How retailers are adapting to the second-hand explosion

By Clotilde Chenevoy | The | Used

The second hand is advancing in French consumption habits and among retailers. However, the economic equation is not easy to solve and requires rethinking business models. Illustrations with the experiences of Colectivo Vestiaire, Fnac Darty and Petit Bateau.

How retailers are adapting to the second-hand boom

7 billion euros in revenue. That’s the weight of the second leg in France, according to KPMG. This market even reaches 86 billion on a European scale. This number will increase even more in the coming years as new consumption habits are adopted. 74% of online shoppers, most of them women, say they now have the reflex to check the product for second-hand before buying it new, according to a Fevad x KPMG study released during Paris Retail Week. Another strong number, 1 in 2 French online shoppers claim to have purchased at least one second-hand product in 2021.

Price remains the main argument that encourages consumers to buy second-hand.  - © Fevad x KPMG
Price remains the main argument that encourages consumers to buy second-hand. – © Fevad x KPMG

“We are facing a great phenomenon, which represents for e-commerce one of the most remarkable innovations since marketplaces and m-commerce”, said Marc Lolivier, General Delegate of Fevad, during a conference on circular economy held for Paris Retail Week. Same analysis for François-Xavier Leroux, partner, customer and digital consultant at KPMG: “The circular economy is becoming an essential pillar of e-commerce. Proof of this is that among the top 20 e-commerce sites, almost all of them offer a second-hand offer or are in the testing phase. »

Among the most mature second-hand markets, according to KPMG, is the automotive sector, where used cars are institutionalized. Then there is fashion, especially for children and women. The second-hand textile market is estimated at €1.16 billion in 2021 in France. Finally, technology products, smartphones, computers or tablets, represent the mature third sector in the face of opportunity.

Second-hand figures in France.  - © DR
Second-hand figures in France. – © DR

On the other hand, if the customer’s appetite is real, the offer is just starting to take shape. The question of profitability is complicated… For François-Xavier Leroux, “Second hand is a market that can be profitable if you ask the right questions. » Indeed, the circular economy requires the transformation of part of the company’s activities, with significant work in the supply chain for sourcing, “the heart of the reactor”, product traceability or at the marketing level. Champions are already emerging in the field, with very different value chains. Marketplace, BtoBtoC or BtoC model, each deploys its organization to try to minimize costs and make the service sustainable.

In the Vestiaire collective, technology at the heart of second-hand luxury

Marketplaces such as Back Market, Vinted, LebonCoin or Vestiaire Collective quickly won the hearts of the French. His approach to the subject is very technological. During the roundtable organized at Paris Retail Week, Bernard Osta, director of strategy at Vestiaire Collective, a marketplace dedicated to luxury products, explained that “technology is a real asset. We systematically carry out digital authentication of the items sold. A physical authentication is carried out at the request of the buyer. The product then joins one of our five market centers for verification and is out in less than 24 hours to the buyer. 30% of the products sold on the platform have physical authentication and represent 70% of revenue. This organization thus makes it possible to limit costs while guaranteeing real customer satisfaction. And the model is nice. Vestiaire Collective has a turnover of 1 billion euros, of which 60% is done in Europe, 30% in the United States and 10% in Asia, with an average basket of 350 euros.

Fnac communicates in store about its second-hand offer.  - © Fnac
Fnac communicates in store about its second-hand offer. – © Fnac

For Fnac Darty, product repair as a commercial argument

This out-of-stock, technology-based model isn’t the only one on the second-hand market. Fnac Darty was thus able to industrialize this offer, relying on its internal logistics and repair technicians. The supply is ensured by returns from online sales or by products that have suffered a defect during unpacking or during transport. “Initially, these flows were treated marginally, but the second hand has experienced a strong acceleration to become a real activity in its own right over the last couple of years, explains Olivier Theulle, director of e-commerce and digital at Fnac Darty. Our real difference is our ability to repair. We also invest heavily in our supply chain. Ultimately, second-hand products account for 1.5 million orders a year. It is an important part of our value proposition. »

For Fnac Darty, used vehicles require investment in repairs, logistics and proximity.

And the group intends to further strengthen the sale of used products. Online, Fnac Darty intends to expand its digital offer by opening its marketplace to other second-hand manufacturers, inspired by the Back Market model. In contrast, “the customer must clearly identify what he is buying”, insists the director of e-commerce and digital. And on the store side, for about a year, corners of second-hand goods were created in some stores. The retailer thus intends to encourage the local resale of these products, in order to minimize logistical costs and the carbon footprint of resale with a short circuit.

Brands that want to regain control

After marketplaces or distributors, many brands such as the ID Kids group (Okaïdi, Obaïbi, Oxybul, Catimini, etc.) or the Eram group are also showing renewed second-hand interest. Through players like LeBonCoin or Vinted, they are already very often present through consumers.

For Guillaume Darroussez, the second hand is only possible if the initial product was designed to last.  - © Petit Bateau
For Guillaume Darroussez, the second hand is only possible if the initial product was designed to last. – © Petit Bateau

“Petit Bateau has been making second hand for 130 years, because since the creation of the brand, the products have circulated within families without monetization of the brand”, laughs Guillaume Darroussez, CEO of the textile brand. By regaining control over the sale of their second-hand products, brands have an interest in customer loyalty and brand image with customers and employees alike. “Doing second-hand must also be part of the corporate culture, believes the leader of Petit Bateau. I get pressured every day by my teams who find that we’re not moving fast enough on the issue. »

After launching a CtoC app in 217, Petit Bateau has given new impetus in 2021 by launching the second-hand clothing collection at points of sale. Customers receive a voucher, “valid for new or used products, we do not oblige consumption”, points out the leader. Petit Bateau would then repatriate these items to a warehouse to check them, which required an overhaul of their logistics. Items are then resold in store corners. By 2022, about fifteen second-hand corners will be installed.

Petit Bateau bets on omnichannel and rental

And the brand does not intend to stop there. Next steps, the brand also intends to develop this offer internationally and on its e-commerce site. Customers will be able to buy new and used items online with a single basket and a single package. “By 2030, we believe this will represent 30% of our volumes,” analyzes Guillaume Darroussez.

In addition, the leader also announces an extra step by betting on the rental of items for “become spotify for baby clothes”. The brand is part of a logic of use of articles and no longer of ownership. A state of mind that transforms clothing design. “Before, a t-shirt had to be able to live 5 lives, in the future, we will be in 8 to 10 lives, concludes the leader of Petit Bateau. The durability of the products is a fundamental prerequisite for promoting second-hand products. »

Second-hand retail challenges

• Respond to the enthusiasm of the French who increasingly have a second-hand reflex before buying new
• Use second hand as a brand loyalty tool
• Develop specific logistics for this new product flow, omnichannel or not
• Configure sourcing to retrieve second-hand products
• Train the network in returning and rejecting items by creating a price list

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