Is it Worth Selling Pre-owned Products Through your eCommerce Store?

The market for pre-owned items is booming right now. Forbes reports that the ReCommerce market (the online market for buying used items) is currently worth $24 billion each year, and that this figure could more than double by 2023. 

While platforms dedicated to selling second-hand items like Threadup and the Facebook Marketplace have the lion’s share of the ReCommerce market, retailers of new items already have some of the infrastructures in place to take advantage of consumers’ desire for more affordable and sustainable second hand products.

The merit of moving into the secondhand market depends on the wider industry that you operate in. In particular, you want to look at three factors. These are:

• Is there current or potential demand for second-hand products?
• Is it possible for you to get high-quality pre-owned products consistently and at a price that allows for a worthwhile margin?
• Is there a set of objective criteria for which you can evaluate the condition of the products you sell?

We will now go over how to evaluate each of these factors in your industry to see whether selling second-hand products is a viable option for your eCommerce business.

Assessing consumer demand for pre-owned products in your industry

Existing demand for second-hand products

The best way to verify whether there is any current demand for second-hand products in your industry is to see whether there are other businesses successfully selling such second-hand products.

You can ascertain whether there are businesses selling second-hand products with decent accuracy by searching for keywords that signify an intent to purchase a relevant used product in Google.

Keywords that indicate this type of buyer intent include:

“Buy used [relevant product]”

“Buy pre-owned [relevant product]”

“Buy second hand [relevant product]”

When we make these searches, there are two types of results that we want to look out for. These are:

1. Google Ads which specifically mentions that a product on sale is second-hand in their ad copy.
2. A map of physical stores that sell second-hand products of the type that you are searching for.

Both of these results indicate that companies are not just selling second-hand items, but that they are also making a good profit by doing so. This is indicated by the fact that the companies are willing to invest in either advertising or in physical premises to try and scale up their second-hand retail operations.

You can see, below, a screenshot of the results for a search that indicates an intent to purchase golf apparel. Notice how there are both Google Ads that specifically mention that there sell second hand tires and that there is a map pack of physical locations where you can buy used tires. 

Results are dominated by Google adverts indicating that people are making good money on selling second-hand products of this type

The existence of physical stores selling used golf items also indicates that there is money to be made here.

This indicates that the secondhand market is worth exploring if you are a retailer in the golf industry.

It can also be worth looking at search volumes for keywords that indicate intent to buy second-hand products in keyword tools. 

Although search volumes in any keyword tools are not exact, they should give you an idea of the types of products that people are looking to buy second-hand online.

Here we can see that if you are selling furniture, musical instruments, outdoor gear or electronics there may well be a viable second-hand market for your store.

Potential demand for second-hand products

There are two main drivers behind consumers’ decision to buy pre-owned products.

1. Pre-owned products are generally more affordable than new ones

2. Consuming second-hand products is thought of as being more environmentally friendly than buying new 

Therefore, if you are in an industry where affordability is a big factor in buying decisions, or where your audience are likely to be conscious of the environment and sustainability, then there is a good chance that you can tap into a secondhand market.

Some ways that you can validate whether affordability is a big factor in buying decisions in your industry is:

• Your most affordable products are your best sellers
• Competitors often use price as a feature of their products in ad copy

• There is a high search volume for buyer intent keywords in your industry that use qualifiers such as: “cheap”, “affordable”, and “under $x”.

Some indicators that your audience may be environmentally conscious consumers include:

• The majority of your customers are under 35

• There is a significant amount of scrutiny from the mainstream media about green issues and sustainable practices in your industry (fashion, automotive and groceries all fall in this category)

• There are successful “sustainable brands” in your space.

If several of these statements apply to your industry then there may well be demand (or future demand) for second hand products. Knowing what is fuelling the demand for pre owned products in your industry is also invaluable when it comes to marketing these products.

Finding reliable suppliers of used products 

The hardest part of selling second hand products online is finding consistent suppliers of such products.

While dedicated second hand marketplaces operate on a P2P basis, allowing users to essentially sell their used products to each other, facilitating this is a huge pivot for more traditional eCommerce retailers. 

Rather, online retailers who want to move into selling second hand products want to partner with a small number of reliable vendors of these products, so that they can sell these products without too many tweaks to their current operations.

The key to this is to partner with businesses that serve the same market as you, and who accumulate the products that you sell as “waste” in their operations.

For example, as a retailer of used tires, we have partnered with collision repair stores nationwide to purchase tires that they remove and keep off vehicles. Although these companies could sell the tires themself, they are not geared to do so and therefore it’s worth their time to sell in bulk at a lower price to us.

Finding these types of value propositions with companies that handle, but do not sell, your products is key to making a success of reCommerce.

Inventory Management and Quality Control

When selling used products, chances are some of the products you sell are going to have some wear and tear. This is not necessarily a problem, in fact, selling products in different conditions at different price points can be used to your advantage, however, you need an unequivocal way of measuring, labeling, and communicating the condition of products to customers.

The key to inventory management of second-hand products is to have completely objective and measurable criteria for what makes a product be in a certain condition. If these criteria are vague, or impossible to measure, then you open yourself up to a potential barrage of returns due to customers having the wrong expectation about the condition of the product that they will receive.

To do this you need to analyze what the most common types of damage or wear and tear are on the products that you hope to sell, and then develop objective means of measuring these. For example, with golf clubs the most common types of wear and tear are bad grips, small dings/chips, bent shafts, and worn treads on the head of the club.

The take home message here is that if you cannot objectively measure and categorize the wear and tear of used products then they might not be the most suitable for reselling due to the number of returns you could receive in virtue of misunderstandings over product condition.

In conclusion: ReCommerce can be a lucrative market but only for certain retailers

Although the growing demand for pre-owned items by consumers can open up new opportunities for some retailers, due diligence is necessary into both the potential demand for such second hand products and the feasibility of sourcing and categorizing pre-owned products that you intend to sell.

The important thing is to do your due diligence prior to launching the business and then follow all e-commerce best practices to optimize all the important facets of running any online store.