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…

  1. Resale as Upsell: Pre-owned sellers return to the brand and spend 2.5X what they received in credit. When a customer sells an item through a brand’s resale platform, they receive site credit which can be put towards the purchase of another product, new or pre-owned. We see that, on average, customers use the credit towards a purchase that is 2.5X the credit value — meaning that resale is a compelling upsell tool for brands, and motivates loyalty amongst customers.
  2. Resale & Mixed Carts: About 15% of resale purchases also include a new item. Many of our brand partners choose to enable the “mixed cart” functionality, which we highly recommend. This allows customers to shop new and pre-owned within the same order. Understanding that a fear of cannibalization is not rooted in reality, our partner Peak Design has fully embraced integration by placing a “buy pre-owned” button directly on the pages of their new product (check out their Marketplace). This marriage of pre-owned and new has the ability to appeal to new customers through a lower price-point, and demonstrate that Peak Design products retain their value. Seeing resale alongside first-hand products is important to customers: According to a recent McKinsey resale report, “Nine in ten customers currently participating in the resale market are also buyers of new products, and three-quarters sell goods too.”
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

--

--

--

Powering the Future of Recommerce

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Take my money Facebook!

5 Clever Tactics to Get More Product Reviews

Podcasting’s $400 Million Intrinsic Added Value

Benefits and drawbacks of Hiring a Digital Advertising And Marketing Agency em Caxias do Sul RS

5 Steps to Get the Full Attention of Your Best Customers

Ideas and Trick to do Marketing in Competitive World

Hotspot v2: what’s new?

TOP 7 BEST TEXT MARKETING WEBSITES

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Recurate

Recurate

Powering the Future of Recommerce

More from Medium

A compilation of Pakistani startup fundings that made the huge total of $375 Million in 2021

Why your Business needs a Local SEO Expert!

The B2B Consultants Guide To Totally Eliminating LinkedIn Messages By Using LinkedIn Ads

How to launch a completely new product within your SaaS?