Why Launching Resale Will Not Cannibalize Sales of New Products

According to Recurate data, brands’ concern about resale cannibalizing new product sales is unfounded.

The resale sector may be growing, but many may still find it a daunting concept. When the Recurate team kicks off a conversation with brands to help them develop their resale program, we’re excited to provide answers to their burning questions. One such question that is top of mind for many brand partners is: Will resale cannibalize our new product?

And the answer is: Not only will resale not cannibalize sales of your new products, our data shows that resale is an effective upselling tool.

The question of cannibalization is an especially critical one in a time when brands have dealt with a lot of uncertainty — through the pandemic and the current supply chain crisis. We advise our brand partners that the most effective resale programs are those that work in tandem with all elements of the business, so it is with good reason that our partners want to fully understand how the presence of pre-owned products may affect new items. The impact is significant, but our experience has shown that that impact is beneficial, rather than detrimental to sales of new products and to customers’ perception of your brand.

After launching 20+ resale channels with brands across the industry, here’s why we know resale won’t cannibalize your new product…

Peak Design’s new product pages feature “Buy Pre-owned” buttons.

3. Resale as Brand-Building: Customers feel good about shopping from brands that offer resale and are clearly committed to sustainability. For example, after helping one of our brands launch their resale platform, we looked into the analytics post-launch and realized that around 47% of their resale customers had returned within a month to buy something new. The McKinsey report also adds that customer sentiment is generally positive when brands participate in resale: “Three-quarters perceive it as a good development, with consumer loyalty, and perception of brand desirability, generally maintained. Around half of current new-product buyers react positively, with a negative response from only five percent, if all other aspects of the customer experience remain the same.”

4. Resale as Quality-Endorsement: Offering a resale channel is a testament to the quality and durability of your products.
It assures a customer they are investing in products that will retain their value for the long run and that they’ll be able to recoup some of the initial cost by turning to resell once they’re ready to pass an item along. McKinsey’s report also shares that, “The ability of a brand to sustain and engage in a secondary market reinforces a desirable aura of craftsmanship, durability and sustainability: four in ten buyers consider that brand participation will raise the market value of their own pre-owned products.”

“We have a lot of brands come to us and ask if resale is going to cannibalize their business. I say to them in the kindest way possible, their business is already being cannibalized. People who want to buy secondhand are already going on eBay or Poshmark. The behavior is already happening. So the real question is: How can you pull those customers in and engage them in your ecosystem?”

- Karin Dillie, Recurate’s VP of Partnerships

Learn more about launching a branded resale program at www.recurate.com

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