Second-Hand Ecommerce: Redefining Customer Experience and Sustainability in the Circular Economy
3 Minute Read
In 2020, the value of the second-hand clothing market was estimated at US $27 billion and is expected to grow to $77 billion by 2025 according to an industry report by ThredUP. While there are many factors driving this growth trend, not least of which is supply, what’s most significant is the change in consumer sentiment.
Buying second-hand has gone from something to be somewhat embarrassed about because that’s all you could afford, to something to be proud of. People love to share how they found a bargain which was great quality too, and this extends beyond clothing. eBay, Facebook Marketplace, and other industry online hubs have made it possible for individuals to buy and sell almost anything from furniture and appliances to gardening tools, kids toys, books. and even building materials. It’s a growing trend that is capturing market share from traditional retailers and impacting buying habits. No industry is immune.
If you start to view the second-hand trend from a customer experience (CX) perspective, the growth quickly starts to make sense. This trend also provides clues to how brands can adapt and retain market share by focusing on specific elements of CX.
1. Second-hand e-commerce sets the benchmark for CX
Many traditional brick and mortar retailers only ramped up their e-commerce efforts out of necessity resulting from the pandemic. By contrast, the second-hand market has been navigating and fine-tuning the complexities of selling online for decades. As a result, second-hand retailers have a far more advanced understanding of what’s important to visitors in the customer journey, how to build connections between buyers and sellers, and how to get visitors to keep coming back. Many second-hand e-commerce sites have set the benchmark for CX which in turn have shaped consumer expectations.
Amazon coined the phrase customer-obsessed, meaning their technology and every aspect of their business strategy is geared towards understanding and delivering what customers want rather than building a business on an offering and expecting it to be enough to attract and convert customers. Companies may not have Amazon’s resources but it is possible to apply important CX learnings to become more competitive. A key element of this is being able to leverage the right consumer data at the right time to not only gain a better understanding of what customers want but also to be able to respond faster with more relevant offerings.
2. Consumer connections need to be rooted in relevance
One aspect of business where second-hand e-commerce has excelled is in creating relevant connections with their target market. Perhaps it’s because second-hand goods are so specific. There’s one item in one color and size. It’s not a product for just anyone. Trying to position the product in terms of demographics to target buyers wouldn’t be very helpful. Yet this is exactly what many brands have traditionally used to try to build connections with customers.
The value of segmenting consumers into target customer personas is diminishing. It is rather like a shotgun approach—targeting everyone and hoping to get someone to buy. Today’s customers are tired of being spammed with irrelevant offers and marketing messages. Instead they desire more authentic and personalized connections with offers that are relevant to their current needs.
Rather than relying on third-party data, the future for improving the customer experience lies in leveraging first-party data to create better connections with customers and serve up more relevant and contextual offers.
3. Price is often less of a priority than sustainability
Consumer awareness of environmental and sustainability issues is far greater than many brands think and it’s overtaking the importance of price. Customers are prepared to pay more for products that are sustainably sourced, use recycled components or materials, or that can demonstrate an ethically sourced supply chain. In addition, buying second-hand is not just about getting a good deal, it’s about getting more use out of products that are already circulating in the economy.
Documentaries have raised the awareness of just how much of any given landfill is made up of products discarded before their lifespan is up. Reselling and repurposing is the easiest way to reduce waste sent to landfills and this is a major driving force behind the success of second-hand resale.
Some brands have recognized this as an opportunity and are offering customers a way to resell their products online. While fashion is at the forefront of this trend, other industries are following. IKEA launched its first second-hand resale store in the USA in 2021 and it’s been so successful that now it plans to roll out more.
The growth in second-hand resale is a lesson in CX, showing what customers value and that they’re willing to spend on it. As knowledge and understanding of the circular economy and sustainability grows, so too will its influence on CX. Consumers are becoming increasingly aware of the environmental and social impacts of their buying behavior, and this is especially true of younger generations. They’ll gladly support brands and second-hand e-commerce sites that extend the lifespan and use of products because as consumers they know they’re helping rather than harming the planet.
The growth in second-hand resale is a wake-up call to brands, if they choose to ignore this trend and continue with business as usual, they may find themselves losing market share to competitors embracing sustainability practices and supporting the resale of their products. Consumers increasingly care a great deal where products come from and they care where they’re going to end up. If either of these are shown to cause harm to the environment or even social causes, they will look for alternatives that have a positive rather than negative impact.
The customer of the future is more informed and conscious about how they shop and what they buy. In the same way as they value the world around them, they also expect to be valued as customers. It’s a message to brands that’s loud and clear: "Take the time to understand what’s important to us and deliver relevant customer experiences and offerings."