Unpacking the Logistics of Recommerce with Ben Whitaker, CEO of Reconomx

As the face of global commerce and consumerism continues to change at remarkable speed, SEKO UK was thrilled to recently announce becoming launch partner of recommerce specialist Reconomx. Recommerce is an area of retail logistics solutions which is going to be vital in years to come as brands aim to reduce carbon footprints and cut costs – but what exactly is recommerce? And why is it seeing a surge now?

We caught up with CEO of Reconomx Ben Whitaker to discuss the rise in recommerce – which has seen the service grow 21x times faster than traditional retail – and the positive influence it can have on both sustainability and profitability in years to come. You can also find out more from Ben in our ‘Inside Out’ video below!

In simple terms, recommerce is the re-selling of problem inventory. In the context of the work done by Reconomx and SEKO, problem inventory comes in the form Ecommerce returns, and in particular cross-border eCommerce returns. As Ben suggested to us, there are three main reasons why this is seeing a surge:

• Commercial
• Environmental
• Operational

As with all business decisions, the commercial benefits are right up towards the top of the list. Recommerce provides brands with a tangible and quantifiable financial benefit, whereas the current model for eCommerce returns is simply an inefficient solution. As Ben highlights: “The benefit of an optimised recommerce solution manifests itself in a number of ways. If you shorten the timeframe by which you handle returns, you shorten the time when cash is out of your business. Traditionally, there is so much money left on the table by doing this process badly because everyone has thought of it as a cost centre rather than a revenue opportunity.”

The key here to a recommerce solution is that by reducing cross-border returns and instead utilising in-country resale channels, businesses can drive down storage and freight charges. Through Reconomx there is also access to expertise in terms of in-country resale opportunities, by having a direct route to the most suitable, profitable and brand appropriate secondary market channels.

Adding his point regarding a revenue opportunity for brands and a lack of investment in it to this point, Ben says: “The returns phenomenon is a relatively new one, and COVID has actually amplified the weakness in the reverse flow because it has not been treated as an opportunity. Brands have thought previously that there is no money in it, so they try and do it at the lowest possible cost – that invariably ends up with the wrong people, with the wrong tools, being given the wrong targets.”

One of the other main benefits, which is particularly high up on the agenda for big brands and corporations, is the positive environmental impact that recommerce can have. The world is in a transition phase where businesses are being encouraged to move towards carbon neutral with a net-zero operating model. Recommerce puts emphasis on two keys aspects of sustainability – the longevity of a product, and the carbon footprint it leaves behind.

Central to the idea is that products for resellers have more than one life, and as such, more than one buyer. As Ben states, the shift to reselling is a considerable one: “Previously if you bought luxury items you would never see those businesses encouraging the practice of putting products on eBay or similar platforms. Those things never existed because of brand image and brand protection, but there is now going to be a real pivot towards sustainability”. And it cannot be underestimated how much this shift towards sustainability has been driven by the consumer.

As this study from IBM suggests, customers are willing to change their habits to have a positive impact on climate change and sustainability, but these want to see their willingness reflected by brands making more conscientious business decisions. This study showed that nearly 60% of consumers are willing to change their purchasing habits to help reduce negative environmental impact. These trends are particularly prevalent among a Gen Z audience, with more than 50% saying they’d be willing to spend an incremental 10% more on sustainable products.

This desire from consumers to change habits in turn has an operational impact on the business decisions made by brands. With the changes being experienced across eCommerce and within the global supply chain, it is becoming more and more evident that certain practices are outdated, and the implications are increasingly apparent.

We have a generation that has been brought up on the ‘fast and free’ philosophy of delivery, but in reality, nothing in a business context is ‘free’ – and this customer base is now beginning to realise that there are impacts being felt in other places. As Ben suggests: “Operationally, lot of customer practices were founded on the idea that there was no money in problem stock, therefore brands weren’t going to invest in it or understand – it was treated as a ‘rear view mirror’ problem. The process of cross-border returns has been founded on a lack of awareness, a lack of data and a lack of process. That’s what Reconomx wants to fix, we want to help separate the diamonds from the coal in terms of products so our clients can focus their efforts on the diamonds.”

In a practical sense, this separating of the diamonds from the coal is establishing what items should be consigned to recommerce and what items justify a cross-border return. Ben elaborates by saying: “In the context of fashion and apparel, this means you fly your best shirts back and you might leave your worst in the location originally shipped to, or move them into another marketplace where somebody is going to use it at a lower price point. This is the pivot that third-party logistics providers like SEKO are reacting to.”

Recommerce solutions with Reconomx and SEKO logistics also becomes a powerful tool operationally because of the data it provides – by using a product grading system, each item has an attribute map, which means there is consistency that you can apply across different locations. This means you can start to compare the process and the outcomes on a consistent basis, allowing for better business decision-making.

There can be no doubt that the rise in recommerce is just beginning, and it is going to become an integral element of the retail market and the global supply chain. For more information or enquiries about recommerce opportunities with SEKO UK, feel free to get in touch.

Learn more about our Returns and Recommerce solutions