The secondary market is becoming increasingly competitive, but resellers who implement the right strategies can rise to the top.
The secondary market starts when retailers and manufacturers offload overstock, distressed and returned products that they cannot restock or reshelf. In such cases, merchants (like you) resell these items at a reduced rate through discount stores, flea markets, wholly-owned websites, and other recommerce platforms like Poshmark and the RealReal.
Driven in part by the explosive growth of returns, as well as the increasingly price-conscious and socially-aware shoppers, secondary marketplaces are booming. This provides entrepreneurs with an incredibly lucrative avenue to build a business, while also contributing to environmental sustainability. However, not every resale channel is worth your time.
Recent research shows that online channels, known as recommerce marketplaces, are growing five times faster than brick & mortar secondary retailers (think: TJ Maxx or Marshalls), and 20 times faster than the general retail market. This popularity is driven by Millennials and Generation Z shoppers who are embracing secondhand goods and making more of these purchases online.
So, how can resellers like you appeal to these price and planet-conscious consumers and stand out in a competitive crowd? Here we offer 5 tips to successfully sell your products on the recommerce market.
Your website can be a great source for converting prospective customers, especially given the right marketing tools. But you may not have a loyal following from day one. Selling across multiple platforms increases your visibility so you get in front of the right customers. Creating a website is not enough. You need to take the product to where your customers already shop.
In fact, resellers who use this multi-platform approach can see a 190% jump in revenue–and that’s just from selling on 2 sites! HauteLook, eBay, Poshmark, and the RealReal are just a few examples of successful platforms that resell products ranging from general merchandise to high-end designer clothing. When you list across various platforms like these, you can ensure the largest number of consumers have access to your products.
Dynamic pricing is a strategy of continuously reworking the price of a product– sometimes changing it from one minute to the next- in response to real-time market conditions. These market conditions refer to competitors pricing strategies and events like holidays, which help you keep track of your product’s supply and demand.
For example, pricing for TVs drops considerably after the Superbowl. This happens because demand wanes significantly and people who bought TVs before the big game tend to return their impulse purchases afterwards. As a potential TV reseller, you must be aware of this event and do everything you can to resell your products at the highest price before the secondary market becomes saturated.
In short, if your product is not in demand, you’re unlikely to yield a high return on your investment. Thus, you must monitor the competitive landscape and global events to determine how to price your product on any given day (or hour). You can create a dynamic pricing strategy manually, but the most effective method is to invest in repricing software so you can compete with other resellers. In fact, a recent report shows that the use of reprcinging software rose by 15% for merchants who sold $250K or more last year.
To succeed in the recommerce industry, you must have a compelling brand story and mission to market on your website. This serves to humanize your brand, and boost your reputation.
As a reseller of second-hand goods you already have an amazing story to tell. You are saving overstock and returned inventory from reaching landfills, and personally contributing to a more sustainable future. Plus, you are helping people save money in the process.
According to recent research, your company’s reputation influences consumer’s willingness to purchase from you. Simply put, when consumers don’t know you or what you stand for, they’re less likely to buy. In particular, consumers are overwhelmingly voting for companies who demonstrate social and environmental responsibility, while avoiding companies who do not.
Another way to show consumers you care is by launching green initiatives. For example, you might utilize more sustainable packaging, and coordinate a “green shipping” option on your website. So instead of rushing to ship products overnight, which wastes resources and burns more fossil fuels, you can enable slower and more “green” shipping options for customers to choose. Implementing sustainable initiatives is only one example of how to build your story, but creating a socially conscious mission is vital to your success.
Customers are inherently skeptical about refurbished and pre-owned products because it’s hard to be certain of the quality they’ll receive. While you may be purchasing verified items from a reputable source that include manufacturer-made replacement parts, no visible scratches, and all original accessories, how can your customer trust you enough to buy when there’s no standard for refurbishment in the secondary marketplace? The key is education, visual proof, and honesty.
A recent study shows educating customers comes with considerable advantages, like building loyalty and trust, enhancing brand protection, and eliminating complaints. When you are upfront about how your products look and function, along with how you sourced them, you can create a mutually beneficial relationship that creates brand evangelists and a lifetime following.
If you pay attention to market conditions, source quality second-hand products, build a reputable brand story, and sell across various online platforms, you are well on your way to building a successful business.