from their products,
  • The ease of use of recommerce services, and more importantly,
  • The preponderance of takeover bids, which handsomely compensate the owners of recommerce services.

In France, the rise of recommerce is partly supported by the "Grenelle II" Law, which states that when they are sold under the brand name of a single dealer, it must "provide or contribute to the collection, removal and treatment of electrical and electronic equipment waste instead of the person who manufactures, imports or brings in the domestic market (...) this equipment regardless of the selling technique, including distance selling and electronic sales".

Issues of recommerce

Recommerce requires a special organization of many functions, such as: logistics management, information systems, customer relations, price control and treatment of the product in the shop, promotion, retention, and resale. Functional products recovered via recommerce solutions are usually put back on the market by the recommercer. Moreover, when this product exceeds local demand, recommercers sometimes turn to foreign markets to sell the products they have purchased. Thus, the recommercer sells some of these used functional products in emerging markets where access to technology and accelerating economic development are reserved for some part of the population.

References
  1. "As I.T. Goes, So Goes Forrester?". Retrieved 2018-10-15.
  2. "As I.T. Goes, So Goes Forrester?". The New York Times. February 18, 2005.
  3. "Making 're-commerce' second nature". The Boston Globe. November 7, 2011.
  4. https://tradein.att.com/#/start-a-trade/discover-device-value
  5. "Why You Should Buy A Second Hand Mobile Phone". Akoda. June 13, 2016.
  6. https://images.apple.com/environment/pdf/products/archive/2014/iPhone6_PER_sept2014.pdf

See also
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