Secondary e-commerce marketplaces are driving circular economy transition

//DH

Business model innovation can create competitive advantages. As business leaders push towards a more sustainable, circular economy than the current take-make-waste system, they’re embracing novel circular services to create new value for customers and transform processes across supply chains.

At GreenBiz Group’s virtual circular economy conference, Circularity 21, executives from companies big and small discussed how different types of circular business models can replace the current linear system and drive real change. Conceptually, circular economy-centric business models provide services or products that extend the length and quality of materials, reduce waste and emissions, and help reduce new resource inputs. In practice, these various models have different operations, requirements, target customers and more.

Take rental and recommerce, for example, two of the best-known circular business models (although others such as circular design are growing in popularity). Neither are necessarily new concepts — just think about how commonplace the practices of buying a used car or leasing a new car are. But younger generations of consumers who want companies to have positive environmental and social impact increasingly turn to companies offering these models — opening up massive economic opportunities for forward-thinking business leaders.

It’s a major step in the shift from a linear economy to a circular economy — rental and recommerce business models require a nontraditional way of thinking about relationships with material goods. Rental provides consumers with access to goods or services rather than full ownership, while recommerce allows them to use a product until it is no longer needed or enjoyable, then recoup part of its monetary value. In a world with finite resources and a changing climate, rethinking traditional consumption models is increasingly attractive to both consumers and businesses.

Recommerce: It’s not just Craigslist anymore

Sure, anyone can resell an old car or electronics or clothing when they’re done with them and want to buy some new goods. But it can be inconvenient and difficult to find buyers and transfer goods to them. That’s an unmet need that enterprising companies are aiming to fill. In 2019, the global secondhand apparel market alone was valued at $28 billion, according to market research firm Statista.

Resale platforms such as Poshmark, Depop, Mercari and TheRealReal have grown immensely in the past few years. Headlines have labeled these platforms "tech-turbocharged thrift" and heralded them as the "future of retail."