Re-commerce, the future of sustainable retail
Opinions expressed by Entrepreneur contributors are their own.
At the G20 meeting in Rome, we saw a polarized world: political actors trying to convince the world that they are doing something to stop global warming and environmental activists like Greta Thunberg in opposition claiming that it is nothing more than a media circus. In my view, an urgent solution that we already have at hand is to strengthen re-ecommerce, the segment of the circular economy that is revolutionizing all industries.
It is known that the fashion industry is the second most polluting after the energy industry. Fast fashion , which manufactures a lot but of poor quality, used and thrown away, is one of the most harmful ways to consume. Much of the production ends up in landfills or burned, a tragedy.
The solution is to reuse what exists, give it new life, avoid waste. How to make these changes? The circular economy, and especially the development of re-commerce, is the smartest and most immediate way to achieve this transformation, but to make it more reliable, it is urgent that an investment be triggered in more technology companies that are carrying out this innovation.
In other sectors it is undeniable that the circular economy is positioning itself as the alternative to the linear economy. An example is the well-known Kavak, the car buying and selling company, the first Mexican unicorn.
The pandemic triggered the adoption of online platforms for responsible and economically accessible consumption, causing the buying and selling of second-hand items to have an exponential growth, especially among the younger millennial and z generations as they are activists of fair and sustainable consumption. Although in Latam there has always been a reuse of fashion, in tianguis and bale clothing, now we are at the point of forcing ourselves to change our habits and dignify this practice.
At Troquer we verify that at least 8 million Mexicans are willing to buy quality second hand, that is a huge change in the mindset that must be capitalized.
In fashion, five re-commerce companies are already unicorns in Europe and the United States. One case is Vestiaire Collective, whose CEO Maximilian Bittner announced in 2021 a round of financing from Softbank for 216 million dollars, reaching a valuation of more than one billion dollars. Another example of the emergence of re-commerce is the strength of the community created in Vinted, another unicorn of this trend.
It is important to note that these two companies have focused on re-commerce of sustainable objects, that is, high-quality second-hand items, which last 8 times longer than fast fashion garments. Therefore we manufacture less quantity, we extend its useful life, we transact less, and we do not throw it away so quickly. Thus, we impact more.
Challenges for re-commerce platforms
In Latin America, the biggest challenge is to achieve the necessary investment to obtain greater traction from the existing second-hand markets, strengthening the buying and selling communities, and at the same time promoting market education so that the economic cycle is closed.
Another challenge for these platforms is to achieve the necessary supply for the demand for pre-loved products. It is not easy to gain the trust of sellers to offer their objects online, but they know that in these communities they can find a new owner capable of paying the value of sustainability. In Troquer we have already managed to create a community that is clear about this and we lead in the preference of buyers and sellers.
Circularity involves a complex operation that few have managed to solve well. Technology is necessary to unite users, make their experience fun and intuitive, apply machine learning to optimize prices and make wallet-tech systems, as well as self-serve functionalities, as well as automated customer personalization and user experience services. to create a round service that, especially young people, the most experienced digital customers, look for in a natural way.
Consumer demands: modern, digital, conscious, mean that business models must adapt to a new reality . This is why re-commerce is the great bet of retail in terms of high scalability and rapid growth and why greater investment is urgently needed in all Latin American industry to capitalize on this new form of the market.