The circular economy is on the rise. Citizens, consumers, governments, companies, NGOs, etc. are all mobilising to move from a throwaway society to a more circular economic model. E-commerce is part of this transformation, as shown by the multiplication of marketplaces for reconditioned products (non-exhaustive list at the end of this article). In France, the Back Market marketplace has become the champion of refurbished electronics in a few years. And we’re not talking about second-hand products (like Vinted) but about refurbished products which, unlike second-hand products sold between individuals, are (in principle) subject to checks and tests by the professional selling them. Are you interested in starting a marketplace for refurbished products? Then there are 5 things you should do to launch it successfully
Choose a mature market
The marketplace is above all a business model before being a technological choice. And this is even more true for refurbished product marketplaces. Before launching a project of this type, ask yourself whether the market on which you wish to position your marketplace is a mature market, both in terms of supply and demand (customer appetite). On the supply side, it is important to look at whether this market has already begun to structure its circular channels (reconditioned, recycling). Are there, for example, specialised repairers who can become sellers on your marketplace and/or control the quality of the products displayed there? In terms of regulations, are the practices and rules for reconditioning products in this market codified? On the demand side, we can mention among the attractive markets, ready-to-wear, childcare, books and telephony, which are now mature markets where the customer brakes on the purchase of non-new products have been lifted (essentially the fear of low product quality). More generally, these are markets where products have a rapid obsolescence or limited use over time. However, whole areas of retail are still little explored (such as large and small household appliances, computers, furniture, DIY tools, etc.).
Securing you sourcing
This is the nerve of the war. Because without products to be reconditioned, there are no reconditioned products to sell! Of course, as a marketplace operator, it is mainly your sellers who will have to source their products and find products to repackage. However, it is up to you to ensure that you are in a market with several sources of access to the product. Be on the lookout for partnerships that will allow you to source these products. Get in touch with eco-organisations, recycling channels or retailers who are often at the forefront of product returns to their shops (defective products, products for which customers have invoked a guarantee, products deemed irreparable). Securing sourcing also means putting in place systems to control the quality of products, in addition to what the professional selling them can do. This is what the Affinitiime marketplace offers for example, which not only allows B2B buyers to source refurbished phones but also offers them a technical analysis service of the equipment before it is sent to their customers. The B2C refurbished products marketplace can therefore be doubled with a purchasing marketplace allowing the sellers of your B2C marketplace to source products but also spare parts, which is a key element of the refurbished economy. Because without spare parts and qualified repairers, there is no product to sell on your marketplace!
Properly onboarding your sellers
The targeting of salespeople is also essential. It is a question of identifying the sellers who will be able to display a lot of products but above all to commit to their quality. To do this, you will need to draw up a quality charter and contract with each seller to ensure that he/she takes responsibility. The seller onboarding stage must also be particularly careful. Especially because, on marketplaces for refurbished products, your sellers may be refurbishers or product repairers who do not always have a perfect knowledge of digital sales channels, which are those structured and regulated by marketplaces. So think about developing simple onboarding kits, with video tutorials, to facilitate the onboarding of sellers and help them quickly understand how to operate the main processes of their marketplace: the creation of their seller space with the verification process (KYC/KYB), the completion of their seller file, the listing of their products, the management of orders and reimbursements, the management of other elements of their back office, the management of the payout and the associated workflows, etc. In addition to onboarding, it is important to put in place procedures to regularly audit your sales staff, either directly by your teams or by analysing customer opinions and feedback.
Pay attention to merchandising
As in traditional commerce, merchandising is key in a marketplace. Merchandising refers to all the techniques used to present services or products in order to encourage consumers to buy. On a marketplace for refurbished products, there will be no standard seller’s presentation or classic product sheets. It is probably more important than on traditional marketplaces to provide clarity and reassurance. The seller, who can often be a repairer, can for example make a short video presentation. In addition to the photo of the reference product (new), the seller should offer other photos of the product in its current state, taken from several angles. It will also be necessary to qualify the condition of the product in accordance with the grading system proposed by the operator. While the circular economy is making progress in the standardisation of products – as shown, for example, by the recent introduction at European level of a reparability index that manufacturers must include on their products – the gradation of the condition of refurbished products (as new, very good condition, fair condition, etc.) is not yet harmonised for all markets (apart from a few markets such as mobile telephony, with a grade that reflects the general condition of the phone (aesthetics, condition of the battery), without impacting its performance). Each operator therefore defines its frame of reference to which the seller must conform. The condition for the success of your marketplace: that everything is clear for the buyer and that he has a maximum of attributes to filter his choices.
Be aware of regulatory changes
We mentioned this earlier. The refurbished economy is becoming structured and standardised, just like the channels that underpin it. But we are only at the beginning. The regulatory framework of the refurbished economy is therefore evolving rapidly and as a marketplace operator you will have to pay particular attention to it. Let’s give some examples. With regard to eco-taxes, for products that are subject to them, there will be no need to include an eco-tax cost on the selling price, as an eco-tax will already have been paid and collected on this product. This may have an impact on the checkout of your marketplace, especially if you rely on existing frameworks designed for the sale of new products. As far as VAT is concerned, reconditioned products, considered as second-hand products, are subject to VAT on the margin paid by the reconditioners and not by the end customer. For advice and expertise on these regulatory issues, consider approaching the non-profit eco-organisations financed by the eco-tax.
As you can see, the refurbished market is huge, estimated today at more than 50 billion euros worldwide (including 22 billion euros for smartphones). In this market, the marketplaces that will be the first to make their mark will be driven by its formidable growth potential. On the condition, however, that they are vigilant about the 5 points listed in this article!
Written by Alexandre AMIOT on Linkedin le 04/23//2021 taken up and translated with his authorization