Consumer shopping habits are evolving towards sustainability through re-commerce.
- Digital marketplaces now facilitate the purchase of refurbished goods, with 80% of transactions occurring online.
- Economic factors and environmental concerns drive the re-commerce surge, particularly among younger generations.
- Challenges within the traditional refurbishment process present logistical and ecological issues.
- Innovative solutions aim to address these challenges, promoting efficiency and sustainability in re-commerce.
Digital marketplaces are proving instrumental in the expansion of re-commerce, with 80% of refurbished goods now being purchased online. This trend is anticipated to rise further as 44% of consumers report increased purchases of second-hand items. Barclaycard Payments estimates re-commerce contributes £7 billion to the UK economy annually, driven significantly by younger generations, notably over two-thirds of Gen-Z individuals who prefer second-hand purchases.
Economic conditions and environmental considerations are primary drivers of the re-commerce trend. In response to rising living costs, consumers are more attentive to product pricing, finding pre-owned items attractive when budgets are limited. Moreover, two-thirds of consumers now consider the environmental credentials of a brand when making purchases. Evaluations extend beyond the products to include factors such as deliveries and returns, reinforcing sustainability as a key influence.
The surge in re-commerce has notably affected the market for refurbished electronics. Nearly two-thirds (64%) of UK consumers have purchased refurbished or repaired electrical items. Despite the popularity of second-hand clothing, the preference for refurbished electronics, such as washing machines or fridges, is twice as high. The appeal lies in cost savings – up to 50% off the recommended retail price – and the environmental benefits of participating in a circular economy.
Traditional refurbishment processes pose significant logistical and ecological challenges. Faulty items returned by consumers typically undergo a cumbersome journey – they are sent to local fulfilment centres, then transported back to the original manufacturers for repairs, often located as far as China. Post-repair, these items are shipped back to the original market for resale, significantly increasing their carbon footprint. This inefficiency is accentuated by the high return rates for consumer tech in the UK, with over 10% of items returned and a quarter of those due to faults.
Innovative approaches are being implemented to mitigate these challenges, enhancing sustainability within re-commerce. A new service has been developed to ensure that returned items are refurbished locally, avoiding unnecessary international transportation. This involves the creation of regional returns centres in the US, UK, and EU, where items are assessed, tested, and refurbished by experts. This end-to-end process not only improves logistical efficiency but also enhances environmental outcomes by significantly reducing the carbon footprint of returns.
The retail sector is in a constant state of evolution, with re-commerce standing as a testament to shifting consumer priorities towards sustainability. In an era marked by growing ethical and environmental scrutiny, adopting practices that support sustainable purchasing habits is crucial. This approach not only elevates retailers’ environmental credentials but also allows them to meet diverse consumer budgets and increase operational efficiency. The integration of circular economy principles into retail operations offers a promising blueprint for the sector’s future sustainability.
Re-commerce is set to play a pivotal role in creating a more sustainable retail sector, driven by economic and environmental imperatives.
