Re-commerce – driving the new last mile?

E-commerce is rapidly expanding. One significant challenge and expectation is a more sustainable approach to shopping. E-consumers are increasingly attentive not only to economic but also the social and ecological aspects related to companies, products, and their production, packaging, delivery, etc. One emerging trend is re-commerce, which involves buying, selling, exchanging or renting used items. Online second-hand platforms like Vinted and OLX offer goods that are given a ‘second life’ and unique items that are hard to find in regular stores.

As shown in the above graphic, in 2021 the European re-commerce market was already valued at some €75bn (US$82bn) but the market is expected to grow to €120bn (US$131bn) by 2025 (+60%) and its share of e-commerce will grow from 10% to 14%. This will arguably make re-commerce a new power in the last mile due to the incremental growth in parcels it will bring.

Just as logistics is crucial in e-commerce, the functioning of the circular economy, particularly online, is unimaginable without an effective logistics process. This requires an integrated approach, flexibility and sustainable solutions. Implementing re-commerce requires entrepreneurs to consider all elements – from storage, through to transportation and returns – to operate effectively.

Variable logistics

The final logistics model varies depending on the type of re-commerce and the marketplace. In some models, the owners of the sold items perform part of the logistics operations themselves, while in others, intermediaries handle them. On traditional re-commerce platforms, items offered by sellers are directly sent or handed over to the buyer, usually on a ‘local exchange’ basis. Thus, the seller is responsible for preparing the items for sale and delivery to the buyer.

In this legacy model, the platform merely facilitates the transaction and does not perform logistics operations. However, this approach is changing, especially in the first and last mile, as some platforms, notably Vinted, Allegro, Amazon and to a lesser degree OLX, are developing their own delivery network and capability.

In the case of companies such as Zalando Pre-owned or Patagonia Worn Wear that buy, accept in exchange or receive used items for free and then engage in re-selling them, the responsibility for most of the logistics processes is with the company. Depending on the needs, used items are refreshed, cleaned, repaired and prepared or repackaged for resale. Therefore, the warehouse infrastructure must be adapted to these needs, including additional spaces for preparing products for resale. These items are also stored until an order is placed for them, after which they are prepared for shipment (packaging, protection from damage, etc.).

Cost-effective delivery

Regardless of the adopted model, the critical element of internet-based re-commerce is delivery. Most deliveries are handled by external logistics companies but can also be performed by the seller or buyer in the form of self-pickup. In any case, the last mile, is involved. Shipments must reach parcel lockers and/or pick-up points (OOH) or the customer’s home or workplace in some way.

Given the generally low cost of the items, this is often the costliest part of the total purchase cost. The two most cost-effective forms of delivery are to parcel lockers and pick-up points, as multiple shipments can be delivered to one place at once and because the buyers and sellers pick up and deliver the items to the OOH point themselves, obviating the need for a door-to-door first or last mile. Moreover, this OOH solution is more ecological because fewer courier stops result in a smaller carbon footprint.

Further development

Despite the challenges, the future of re-commerce appears promising, and we believe it will continue to gain popularity, attracting eco-conscious consumers, bargain hunters and those who value unique products. Expanding the addressable range of products, re-commerce will go beyond the most popular categories today, such as clothing and electronics, to include furniture, sports equipment and many other items.

Technological advancements will drive the development of re-commerce through more advanced online platforms, tools for assessing product condition, and improvements in last-mile options.

There is no area that is so dependent on cost effective and customer centric delivery as this one so any carrier that ignores this segment, or indeed any re-commerce platform that doesn’t recognize the key importance of the last mile, does so at its peril!

Arrticle written in co-operation with Arkadiusz Kawa and posted on Parcel and Postal Technology International